China spends $3 billion on US soybean imports

By Philippa Jones

- Last updated on GMT

Related tags: Soybean, Us

China has signed contracts worth nearly $3bn to import US soybeans,
reported the US Soybean Export Council.

The Council said that Chinese buyers signed 27 contracts worth an estimated $2.7bn during a visit to US soybean export companies last week. These contracts will account for 70 percent of the 410m bushels of soybeans US farmers are expected to sell to China during the 2007 market year and are worth more than half of the US Department of Agriculture's (USDA) prediction for China's total imports of the commodity in 2006-07. According to the Export Council, industry experts hinted that more contracts will be signed in the coming weeks. "I had no idea how many contracts would be signed,"​ said Ma Xiuhong, China's vice minister for commerce and leader of the delegation. "It's much more than I expected."​ George Dixon, chairman of the Illinois Soybean Association, said the purchase was more than four times greater than people had predicted before the sale. "We had an understanding of what we might be looking at (in terms of contract value before the sale),"​ he said. "But they bought about four times that."​ Dixon suggested the large purchase was in part a "hedge against bad weather this growing season."​ Bian Zhenzhu, vice president of the China chamber of commerce for import/exports of foodstuffs, native produce and animal by-products, confirmed that market forces would determine the quantity of China's soybean imports, rather than specific government policy. One reason for China's increased need for soybeans is to supply its growing aquaculture sector, which consumes 150m bushels of soybeans annually. "If (aquaculture) continues to grow in the next 10 years as it has the last 10 years, 20 percent of US soy meal could go to aquaculture worldwide,"​ said Eric Niemann, chairman of the United Soybean Board. "We're very confident we'll be able to be a consistent supplier as we have been in the past,"​ he added. A recent report by the European Commission, based on the latest 10-year projections, indicated that China could double its oilseed imports to around 50 million tonnes by 2015-16, accounting for around half of all global oilseed trade. There are therefore huge opportunities for US farmers to benefit from this growing demand. However, they need to ensure that the quality of their soy is good enough for the export market. It is believed that during its latest trip to the US, the Chinese delegation expressed concerns about the declining oil and protein content in US soybeans since 2003 and demanded that US farmers consistently grow high-quality products. The Chinese also wanted reassurance that the US was ready to stop soy prices rising exponentially on the back of increased demand for soy to turn into biofuels. The US is hoping that soybeans will gain back some growing acres from corn next year and that an even greater supply of soy will help keep prices down.

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