* Beneficial rains in Brazil, Argentina weigh on soybeans
* Details of initial U.S.-China trade deal awaited
* Risk-averse mood evident ahead of USDA global estimates
* Markets tentative amid rising Middle East tensions (Rewrites throughout with U.S. market open, adds quote, updates prices; changes byline and dateline, previous HAMBURG)
CHICAGO, Jan 7 (Reuters) - U.S. soybean futures eased on Tuesday on crop-boosting rains in South America and as investors squared positions ahead of a key U.S. Department of Agriculture (USDA) crop supply-and-demand report due at the end of the week.
Corn and wheat futures fell for a third straight session as a firming U.S. dollar and rising U.S.-Iran tensions weighed on prices.
Investors were also awaiting further details on a Phase 1 U.S.-China trade deal that is expected to significantly bolster Chinese purchases of U.S. agricultural goods.
Grain markets remained risk-averse, however, ahead of Friday's USDA report which is expected to show smaller U.S. corn and soy crops, lower U.S. winter wheat seedings and tighter end-of-season grain stocks.
Traders are monitoring corn and soybean crop weather in Brazil and Argentina as farmers in top soy exporter Brazil get set to begin harvesting a massive crop in the coming weeks.
"We're seeing decent South American growing conditions and probably a record soybean crop in Brazil. Even if it's been downgraded a little bit, it still looks like close to 125 million metric tons and that's going to be hard to compete with for U.S. soybeans," said Brian Hoops, president of U.S. broker Midwest Market Solutions.
Crop conditions are favourable in much of Brazil and Argentina and the key Brazilian soybean state of Rio Grande do Sul, which has been dry, is forecast to receive rain later this week, according to Kyle Tapley, meteorologist with Maxar.
Analysts polled by Reuters ahead of Friday's USDA report expect minimal adjustments to the agency's already-lofty prior estimates for South American corn and soy crops.
Chicago Board of Trade March soybeans were down 1-1/2 cents at $9.43-1/4 a bushel at 12:41 p.m. CST (1841 GMT). March corn shed 3/4 cent to $3.84 a bushel while CBOT March wheat fell 2-1/2 cents to $5.47-1/2 a bushel.
Optimism that China will accelerate purchases of U.S. farm goods has been supportive for Chicago markets, particularly soybeans, with officials expected sign a Phase 1 trade deal next week.
However, reports from China on Tuesday were worrisome for U.S. exports. China will not increase its annual low-tariff import quotas for corn, wheat and rice to accommodate stepped-up purchases of U.S. farm goods, media reported.
Analysts said the quotas could make it difficult to reach the trade deal's lofty goal of roughly doubling China's annual purchases from pre-trade war levels (Additional reporting by Michael Hogan in Hamburg and Naveen Thukral in Singapore; Editing by David Goodman and Tom Brown)