GRAINS-Soybeans retreat after rally, wheat holds at three-month high

By Julie Ingwersen

CHICAGO, Nov 4 (Reuters) - U.S. soybean futures fell on Tuesday, retreating from a 16-month high hit a day earlier, as traders awaited Chinese purchases of U.S. cargoes following last week's trade truce agreed by the world's two largest economies.

Corn followed soybeans lower while broad market declines in crude oil CLc1, metals and Wall Street equities added to bearish sentiment. MKTS/GLOB

But wheat futures bucked the lower trend and rose to a three-month peak, with ongoing rumors of Chinese interest in U.S. wheat encouraging investors to cover short positions.

As of 12:40 p.m. CST (1840 GMT), the most-active soybean contract on the Chicago Board of Trade Sv1 was down 15-1/2 cents at $11.18-3/4 per bushel, having climbed to its highest since June 2024 on Monday at $11.35-3/4.

Benchmark CBOT corn Cv1 was down 4-1/4 cents at $4.30 a bushel while wheat Wv1 was up 4 cents at $5.47-1/2 a bushel.

Soybeans slid on profit-taking as traders watched for signs of fresh Chinese purchases. The White House has said China will buy millions of metric tons of U.S. soybeans under last week's agreement to de-escalate the countries' trade war, with Washington specifying an initial volume of 12 million tons should be booked by the end of December.

However, traders have yet to confirm large purchases of U.S. supplies, while on Monday market sources said Chinese soybean importers have stepped up purchases of cheaper Brazilian cargoes.

Some viewed soybean futures as ripe for a correction in the absence of fresh Chinese bookings.

"The market was overextended to the upside. I think some backing and filling was probably warranted without any bullish news today," said Sherman Newlin, an analyst for Risk Management Commodities.

The U.S. government remains largely shut down, halting the U.S. Department of Agriculture's flash export sales reports.

Corn futures were pressured by brokerage StoneX raising its forecast of the U.S. corn yield slightly, a move that countered recent expectations of declining yield potential.

Wheat futures were mostly higher, supported by reports of China's interest in buying U.S. wheat, though traders cautioned it was unclear if any purchases had been made.

Open interest in CBOT wheat futures has been declining since mid-October as prices have risen, an indication of traders exiting the market by liquidating short positions.

"I don't think anything fundamentally has changed in the wheat market that is going to push it higher," Newlin said.