November 13, 2003

 

 

China Interested In Buying US Wheat and Other Farm Goods

 

China will buy U.S. wheat as part of a "large-scale" Chinese effort to purchase American agricultural commodities, Zhang Guobao, vice minister of China's development and reform commission, said on Wednesday.

 

His remarks followed weeks of international grain trade speculation that China could buy up to 3 million tonnes of wheat from the United States, Australia and Canada.

 

That speculation intensified in the run-up to Chinese Premier Wen Jiabao's visit to the United States in early December and Bush administration pressure on Beijing to correct a lopsided bilateral trade relationship.

 

Zhang appeared with U.S. Commerce Secretary Donald Evans at a ceremony to mark billion-dollar purchases of aircraft and engines from Boeing Co. <BA.N> and General Electric Co. <GE.N>

 

Speaking through a translator, Zhang told reporters that the contracts with those two companies are part of a series of "large-scale" Chinese purchases from the United States that will include cotton, soybeans, wheat and other agricultural products.

 

Zhang did not elaborate on the amount or timing of American agricultural purchases.

 

Wheat futures on the Chicago Board of Trade on Wednesday jumped to the highest level in a year in part on traders' anticipation of Chinese wheat purchases. The December delivery contract set a new contract high before easing slightly to close at $4.03-1/2 per bushel, up 14-1/2 cents.

 

While Chinese grain stocks have been falling and domestic prices rising, there have been some questions whether China actually needs to buy foreign wheat or is bowing to political pressure.

 

China is the world's largest wheat grower. Its crop will drop to an estimated 87.0 million tonnes this season, compared to 90.3 million tonnes last year, according to U.S. Agriculture Department data.

 

China's stockpile of wheat is expected to tumble sharply this year, the USDA said.

 

"Everybody thinks China is going to buy some U.S. wheat during the (premier's) upcoming visit," said grains analyst Dan Basse, president of research company AgResource. "They might already have bought some from Australia and Canada."

 

China recently purchased U.S. soybeans and cotton.