HAMBURG- Chicago wheat futures rose almost 2% on Tuesday after new estimates that the crop in Australia will fall to its lowest since 2008, reducing competition to the United States in export markets.

Soybeans and corn rose on hopes Chinese buying will at last start under the Phase 1 trade deal with the United States, as China announced a series of new import tariff exemptions on U.S. products including soybeans.

Chicago Board of Trade most active wheat Wv1 was up 1.9% at $5.53-1/2 a bushel at 1159 GMT. Soybeans Sv1 rose 0.2% to $8.96 a bushel. Corn Cv1 rose 0.7% to $3.80-1/2 a bushel.

Markets were closed on Monday for a U.S. public holiday.

Australia said on Tuesday its 2019/2020 wheat harvest was sharply below expectations as severe drought wilted crops. 

With harvesting now complete, Australian agricultural agency ABARES said the crop totalled 15.17 million tonnes - the lowest since 2008.

“Wheat is being supported by the forecasts of a much reduced harvest in Australia, although a cut had been widely expected after the poor weather there,” said Matt Ammermann, commodity risk manager with INTL FCStone.

“Australia is a large wheat exporter and reduced Australian supplies on world markets could open more sales opportunities for U.S. wheat. Wheat is also seeing support from brisk import demand, with purchase tenders from countries including Turkey and Morocco.” GRA/TEND

China said on Tuesday it would grant exemptions on retaliatory import duties imposed on 696 U.S. goods, as Beijing seeks to fulfil commitments made in its interim trade deal with Washington. 

Tuesday's announcement comes after the Phase 1 trade deal between the two countries took effect on Feb. 14 and is the third round of tariff exemptions China has offered on U.S. goods.

“Will China buy from the U.S. this week” asked a report from brokerage Allendale, reflecting the anticipation in markets.

Despite the signing of the Phase 1 deal around a month ago, China has not made major purchases of soybeans or corn in the United States. Despite the coronavirus crisis, Chinese buyers bought around 500,000 tonnes of Ukrainian corn last week. 

“Soybeans and corn are being underpinned after news that China will give more exemptions to duties on U.S. imports including soybeans and other farm products,” Ammermann said.

“Large Chinese purchases of U.S. soybeans and other grains have not taken place since the deal signing, but market expectations remain that the Chinese buying will probably start soon.”

(Reporting by Michael Hogan, additional reporting by Naveen Thukral, editing by Mark Potter) ((michael.j.hogan@thomsonreuters.com; +49 172 671 36 54; Reuters Messaging: michael.hogan.thomsonreuters.com@reuters.net))