GRAINS-Soy hovers near three-month peak as traders watch China demand

By Tom Polansek

CHICAGO, Feb 24 (Reuters) - Chicago Board of Trade soybean futures rose to hover near a three-month high on Tuesday as concerns temporarily eased about upheaval in U.S. tariff policy hurting potential sales to top importer China.

Strong domestic demand for U.S. soybeans also supported the market, analysts said, as corn and wheat futures dipped.

Soybean traders were watching to see how China reacted after the U.S. Supreme Court on Friday struck down President Donald Trump's global reciprocal tariffs. Trump then announced a new general rate of 10% that he later said would rise to 15%.

China is closely monitoring U.S. policies and will decide "in due course" whether to adjust countermeasures to U.S. tariffs, a Chinese commerce ministry official said. China is willing to hold frank consultations during an upcoming sixth round of U.S.-China economic and trade talks, the official added.

"The fact that they're still in deal mode is supportive to the market," said Jim Gerlach, president of A/C Trading in Indiana.

UNCERTAINTY OVER CHINESE DEMAND

CBOT May soybeans SK26 finished up 5-1/2 cents at $11.55-1/4 per bushel after rising on Monday to the highest level since November 19. Soyoil futures, meanwhile, stormed to contract highs.

"Soybeans hope to see buying interest from China, which just returned from Lunar New Year holidays," said Andrey Sizov, head of consultancy Sovecon.

CBOT May wheat WK26 ended down 1/2 cent at $5.73-1/4 per bushel. On Monday, the contract reached the highest level since July 29.

CBOT May corn CK26 ended down 1-3/4 cents at $4.38-1/2 per bushel after hitting the highest level since January 12 on Monday.

BRAZIL OFFERS CHEAPER SOY

U.S. tariff policy changes had raised doubts over whether China would extend purchases of U.S. soybeans that had resumed following a trade truce in late October.

Reduced tariff pressure from the United States could encourage China to focus on booking supplies from an expected record Brazilian crop, though immediate competition from Brazil may be curbed by relatively slow harvest progress, traders said.

"We don't see a big upside in soybean prices unless we see China buying U.S. cargoes," an oilseed trader in Singapore said. "Buyers are preferring to take Brazilian cargoes which are much cheaper."