Delegations sign record-setting soybean deals
Updated: 2012-02-17 09:39
DES MOINES, Iowa - A Chinese trade delegation signed agreements with US grain companies on Wednesday to buy 8.62 million metric tons of soybeans from the United States and will ink more deals on Thursday for a record-setting purchase topping 12 million metric tons.
Chinese powerhouses like COFCO Co, the country's largest State-owned grain trading house, and Sinograin, which manages State grain reserves, signed deals in Des Moines, Iowa, with companies such as Archer Daniels Midland, Bunge and Cargill.
The Chinese delegation was expected to sign more purchase agreements in Los Angeles on Thursday, which would bring the total amount to a record of more than 12 million metric tons, said Kirk Leeds, director of the Iowa Soybean Association.
The soybeans will come from supplies harvested last fall and the crop that will be planted this spring. The value of the purchases in total will be around $6 billion.
At a similar event last year, Chinese companies signed deals to buy 11.56 million metric tons of US soybeans valued at $6.68 billion in what was the largest one-off purchase of US soy in history at the time.
The deals, signed after trading at the Chicago Board of Trade had ended for the day, were cheered by grain traders.
"This is a little surprising," said Rich Nelson, director of research at advisory firm Allendale. "They had previously made announcements that they would not be buying as much as last year," he said.
Droughts in Brazil and Argentina have prompted private importers in China to turn to the United States for additional supplies.
Bian Zhenhu, president of China's Chamber of Commerce of Foodstuffs and Native Produce, said improved relations between the world's two top economies was key to promoting more trade.
"I personally wish there was more common ground and mutual respect for the trading relationship," he said.
Michael Scuse, acting under secretary for farm and foreign services, said Sino-US trade ties, even in agriculture, faced many hurdles and cited problems related to US efforts to export to China products such as beef, apples and strawberries.
"There is a list of products we would like to get into China. They have a list. It is very important that we continue to have dialogues and discussions and build relationships," Scuse said.
"As the incomes in China continue to grow, the demand will continue to grow, and not just for soybeans but for other products as well," he said.