November 19, 2003

 

 

China's Sudden Cancellation of Soybean Trip to Chicago More To It Than Meets The Eye

 

Yesterday, Chinese soybean buyers abruptly cancelled a planned trip to Chicago apparently due to visa problems, but there were concerns the cancellation might be linked to impending new U.S. import quotas on clothing made in China.

 

"There is concern from our China office that this might be related to a textile issue," said Peter Thornton of the American Soybean Association (ASA), which was to have hosted the buyers and arranged for them to meet their U.S. counterparts.

 

"The entire Chicago event is canceled," he told Reuters, adding that further details remained sketchy.

 

News of the cancellation of the trip, which was aimed at strengthening the business and personal relationships between Chinese soy buyers and U.S. exporters, sent soybean futures at the Chicago Board of Trade tumbling. The January contract fell to a session low of $7.53 a bushel before ending at $7.77, down 3 cents.

 

U.S. Commerce Undersecretary Grant Aldonas commented yesterday that the Bush administration had decided to set new quotas on imports of Chinese clothing to stop a surge in shipments.

 

Tian Deyou, the commercial consul at China's consulate in Chicago, said "there is no linkage" between the scrapping of the trip and the U.S. import quotas on Chinese clothing.

 

"There were some problems with visas. There were so many people from all over China (in the delegation) and a short time to get things done," he told Reuters.

 

China, the world's top soybean importer, supposedly would attend a gathering in Chicago on Friday to trumpet its hefty purchases of U.S. soybeans in recent months, to take the heat off its yawning trade surplus with the United States.

 

Industry sources said the 30-member delegation, led by Liao Xiaoqi, one of China's vice ministers for commerce, was set to arrive in Chicago today.

 

They said the trip had been initiated by China last week, and that the ASA on Monday was still hastily putting together the schedule and arranging for grain companies to meet delegation members behind closed doors at a Chicago hotel.

 

Grain analysts said the trip's cancellation raised concerns over whether China, the top market for U.S. soy, would continue its voracious buying of soybeans from the United States.

 

"There is a concern that sales to China might decrease," said grains analyst Bill Nelson of brokerage A.G. Edwards. "Prices are falling across the board," he added, referring to declines in CBOT wheat and corn futures.

 

China has purchased about 7 million tons of soybeans from the United States so far in the 2003/04 season that began September 1, compared with just 2.7 million in the year-ago period. Huge imports by China have helped drive CBOT soy prices to six-year highs in recent weeks.

 

The United States Department of Agriculture has forecast China will import 22 million tons of soybeans in 2003/04 from all sources, including Brazil and Argentina, the world's second and third largest producers, respectively, after the United States.

 

Thornton, ASA's Asia marketing manager, said members of one of the five buying teams were unable to get their visas.

 

He said China's Chamber of Commerce informed the ASA of the cancellation for the Import and Export of Foodstuff and Livestock.

 

The delegation was to have been given a tour of the Chicago Board of Trade on Friday and sign an agreement of cooperation with the ASA, followed by a seminar where it would have updated U.S. firms on China's grain inspection procedures.

 

The industry sources said Chinese officials were also scheduled to provide details on the country's regulations on the import of food with genetically modified organisms.