GRAINS-Soybeans rally pauses as traders await US-China deal

CANBERRA/PARIS, Oct 29 (Reuters) - Chicago soybean futures fell on Wednesday as U.S. farmers took profits after prices climbed in the previous session to their highest level since July 2024, fuelled by optimism that China and the U.S. may reach a deal on soybean purchases.

Corn and wheat futures also slipped. Both contracts had tracked soybeans higher in recent sessions.

The most-active soybean contract on the Chicago Board of Trade (CBOT) Sv1 was down 0.5% at $10.89-3/4 a bushel at 1152 GMT, after rising as high as $11.08 on Tuesday.

CBOT corn Cv1 fell 0.2% to $4.31-1/4 a bushel, after rising to $4.36-1/4 on Tuesday, its highest since early July.

Wheat Wv1 fell 0.2% to $5.28 a bushel, after reaching $5.35 on Tuesday, its highest since mid-September.

China's state-owned COFCO bought three U.S. soybean cargoes, two trade sources said, the country's first purchases from this year's U.S. harvest, shortly before U.S. President Donald Trump and his Chinese counterpart Xi Jinping are expected to meet in South Korea on Thursday.

As the two nations battle over trade tariffs, the lack of Chinese buying has cost U.S. farmers billions of dollars in lost sales, after they largely supported Trump in his campaign for president.

Trump said on Monday that a trade deal should be agreed and Treasury Secretary Scott Bessent said China would make "substantial" soybean purchases under the proposed framework.

"COFCO bet that (soybean) prices would rise if a deal is reached. We'll see what happens next," a European trader said.

Analysts said farmers were selling soybeans and corn to lock in the higher prices, which would likely fall again if no deal or a smaller than expected deal is done.

China may need between 5 million and 10 million metric tons of soybeans to fill a supply gap before it begins to receive new-crop Brazilian beans next year, said StoneX analyst Arlan Suderman.

If this quantity were bought from the United States, "that would certainly help the U.S. balance sheet, but it wouldn't be enough to justify rationing demand with higher prices," he wrote in a note to clients.

"Larger shipments than that are needed to provide longer term strength to soybean demand."