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GRAINS-Soybeans firm, turning up on prospects for Chinese export demand

Julie Ingwersen

(Recasts with updated prices, quotes, changes byline, changes dateline; previous PARIS/SINGAPORE) CHICAGO, Feb 13 (Reuters) - U.S. soybean futures rose on Thursday, rallying from early declines on short-covering and prospects for China to step up purchases of U.S. supplies as the U.S.-China Phase 1 deal goes into effect in the coming days, traders said. Wheat futures fell and corn sagged as traders focused on prospects for large South American harvests. As of 1:05 p.m. CST (1905 GMT), the Chicago Board of Trade March soybean contract was up 2-1/2 cents at $8.95 per bushel, on track to post its ninth consecutive higher close. CBOT March wheat was down 6 cents at $5.41-1/2 per bushel. March corn was down 3-1/2 cents at $3.79-1/2 a bushel, staying inside Wednesday's trading range. Soybeans turned higher as traders considered that the U.S.-China Phase 1 trade agreement was due to go into effect 30 days after its Jan. 15 signing, potentially spurring export demand for U.S. agricultural products. Commodity funds hold a net short position in CBOT soybean futures, leaving the market vulnerable to short-covering rallies, and U.S. markets will be closed on Monday for the Presidents Day holiday. "Traders are trying to position for the potential opening of Chinese markets next week," said Dan Basse, president of Chicago-based AgResource Co. "If China all of a sudden comes out with duty-free export licenses, or drops their tariffs, who wants to be short beans?" Soybean futures drew additional support from a strong domestic soy crushing pace coupled with a lack of producer soybean sales. "(Soybean) meal demand is very strong, both on the export and domestic use categories," said Terry Reilly, senior analyst with Futures International in Chicago. Others cautioned that China has been an aggressive buyer of Brazilian soybeans in recent days, taking advantage of a plunge in the value of Brazil's currency. CBOT wheat futures fell, shrugging off support from strong weekly export data. The U.S. Department of Agriculture reported export sales of U.S. wheat in the week ended Feb. 6 at 687,100 tonnes (old and new crop years combined), topping trade expectations. Corn drifted lower in rangebound trade, pressured by expectations for large South American harvests given generally favorable crop weather. Argentina's Rosario grains exchange on Wednesday raised its forecast of the country's corn crop to 50 million tonnes, from 49 million previously. The Buenos Aires Grains Exchange pegged the crop at 49 million tonnes, in its first corn crop estimate of the season.

Wheat and corn also took cues from declines in world equity markets, which were on the defensive as a sharp rise in the death toll from the coronavirus in China stoked concern about fresh economic fallout from the outbreak.

CBOT prices as of 1:04 p.m. CST (1904 GMT):

Net Pct Volume

Last change change

CBOT wheat WH0 541.75 -5.75 -1.1 67318CBOT corn CH0 379.00 -4.00 -1.0 160000CBOT soybeans SH0 895.25 2.75 0.3 158287CBOT soymeal SMH0 291.40 -0.30 -0.1 64467CBOT soyoil BOH0 30.69 -0.34 -1.1 60801

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

(Additional reporting by Gus Trompiz in Paris and Naveen Thukral in Singapore; Editing by Sherry Jacob-Phillips, David Evans and Tom Brown)