* Grains up as U.S., Iran show signs of desire to avoid conflict
* Market eyes U.S. supply-demand report for price direction (Recasts, added quote in paragraph 4)
By Naveen Thukral and Sybille de La Hamaide
SINGAPORE/PARIS, Jan 9 (Reuters) - Chicago grain futures rose for a second session on Thursday, with prices supported by signs of a de-escalation in tensions between Iran and the United States, although expectations of a record crop in Brazil limited gains.
U.S. President Donald Trump on Wednesday tempered days of angry rhetoric and suggested Iran was “standing down” after it fired missiles at U.S. forces in Iraq overnight, as both sides looked to defuse a crisis over the U.S. killing of an Iranian general.
“Easing of tensions in the Middle East is definitely supporting prices,” said Ole Houe, director of advisory services at brokerage IKON Commodities in Sydney.
Ample supplies from South America are likely to weigh on prices although a recovery in Chinese demand could limit the downside, Houe added.
The most-active soybean contract on the Chicago Board Of Trade was up 0.45% at $9.51-1/2 a bushel as of 1245 GMT, having firmed 0.3% on Wednesday.
Wheat added 0.6% to $5.56-1/4 a bushel and corn gained 0.5% to $3.86-1/4 a bushel.
Price moves were moderate with grain markets cautious before Friday’s widely followed U.S. Department of Agriculture (USDA) global crop estimates. It could include a revision to the U.S. corn harvest after poor weather.
“Grain markets remain in a holding pattern awaiting tomorrow’s major USDA reports, but are finding support overnight from Chinese trade-deal headlines,” Allendale brokerage said in a report.
Grain traders are also waiting for more details on the Phase 1 U.S.-China trade deal due to be signed next week, which calls for bigger Chinese purchases of U.S. agricultural goods.
Soybean demand in China, by far the world’s biggest soybean buyer, is expected to recover this year from the damage caused by African swine fever in 2019.
Brazil, which is on track for a record soybean crop this year, could lose some gains it made in the global market during the U.S.-China trade war in the event that the two countries close a deal ending the dispute, a Brazilian Agriculture Ministry official said on Wednesday.
Commodity funds were net buyers of CBOT wheat, soybean and soymeal futures contracts on Wednesday, net sellers of soyoil and net even in corn, traders said. (Reporting by Naveen Thukral, Editing by Sherry Jacob-Phillips and Nick Macfie)