GRAINS-Grains fall on long liquidation as war premium fades

By Heather Schlitz

CHICAGO, May 7 (Reuters) - Chicago Board of Trade grain futures fell on Thursday as hopes of a potential truce between the U.S. and Iran sparked selling from managed funds and speculators that had previously taken long positions on agricultural commodities.

The most-active wheat contract on the Chicago Board of Trade Wv1 had lost 6 cents to $6.11-1/2 a bushel as of 12 p.m. CDT (1700 GMT). Soybeans Sv1 slipped 1-1/4 cents to $11.93-1/2 a bushel, and corn Cv1 fell 1-1/4 cents to $4.67-1/4 a bushel.

Oil prices slid earlier on Thursday on renewed hopes for a U.S.-Iran peace deal that could gradually ease supply disruptions caused by the closure of the Strait of Hormuz, before reversing course later in the session. O/R

Tehran said it was reviewing Washington's peace proposal that sources said would formally end the war while leaving unresolved the key U.S. demands that Iran suspend its nuclear program and reopen the strait.

"We're taking war premium out of a lot of commodities," said Dan Basse, president of AgResource Company. "We're sitting on the edge of our chairs waiting for Iran's response."

The war has driven massive fluctuations in oil prices, which influence agricultural markets as corn and soybean oil are widely used for the production of biofuels.

Market players are also monitoring weather in the drought-stricken U.S. wheat belt. Though rainfall hit the U.S. Plains this week, some dry areas of the region missed key precipitation, while in others, the rainfall may not have been enough to save the crop, analysts said.

However, freezing temperatures caused only minimal frost damage, lowering some weather concerns.

The U.S. Department of Agriculture's weekly report said 31% of the nation's winter wheat crop was in good to excellent condition, up from 30% last week but still the lowest for this time of the year since 2023.