* Market sees more soy purchases in planned U.S.-China trade deal
* Scope for U.S. sales to China adds to demand optimism in wheat
* Trading light during holiday week (New throughout, updates with U.S. trading, changes byline/dateline, previous PARIS/SHANGHAI)
By Tom Polansek
CHICAGO, Dec 27 (Reuters) - U.S. wheat and soybean futures jumped on Friday to their highest prices since summer 2018 on expectations for increased Chinese buying as a result of an initial trade deal.
Corn futures set an eight-week high.
The markets continued to focus on prospects for more U.S. sales to China after the countries agreed this month to a Phase 1 accord to ease their trade war. The dispute slowed shipments of soybeans, sorghum, pork and other agricultural products to China for more than a year.
Beijing, the world’s largest soybean importer, committed to increasing purchases of U.S. farm goods as part of the trade deal, though details have yet to be announced. China has bought around 1 million tonnes of European Union wheat so far this season and could now shift to U.S. supplies under the accord.
“You’ve got continued rumors that China’s going to buy both corn and wheat,” said Jim Gerlach, president of broker A/C Trading in Indiana.
The most actively traded wheat futures were up 9-3/4 cents at $5.58-3/4 a bushel at the Chicago Board of Trade by 10:35 a.m. CST (1635 GMT). The contract earlier reached its highest price since August 2018 at $5.61.
Most-active soybeans futures touched the highest price since June 2018 before pulling back. The contact was down 5-1/2 at $9.41 a bushel after reaching a session high of $9.50-1/2.
Corn futures were up 3/4 cent at $3.89-1/4 a bushel and reached their highest price since Nov. 1.
“The market is getting confident that China is going to make meaningful purchases,” said Ole Houe, director of advisory services at brokerage IKON Commodities in Sydney.
The U.S. Department of Agriculture in a weekly report said export sales of U.S. wheat last week were 714,900 tonnes, toward the high end of analysts’ expectations for 200,000 tonnes to 900,000 tonnes.
Worries about unfavorable weather reducing global wheat production helped lift wheat futures, traders said. Expectations that commodity funds will buy wheat futures as they rebalance their portfolios for 2020 also supported prices, they said.
“Concerns of declining world production and lower U.S. acres are driving strength in wheat prices,” U.S. brokerage CHS Hedging said in a note.
Oilseed markets were being supported by a run-up in palm oil prices. Malaysian palm oil futures reached their highest in nearly three years on forecasts for lower production coupled with demand for use in biofuel.
Reporting by Tom Polansek in Chicago. Additional reporting by Gus Trompiz in Paris and Emily Chow in Shanghai; Editing by Aditya Soni, Mark Potter and Richard Chang