BEIJING, July 15 (Reuters) - Chicago wheat futures continued to rally on Wednesday as traders assessed the impact of possible reductions to Russian wheat exports following Ukrainian drone attacks on ships in the Azov Sea.

FUNDAMENTALS

* The most-active wheat contract Wv1 on the Chicago Board of Trade (CBOT) was up 0.4% to $11.96 a bushel by 0145 GMT. Soybean Sv1 gained 0.2% to $6.46 a bushel, and corn Cv1 gained 0.1% to $4.61 a bushel.

* Shipping in the Sea of Azov, the route for a quarter of Russia's grain exports, remained restricted on Tuesday after continued Ukrainian drone attacks, Reuters sources said.

* Soybeans and corn rose, recouping some of the losses from the last session after the U.S. Department of Agriculture said crop conditions improved.

* Condition ratings for U.S. corn and soybean crops improved slightly last week, the USDA said in a weekly report on Monday, as the risk of hot and dry weather loomed.

* The agency said 68% of the nation's corn crop was in good or excellent shape as of Sunday, up from 67% a week earlier. The soybean crop was rated 65% good to excellent, up from 64% a week earlier.

* U.S. corn and soybean futures hit their highest levels in more than a month on Monday as weather risks and renewed tensions in the Middle East lifted prices.

* Hot and mostly dry weather was forecast for the western half of the U.S. Midwest crop belt this week and potentially extending into next week, threatening crop yield potential.

* The USDA reported export inspections of U.S. soybeans in the latest week at 418,592 metric tons, in line with trade expectations for 300,000 to 600,000 tons.

* The agency reported export inspections of U.S. corn in the latest week at 1,539,718 tons, towards the high end of trade expectations for 1,100,000 to 1,600,000 tons. USDA/I

MARKET NEWS

* Oil rose on Wednesday as President Donald Trump reimposed a naval blockade on all Iranian ports and Iran launched strikes on U.S. infrastructure in the region.O/R

DATA/EVENTS (GMT)

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1230 US PPI Machine Manuf'ing Jun