April 7, 2006

 

US, China sign trade pact for 4.98 million tonnes of US soybeans

 

 

Thirteen Chinese soybean processing companies on Thursday (Apr 6) signed 10 contracts with US agricultural exporters to buy 4.98 million tonnes of US soybeans and 20,000 tonnes of US soyoil in calendar year 2006.

 

The soybean purchase agreements, which were signed during a ceremony at the Chicago Board of Trade, are the first in a series of signings the Chinese delegation will make as they visit the US Additional contract agreements will be signed for further purchases in Minnesota on Friday, and Washington DC on Monday.

 

The 13 companies comprising the delegation represent 67 percent of the soybean purchasing power of China.

 

The contract signings represent new purchases to be delivered by the end of the 2006 calendar year. Cao Xumin, president of the China Chamber of Commerce for Import and Export of Foodstuffs, Native Produce and Animal By-Product, said China imported more than 25 million tonnes of soybeans in calendar year 2005, with 12 million tonnes purchased from the US. He anticipates that China's import needs will be greater in 2006 than in 2005.

 

China is the biggest export market for US soybeans, with 14 percent of total US soybean production and nearly 40 percent of total US soybeans exports going to China.

 

Letters of intent were signed between Archer Daniels Midland (ADM) and COFCO International Company and Yihai Investment Company. Louis Dreyfus signed agreements with Jilin Grain Group Import and Export Company and Chinatex Grains and Oils Import and Export Company. Also signing a trade agreement were Zen Noh Grain Corp and Chinatex Grains and Oils Import and Export Company. Guangzhou Green Oil Company and Zen Noh Grain Corp signed letters of intent. Bunge signed letters of intent with Guangzhou Green Oil Company and Sinograin Eastern Economic and Trade Company.

 

In addition to the contractual signings between companies, China and the state of Illinois signed a memorandum of understanding to promote agricultural trade between the state and China.

 

Phil Laney, country director-China for the American Soybean Association, said: "The signings demonstrate the Chinese government's commitment to global agricultural trade and this is a very positive relationship for US farmers."

 

The signings are a business relationship, and with heavy competition in world soybean markets, US producers must keep quality up with good oil content in soybeans to remain competitive, he added.

 

When asked if China is conducting similar deals with Brazil and Argentina, Xumin replied that China imported 25 million tonnes of soybeans in 2005 of which 12 million were from the US with Brazil and Argentina supplying the rest.

 

China's soybean imports are for the crushing industry, with 50 percent of the processed soybeans used for poultry feed, 27 percent for swine and 20 percent for aquaculture, said Curt Raasch, president of United Soybean Board.

 

The speedy development of the Chinese economy and its move to a more protein-based diet provides a broad-based market for agricultural and food related products from the US and in particular soybeans, said Xumin.