GRAINS-U.S. grains fall on profit taking; wheat set for third straight yearly gain

(Updates with background)

SHANGHAI, Dec 31 (Reuters) - U.S. wheat and soybean futures fell in early trade on Tuesday on profit taking after hitting over one-year highs in the previous session, but were on track to chart annual gains.

The most active wheat futures were on track to rise 10.2% in 2019, a third straight year of annual gains. Wheat prices were last down 0.3% at $5.54-1/2 a bushel at around 0400 GMT, after hitting their highest since August 2018 on Monday.

The most active soybeans futures were also up 6.3% on-year, in line for its first annual gain in three years. Soybean prices, which rose to their highest since June 2018 in the previous session, were last down 0.2% at $9.50-1/2 a bushel.

Meanwhile, the most active corn futures were slightly up 3.1% on-year so far, but were down 0.5% at $3.86-1/2 a bushel on Monday.

Grain prices had risen on Monday after the South China Morning Post reported that Chinese Vice Premier Liu He will visit Washington this week to sign an agreement for a Phase 1 trade deal, in which China agreed to import more U.S. farm goods.

The U.S. White House trade advisor also said on Monday that the agreement would be signed “within the next week or so”.

China, the world’s largest consumer of soybeans, and the United States struck a “Phase 1” trade deal earlier in December that includes a commitment by Beijing to increase purchases of American agricultural products.

It also announced an approval of two new genetically modified (GM) crops for import on Monday that could boost agricultural purchases from the United States, while renewing permits for 10 others, the Chinese agriculture ministry said.

In other related news, Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC,) on Monday received a lowest offer of $857.00 per tonne for 10,500 tonnes of sunflower oil at an international purchase tender for vegetable oils, traders said. Its strategic reserves of wheat stand at five months.

Meanwhile, export prices for Russian wheat rose for a seventh straight week last week due to higher benchmarks in Chicago and Paris, a stronger rouble and concerns about the 2020 Black Sea crop, analysts said. (Reporting by Emily Chow; Editing by Rashmi Aich and Shailesh Kuber)