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GRAINS-Soybeans rally up as market digests Chinese tariff threat

(Updates U.S. market activity to close)

CHICAGO, April 5 (Reuters) - Chicago soybean futures rallied more than 1 percent on Thursday as investors played down the immediate impact of proposed Chinese tariffs on U.S. supplies, a move that had sent prices plunging a day earlier.

U.S. wheat futures jumped as much as 2 percent, lifted by worries that cold temperatures could stress crops in the southern Plains. Corn futures also gained as spring sowings could get off to a slow start due to soggy weather.

Prices for soybeans stayed within the range established during Wednesday's session, when China proposed imposing tariffs on U.S. soybeans. China buys about two-thirds of globally traded soybeans.

"We're bouncing off the lows from yesterday and the higher stock market is probably helping," said Highground Trading broker Scott Capinegro.

Chicago Board of Trade May soybeans finished up 16 cents to $10.31-1/4 per bushel, recovering a portion of the declines notched in the previous session.

CBOT May corn was settled up 8-1/2 cents at a session-peak of $3.89-1/2 per bushel.

Investment funds were net buyers of both commodities, traders said.

Export traders doubted whether China could shun U.S. soybeans given its huge import requirements, while investors more widely saw signs the two sides may choose to negotiate.

Surging Brazilian soybean cash prices also pushed some buyers to the United States. Bids for barges of soybeans destined for U.S. Gulf Coast export terminals rose to the highest levels in a month and Brazilian soybean differentials reached $1.85 per bushel over futures.

"At second glance ... it becomes clear that U.S. soybeans are exported to China predominantly between October and March - that is to say during and shortly after the U.S. harvest so most of the soybeans should already have been shipped by now," Commerzbank analysts said in a note.

CBOT May wheat was up 9 cents to $4.64-3/4 per bushel and K.C. May wheat was 12-1/2 cents higher at $4.98-1/2.

Sub-freezing temperatures forecast on Friday night in the Plains would add to wheat crop stress in a region already suffering from dry weather, the Commodity Weather Group said in a note.

The U.S. Department of Agriculture said on Monday that only 32 percent of the U.S. winter wheat crop was in good to excellent condition, the lowest rating at this point in the crop year since 2002. (Additional reporting by Colin Packham in Sydney and Gus Trompiz in Paris; editing by G Crosse)