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GRAINS-Corn soars 4% on fresh sales to China; soy, wheat also climb

(Updates with closing U.S. prices)

CHICAGO, Jan 26 (Reuters) - U.S. corn futures surged 4% on Tuesday as news of fresh export sales to China re-ignited concerns about tightening U.S. and global grain supplies, analysts said.

Soybeans followed corn higher, with worries about a slow start to the Brazilian soy harvest lending support. Wheat firmed on supply concerns and news that Russia formally adopted a planned increase in a wheat export tax.

Chicago Board of Trade March corn futures settled up 20-3/4 cents at $5.32-1/4 per bushel. CBOT March soybeans ended up 26-3/4 cents at $13.70-1/4 a bushel and March wheat settled up 16-3/4 cents at $6.65-1/4 a bushel.

Corn posted the biggest gains on a percentage basis after the U.S. Department of Agriculture confirmed private sales of 1.36 million tonnes of U.S. corn to China, the largest such sale since July.

“This is a classic demand-pull market,” said Rich Feltes, vice president for research with R.J. O’Brien, noting that some analysts expect China’s 2020/21 corn imports to exceed the USDA’s current forecast of 17.5 million tonnes.

Tuesday’s corn sale to China, Feltes said, reflects “further tightening in our U.S. carry-over situation, and the need for more acres and a great yield in 2021 in the U.S.”

U.S. agribusiness Archer Daniels Midland Co on Tuesday reported a 36% jump in fourth-quarter profit on strong soy processing margins and solid exports, particularly to China.

Harvest delays in Brazil, meanwhile, have stalled the seasonal shift in soybean export business to South American suppliers. Agribusiness research firm AgRural estimated Brazilian soy farmers had harvested just 0.7% of the planted area through Jan. 21, compared with 4.2% a year ago.

Traders are closely watching whether CBOT March corn and soybean futures, after a sell-off last week, will revisit multi-year highs hit in mid-January.

“If those highs are taken out, then it’s off to the races on the upside,” Feltes said.

Wheat futures drew support as Russia formally adopted a planned increase in a wheat export tax from March 1, a measure that contributed to a recent rally in prices.

Also, a USDA attache in Argentina estimated the country’s 2020/21 wheat exports at 11.3 million tonnes, 700,000 tonnes lower than USDA’s official forecast. (Additional reporting by Gus Trompiz in Paris, Hallie Gu in Beijing and Gavin Maguire in Singapore; Editing by Subhranshu Sahu, Sherry Jacob-Phillips, Paul Simao, Dan Grebler and Sonya Hepinstall)

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