GRAINS-Soybeans set for biggest monthly gain in nearly four years on China trade optimism

PARIS/BEIJING, Oct 31 (Reuters) - Chicago soybean futures edged down on Friday but remained on course for their biggest monthly gain in nearly four years after a rally fuelled by the prospect of revived soybean exports under a U.S.-Chinese trade truce.

Corn and wheat, not mentioned by Washington and Beijing as part of agricultural trade commitments, fell for a second session, though they were also set for a monthly rise.

Trump said on Thursday that he and Chinese President Xi Jinping had agreed to lower tariffs on China in exchange for Beijing cracking down on the illicit fentanyl trade, resuming U.S. soybean purchases and keeping rare earths exports flowing.

U.S. Treasury Secretary Scott Bessent later specified that China agreed to buy 12 million metric tons of U.S. soybeans through January and 25 million tons annually for the next three years.

The new commitment was welcomed by U.S. farmers after Chinese buyers had largely turned to South American supplies in recent months amidst the broader trade dispute between Washington and Beijing.

"However, confirmation from China is still pending. Until this happens, the upside potential for soybean prices is likely to be limited," Commerzbank analysts said, reflecting caution over how the soybean purchasing pledge will translate into actual exports.

The most-active soybean contract on the Chicago Board of Trade (CBOT) Sv1 was down 0.5% at $11.02-1/2 a bushel as of 1222 GMT, holding near a 15-month high from Thursday. The market was on track for its strongest monthly advance since January 2022.

CBOT corn Cv1 fell 0.6% to $4.27-3/4 a bushel, moving back from a near four-month peak on Thursday, while CBOT wheat Wv1 shed 1.1% to $5.18-1/2 a bushel, retreating from a six-week peak in the previous session. Both cereal markets are poised for monthly gains.

"No specific commitments or announcements regarding wheat or corn were communicated at the end of the Sino-American meeting. Operators have therefore returned to market fundamentals and commercial considerations, in a context still marked by global abundance," Argus analysts said.

Harvest progress in the U.S. Midwest and favourable early planting conditions in Brazil were curbing corn and soybean markets, though an absence of official U.S. data during a government shutdown was maintaining uncertainty over U.S. yields.

In wheat, the onset of harvesting in Argentina and Australia, which are forecast to bring in bumper crops, and improved planting weather in Europe and the Black Sea region were sustaining expectations of abundant supply in major export zones.