November 5, 2003
Speculation of Huge Wheat Exports to China From US
Yesterday, the Chinese government and American industry officials discussed the condition, size and quality of the U.S. wheat crop, reviving grain market rumors that China may start making big purchases of wheat.
But lack of confirmation of buying interest or a sale pushed wheat prices for December delivery at the Chicago Board of Trade down to $3.63-1/2 a bushel at the close on Tuesday, down 1-1/2 cents and 6 cents below the morning high.
Officials of Sinograin, the agency that manages China's grain reserves, met with U.S. Wheat Associates leaders, said Dawn Forsythe, spokeswoman for the group that promotes exports of American wheat.
"It was a fact-finding mission" for Sinograin, with the Chinese officials asking about this year's U.S. wheat crop and discussing Chinese grain stocks, Forsythe said.
Sinograin officials expressed desire to buy American wheat any time soon, Forsythe said, "We need more discussions."
U.S. wheat prices see-sawed on October 27 amid similar rumors about Chinese demand. China had bought 67,000 tons of U.S. wheat the prior two weeks and exporters reported rumors that it may be canceling its own wheat exports.
Rumors soon flew that China could have bought up to several million tons of wheat from the U.S., Canada and Australia. Chinese traders dismissed the talk, saying soaring freight rates alone would not permit such a sale.
But some traders in China also said the government might have bought one or two cargoes of U.S. soft red winter wheat due to falling stocks after five years of short crops.
Two days later, the U.S. Agriculture Department confirmed a sale to unknown buyers of 200,000 tons of U.S. SRW wheat.
The Chinese delegation was in Kansas City, Mo., on Monday and is supposed to go to New Orleans later on Tuesday before traveling to Brazil, Forsythe said.
Following the meeting with U.S. Wheat Associates, the Chinese delegation was scheduled to go to the U.S. Department of Agriculture to meet with Foreign Agricultural Service grain specialists, economists and grain-quality experts.
USDA officials were not immediately available for comment on Tuesday's discussions.
Scheduled in early December, Chinese Premier Wen Jiabao will visit the United States amid increasing pressure by the Bush administration that Beijing buy more American goods.
His visit has sparked some speculation in the U.S. agriculture community that Chinese purchases of American wheat could be announced in the run-up to Wen's arrival as one way to placate the Bush administration.
While the White House is hoping China buys more American manufactured goods to boost a U.S. economy that has shed millions of manufacturing jobs, farm sales represent an important aspect in the two countries' trade relationship.
Besides hopes for wheat sales to China, American exporters are enjoying rip-roaring U.S. soy exports.
In the first two months of the U.S. marketing year that began on September 1, China bought more than 4.4 million tons of U.S. soybeans, nearly doubling last year's pace. The sales have helped boost U.S. soybean prices to six-year highs.