GRAINS-Soybeans, corn rise on Argentine drought concerns

* Argentine soy, corn crops cut by drought

* Fear of U.S./China trade war subsides

* Wheat falls as U.S. crop conditions improve

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(Recasts with European trade, adds new comment, changes dateline) HAMBURG, March 27 (Reuters) - Chicago soybean and corn rose on Tuesday in response to continued dry weather which is threatening crops in major exporter Argentina, while fears eased that a U.S./China trade war could disrupt soybean exports. Wheat fell after a U.S. Department of Agriculture (USDA) report indicated improved conditions of U.S. crops after recent rain. Most active Chicago Board of Trade May soybeans futures rose 0.4 percent to $10.29-3/4 a bushel at 1050 GMT. May corn rose 0.3 percent to $3.75-1/4 a bushel. May wheat fell 0.1 percent to $4.53-1/2 a bushel. "Soybeans and corn are being strengthened today by continued fear about dryness damaging Argentine crops, said Matt Ammermann, commodity risk manager with INTL FCStone. There is also a feeling that the feared trade dispute between the U.S. and China may not turn out as bad as had been feared. The market is hoping that any U.S./China trade war will not create near-term disruption to U.S. soybean exports to China. Soybeans were weakened last week by fears an escalating trade dispute between the United States and China would disrupt soybean flows between the world's biggest producer and the world's largest importer of the oilseed. The U.S. and China are now negotiating about their rival trade demands.

Rains expected to relieve Argentina's drought-hit soy and corn crops failed to materialise over the weekend, all but ending hope that yields might recover from four months of unrelenting sun, with more dryness expected. Argentina remains unusually dry and damage has been done to its soybean harvest, Ammermann said. Markets are now increasingly expecting an Argentine soybean harvest of below 40 million tonnes against 47 million tonnes estimated An Argentine corn crop of below 30 million tonnes is also being anticipated soybean and corn crops would transfer export demand to the United States. Wheat is being weakened by USDA crop condition reports on Monday which indicated some improvement, as had been anticipated after recent rain. The USDA on Monday rated 13 percent of winter wheat in major producer Kansas in good-to-excellent condition, up from 11 percent last week. Markets are also focused on the USDA's grain stocks and estimates for spring U.S. plantings on Thursday. Farmers are expected to plant more soy than corn for the first time since 1983, says a Reuters poll. Grains prices at 1050 GMT

Contract Last Change Pct chg Two-day chg MA 30 RSI CBOT wheat 453.25 -1.00 -0.22% -1.52% 476.58 35 CBOT corn 375.25 1.25 +0.33% -0.53% 380.52 42 CBOT soy 1029.50 4.00 +0.39% +0.12% 1043.68 46 CBOT rice $12.45 -$0.02 -0.12% +0.69% $12.34 62 WTI crude $65.76 $0.21 +0.32% -0.18% $62.36 71

Currencies

Euro/dlr $1.241

Most active contracts Wheat, corn and soy US cents/bushel. Rice: USD per hundredweight

RSI 14, exponential

(Reporting by Michael Hogan, additional reporting by Colin Packham, editing by Jane Merriman)