June 2, 2004

China To Continue Buying Soybeans From Argentina

China plans to continue buying soybeans from Argentina, easing concern here that shipments of the country's main agricultural export could decline.

On Monday, Chinese Commercial Minister Bo Xilai told senior Argentine authorities in Buenos Aires that China would keep up purchases of Argentine soybeans, according to a statement issued by Argentina's government.

Xilai met with Argentina's Foreign Minister Rafael Bielsa and the top official for trade, Martin Redrado, in preparation for Argentine President Nestor Kirchner's official trip to China between June 27 and July 3, according to the statement.

The news comes as China turns back more soybean shipments from some trading firms in Brazil because of fungicide contamination. The fresh rejections - other shipments have been turned back in the past year - means that Brazil, the world's No. 2 soybean producer and exporter after the U.S., will likely export less of the product than expected this year.

This raised concern that Argentina could also be affected, as China is the main destination of its soybean exports, taking 86% of shipments.

Redrado said Argentina's soybean exports were on track.

"In terms of quantity, we expect to have the same level of (soybean) exports as last year," Redrado, Argentina's top trade official, said on Tuesday. "Actually in the first quarter they were increasing."

He added that "clearly there will be a decrease in (soybean) prices, but from a quantity point of view (exports) will be the same as last year."

Argentina is the world's third biggest exporter of soybeans, exporting an estimated 11 million metric tons of beans and 25 million tons of soymeal and soyoil each year.

According to local estimates, Argentina is expected to produce between 32 million and 32.5 million tons of 2003-04 soybeans. The U.S. Department of Agriculture expects production to total 34 million tons. The 2002-03 output was 35.27 million tons, according to the Buenos Aires Cereals Exchange.