GRAINS-Prices tick lower as USDA report, trade risks prompt caution

* Grains consolidate after rally on Argentina, U.S. drought

* Traders cautious before Thursday's USDA crop forecasts

* Investor fears of trade war also keep market subdued

(Updates with European trading, changes byline/dateline) PARIS/SYDNEY, March 7 (Reuters) - Chicago wheat, corn and soybean futures edged lower on Wednesday as the run-up to closely watched U.S. government crop forecasts and rising global trade tensions cooled prices after a weather-fuelled rally. The most active wheat futures on the Chicago Board of Trade were down 0.3 percent at $5.05-3/4 a bushel by 1256 GMT, consolidating below last week's 7-1/2 month high of $5.18-1/2. CBOT soybean futures slipped 0.4 percent to $10.70-1/4 a bushel, easing away from Monday's near 20-month peak of $10.82-1/2. Corn inched down 0.1 percent to $3.88 a bushel, just below Tuesday's seven-month top of $3.88-1/2. After severe drought in Argentina fuelled gains in soybean and corn prices in the past month, grain markets awaiting revisions by the U.S. Department of Agriculture (USDA) to its Argentina forecasts in a world crop report due on Thursday.

"Traders are cautious and less busy close to the USDA report tomorrow, especially after the rally observed these last weeks in Chicago," consultancy Agritel said in a note. But some of the expected crop losses in Argentina are expected to be offset by higher production in Brazil. Adding to the subdued mood in commodity and equity markets was growing concern about a global trade war after the resignation of a free trade advocate from the staff of U.S. President Donald Trump. Trump's announcement of plans for tariffs on imported steel and aluminium to protect U.S. producers drew threats of retaliation from trade partners. Large flows of U.S. soybeans to China were seen as one market at risk of disruption.

The wheat market has also been curbed by regional crop data in the United States that suggested stabilising conditions in parched wheat belts. The USDA in a state crop report on Monday rated 13 percent of the Kansas winter wheat crop in good-to-excellent condition, up from 12 percent in a monthly report released Feb. 26. But weather forecasts show only limited rain relief in the U.S. Plains and Argentina's Pampas crop heartland in the week ahead. Expectations the USDA will raise its projection of U.S. wheat stocks this season due to weak exports was also weighing on the wheat market.

Prices at 1256 GMT

Last Change Pct End Ytd Pct Move 2017 Move CBOT wheat 505.75 -1.25 -0.25 427.00 18.44 CBOT corn 388.00 -0.25 -0.06 350.75 10.62 CBOT soy 1070.25 -4.50 -0.42 961.75 11.28 Paris wheat Mar 162.00 -1.00 -0.61 159.00 1.89 Paris maize Jun 163.00 -0.50 -0.31 157.75 3.33 Paris rape May 349.50 -2.25 -0.64 352.75 -0.92 WTI crude oil 62.35 -0.25 -0.40 60.42 3.19 Euro/dlr 1.24 0.00 0.10

Most active contracts - Wheat, corn and soy US cents/bushel, Paris futures in euros per tonne

(Reporting by Gus Trompiz in Paris and Colin Packham in Sydney Editing by Richard Pullin and Edmund Blair)