GRAINS-Chicago soybeans rebound after hitting year low on China tariffs

By Ella Cao and Peter Hobson

BEIJING, April 7 (Reuters) - Chicago soybean futures rose on Monday, supported by potential changes to U.S. biofuel policy and a weak dollar, after China's announcement of a 34% tariff on U.S. goods pushed soybean prices to their lowest this year in the previous session.

The most-active soybean contract on the Chicago Board of Trade (CBOT) Sv1 was up 0.18% at $9.79 a bushel as of 0700 GMT. On Friday it fell to $9.70, its lowest since December.

Last week, a U.S. biofuel coalition lobbied for higher federal biomass diesel blending mandates, potentially increasing the Renewable Volume Obligation (RVO) from 3.35 billion to as much as 5.75 billion gallons.

The increase in the RVO would draw more soybean oil into the fuel mix, raising overall demand.

"A robust biofuel policy would support U.S. farmers, making China more dependent on Brazilian soybeans and thus reducing the effectiveness of tariffs on U.S. exports," said Cheang Kang Wei, assistant vice president at StoneX in Singapore.

Helping to steady Chicago prices was a weakening of the U.S. dollar, which makes U.S. farm goods cheaper for overseas buyers and encouraging demand. .DXY USD/

Beijing's 34% tariffs on U.S. goods will be add to the 10%-15% duties China already imposed on roughly $21 billion worth of agricultural trade.

Analysts say they will shift China's soy purchases from the United States to Brazil, which is in the process of harvesting a bumper crop, adding to plentiful global supply.

Brazilian farmers have already brought in 85.83% of the 2024/2025 soybean crop, compared to 79.36% at the same time last season, according to consultants Patria Agronegocios.

China typically imports more soybeans from Brazil at this time of year and shifts to the U.S. during its harvest season starting late summer.

China's most-active soymeal contract DSMcv1 rose more than 2% - its largest daily gain in over two months - on concerns that the tariffs will crimp local supply.

Prices of rapeseed meal CRSMcv1, a substitute for soybean meal in animal feed, also surged by 1.5%.

However, the immediate effect of tariffs on supply should be limited, said Liu Jinlu, an agricultural researcher at Guoyuan Futures.

In other crops, corn Cv1 rose 0.11% to $4.61 a bushel and wheat Wv1 added 1.23% to $5.36 a bushel, after three sessions of losses.