GRAINS-Corn, soybeans sag on renewed U.S.-China trade jitters

(New throughout; updates prices, adds quotes, changes byline, changes dateline from previous HAMBURG) CHICAGO, May 29 (Reuters) - U.S. corn futures fell nearly 2 percent on Tuesday, with the front contract dropping below $4 a bushel as U.S. trade tensions with China re-emerged, analysts said. Wheat turned lower after climbing to multi-month highs, and soybeans also slipped. As of 1 p.m. CDT (1800 GMT), Chicago Board of Trade July corn was down 7-3/4 cents at $3.98-1/4 per bushel. July wheat was down 8 cents at $5.35 a bushel and July soybeans were down 9-1/2 cents at $10.32 a bushel. Corn tumbled after the United States said it will continue pursuing action on trade with China, days after Washington and Beijing announced a tentative solution to their dispute and suggested that tensions had cooled. China is the world's biggest soybean importer and the top buyer of U.S. sorghum, a feed grain that competes with corn. The news appeared to trigger long liquidation in corn and soybeans, markets in which commodity funds hold net long positions. A stronger dollar added to the negative tone, making U.S. grains less competitive on the world market. "The dollar strength is a real anchor for all the trade. Then you get kicked with the China trade headlines," said Don Roose, president of Iowa-based U.S. Commodities. Also, traders believe the U.S. corn crop is off to a good start, overcoming early planting delays in April. Ahead of the U.S. Department of Agriculture's weekly crop progress report, analysts on average expected the government to rate 72 percent of the crop in good to excellent condition, up from 65 percent a year ago. Wheat followed corn and soy lower, retreating after the CBOT July contract hit a 10-month high on concerns about dry weather in Russia and elsewhere. Forecasts for beneficial rains in the northern U.S. Plains spring wheat belt and possibly Canada added pressure. Soybeans declined but drew underlying support from logistics problems in Brazil, where a truckers' strike has been slow to unwind, even after the government agreed to subsidize diesel prices in a bid to end protests. Soybean exporters are considering declaring force majeure on shipments, a contractual clause that releases them from obligations because of events beyond their control, according to Anec, a trade group representing grains exporters such as Archer Daniels Midland Co and Louis Dreyfus Co. "If it were not for the Brazilian strike woes going on, beans could be much lower than they are," Futures International analyst Terry Reilly said.

CBOT prices as of 12:59 p.m. CDT (1759 GMT):

Last Net Pct Volume

change change

CBOT wheat WN8 534.50 -8.50 -1.6 120231 CBOT corn CN8 398.75 -7.25 -1.8 183315 CBOT soybeans SN8 1033.25 -8.25 -0.8 96258 CBOT soymeal SMN8 380.30 0.00 0.0 50050 CBOT soyoil BON8 31.21 -0.13 -0.4 39082

NOTE: CBOT July wheat, corn and soybeans shown in cents per bushel, soymeal in dollars per short ton and soyoil in cents per lb.

(Additional reporting by Michael Hogan in Hamburg and Colin Packham in Sydney; editing by Alexandra Hudson and Chizu Nomiyama)