GRAINS-Soy climbs on fresh sales to China; wheat up on firm cash

(Recasts throughout; updates prices, adds quotes; changes byline and dateline) CHICAGO, Feb 1 (Reuters) - The most-active U.S. soybean futures contract reached its highest level since June on Friday on news of fresh U.S. soy sales to China, but the market pared gains as traders considered plentiful global supplies. Wheat futures rose as firming U.S. cash markets signaled a pick-up in export demand, and corn followed the firm trend. Chicago Board of Trade March soybeans settled up 2-1/2 cents at $9.17-3/4 per bushel after reaching $9.31-1/4, the highest price for a most-active contract since June 14 on a continuous chart. CBOT March wheat ended up 7-3/4 cents at $5.24-1/4 a bushel and March corn finished up 1-3/4 cents at $3.78-1/4 a bushel. Soybeans advanced a day after Chinese Vice Premier Liu He, following high-level, bilateral trade talks in Washington, announced China would buy an additional 5 million tonnes of U.S. soybeans. Chinese state-owned firms bought at least 1 million tonnes of U.S. soybeans on Friday for shipment, three traders with knowledge of the deals said. One trader with direct knowledge of the deals said total purchases were around 2.2 million tonnes.

However, CBOT soybean futures pared gains and closed near the day's lows. "I think we understand that another 5 million tonnes ... it doesn't change the balance sheets tremendously," said Dan Basse, president of AgResource Co. "Because we've got a Brazilian harvest coming on, and we've got an abundance of U.S. and world stocks, the market can absorb 5 million tonnes and has done so," Basse said. Brokerage INTL FCStone lowered its estimate of Brazil's soybean crop to 112.2 million tonnes, down 4 million tonnes from last month, citing hot and dry weather. CBOT and K.C. wheat futures climbed on strengthening cash markets, especially for hard red winter wheat at the U.S. Texas Gulf export hub, which traders took as an indication of increased export demand. "There is business getting done, and premiums are reflecting that," one cash-connected U.S. wheat trader said. K.C. March hard red winter wheat futures settled up 9-3/4 cents at $5.08-3/4 after trading below $5 in each of the last four sessions. "It feels like below $5 in K.C. March there was a lot of interest. Wheat probably found some non-routine demand at that level," said Joe Nussmeier, broker at Frontier Futures. The news that China bought U.S. soybeans added to hopes that China might eventually buy U.S. wheat and corn as well. "World wheat prices have been rising steadily, going back to September. We in Chicago have not followed because we didn't get to see any of the volume. But maybe that is changing," Basse said.

CBOT settlement prices:

Last Net Pct Volume

change change

CBOT wheat WH9 524.25 7.75 1.5 80178 CBOT corn CH9 378.25 1.75 0.5 138188 CBOT soybeans SH9 917.75 2.50 0.3 157472 CBOT soymeal SMH9 311.80 1.80 0.6 84577 CBOT soyoil BOH9 29.89 -0.28 -0.9 78404

NOTE: CBOT March wheat, corn and soybeans shown in cents per bushel, March soymeal in dollars per short ton and March soyoil in cents per lb.

(Reporting by Julie Ingwersen; Additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore; Editing by David Evans and Leslie Adler)