GRAINS-Chicago grains drift lower with dollar and weather in focus

(Updates with European trading, changes byline/dateline) PARIS/BEIJING, Feb 4 (Reuters) - Chicago grain and soybean futures edged lower on Wednesday, curbed by a firm dollar as traders assessed weather risks and geopolitical tensions, analysts said. Soyoil, however, held steady after a day-earlier rally supported by updated U.S. government guidance on tax credits for biofuel, a major source of demand for soyoil. Ample global supply continued to cap grain prices as traders started to look ahead to world crop forecasts from the U.S. Department of Agriculture next Tuesday for fresh direction. The most-active wheat contract (Wv1) on the Chicago Board of Trade was down 0.6% at $5.25-3⁄4 a bushel by 1214 GMT. CBOT corn (Cv1) was 0.4% lower at $4.27, while CBOT soybeans (Sv1) eased 0.3% to $10.62-1⁄2 a bushel. The dollar index (=USD) rose on Wednesday, making U.S. crops more expensive internationally. (FRX/) Volatility in the dollar, which hit a four-year low last week before rebounding following Friday’s nomination of Kevin Warsh as the next Federal Reserve chair, has weighed on grain and wider commodity markets. Uncertainty over Washington’s stance towards Iran ahead of scheduled talks on Friday has also buffetted crude oil prices. “It remains difficult for agricultural commodity prices in Chicago to take a clear direction,” Argus Media analysts said. “Debates around the U.S. position toward Iran and the appointment of Kevin Warsh to the Federal Reserve continue to influence oil and the dollar index.” Soybean by-product soyoil (BOv1) ticked up 0.1% to hold on to Tuesday’s 2.4% gain. The U.S. Treasury Department on Tuesday released updated guidance on biofuel tax credits, a move welcomed by traders as giving clarity to biofuel producers. The news also supported corn, widely used to produce ethanol fuel. Soyoil is among feedstocks used for biodiesel. Trader were monitoring winter cold in northern hemisphere wheat belts. While snow cover was expected to limit damage in U.S., Ukrainian and Russian plains, a prolonged period of severe cold in the Black Sea region was nonetheless sustaining some market concern, according to traders. Prices at 1214 GMT Last Change Pct Move CBOT wheat (Wv1) 525.75 -3.00 -0.57 CBOT corn (Cv1) 427.00 -1.50 -0.35 CBOT soy (Sv1) 1062.50 -3.25 -0.30 Paris wheat (BL2c1) 193.75 0.50 0.26 Paris maize (EMAc1) 190.75 -0.25 -0.13 Paris rapeseed (COMc1) 479.50 2.00 0.42 WTI crude oil (CLc1) 63.33 0.12 0.19 Euro/dollar (EUR=) 1.18 0.00 -0.06 Most active contracts - Wheat, corn and soy U.S. cents/bushel, Paris futures in euros per metric ton