November 17, 2003



China To Trumpet Its Enormous Purchase of US Soybeans

China, in an attempt to dim the harsh spotlight on its huge trade surplus with the United States, will trumpet its hefty purchases of U.S. soybeans at an industry meeting in Chicago next week, traders said last Friday.


They said a 30-member delegation from the world's top soy buyer accounting for nearly one-third of global imports, will also sign agreements with U.S. companies at the gathering on November 21 to highlight their dominant role in the U.S. soy market.


Steve Censky, chief executive of the American Soybean Association which is hosting the event, said he was uncertain if any purchase agreements would be signed.


But a grain trader whose company would be among other trading firms attending the gathering said Chinese private sector executives would indeed sign purchase agreements.


"They will be signing some agreements with us on existing contracts to show how (many) beans they are buying from the U.S.," he said.


He declined to reveal the value of the contracts, but added that China was concerned with criticism over its trade surplus with the United States, projected at $120 billion this year.


A grain industry source said the Chinese delegation was not expected to ink any wheat purchase deals since its members, including those from National Cereals, Oils and Foodstuffs Import & Export Corp. (COFCO), were from the soy sector.


Chinese demand for U.S. soybeans since this year's marketing season began on September 1 has been red hot. China purchased 6.35 million tons up to November 6, compared with 2.66 million tons in the corresponding period of the 2002 season.


A weekly report from the U.S. Agriculture Department issued on Friday stated that China bought 406,000 tons of soybeans from the United States last week alone.


China's voracious buying coupled with the smallest U.S. crop in seven years has pushed prices to seven-year highs. The country is projected to import a record 22 million tons in the 2003/04 season ending August 31.


Censky said COFCO and private sector soy processors would attend the Chicago meeting. State-owned grain trader COFCO is one of two agencies authorized to export corn from China.


"They are very sensitive to the trade imbalance and want to come over and highlight what a major purchaser (of soybeans) they are, being the largest export market for U.S. soybeans." said an industry source familar with the Chicago meeting.


Chinese Premier Wen Jiabao will visit the United States early next month, and will resolve concerns over China's recent attempts to slow soybean imports from the United States in a bid to keep domestic prices stable.


"There have indeed been some problems in the trade due to a lack of transparency and some management of trade issues that we hope don't occur again in the future," he added.

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