Rewrites throughout, updates with closing U.S. prices

By Julie Ingwersen

CHICAGO, March 6 (Reuters) - Chicago corn futures surged nearly 2% on Thursday as trade tensions cooled with Mexico, the top buyer of U.S. corn, after President Donald Trump temporarily suspended steep tariffs that he had imposed on Mexico this week.

Soybeans and wheat followed the firmer tone, with a weaker dollar .DXY adding support to agricultural markets by making U.S. goods more competitive globally.

Chicago Board of Trade May corn CK25 settled up 8-1/4 cents at $4.64 per bushel. May soybeans SK25 ended up 15-1/2 cents at $10.27-1/4 a bushel and CBOT May wheat WK25 finished up 5-3/4 cents at $5.54 a bushel.

Trump had imposed 25% U.S. tariffs on imports from Mexico and Canada on Tuesday along with fresh duties on Chinese goods, fueling worries that an expanding trade war would threaten demand for U.S. products.

Mexico was the largest buyer of American corn and wheat in 2024 and the No. 2 destination for U.S. soybeans after China, and the tariff threats raised fears of trade disruptions, sending grain futures tumbling earlier this week.

Thursday's reprieve eased concerns.

"Demand is back on with our largest trading partner in corn and pork," said Don Roose, president of Iowa-based U.S. Commodities, referring to Mexico.

On social media platform Truth Social, Trump had earlier only mentioned an exemption for Mexico, expiring on April 2, but the amendment he signed into his order covers Canada as well. The three countries are partners in the U.S.-Mexico-Canada Agreement on trade that Trump negotiated in his first term as president.

Market players await the U.S. Department of Agriculture's next monthly supply/demand report due on March 11. The USDA will consider trade policies in place when the forecasts for grains and soybeans are issued, an agency official said.

In other global agricultural news, a conveyor belt system collapsed at a grain terminal at the northern Brazil port of Barcarena, trade sources said, suspending grain shipments. Brazil is the world's largest soybean exporter.

China is expecting to produce an abundant wheat harvest this year, a COFCO International executive said, with rising domestic supplies likely to reduce the need for imports.

(Reporting by Julie Ingwersen; additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore; editing by Diane Craft and Sonali Paul)

((Julie.ingwersen@thomsonreuters.com; 1-313-484-5283; Reuters Messaging: julie.ingwersen.thomsonreuters.com@reuters.net))