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China to buy 5.5 million metric tons of U.S. soybeans

China to buy 5.5 million metric tons of U.S. soybeans

Chinese officials sign deals for some $3 billion worth of U.S. soybeans. ASA official explains significance.

On Monday, Chinese officials signed agreements pledging to buy over 5.5 million metric tons of U.S. soybeans.  At current prices, the deals are worth almost $3 billion.

The signing ceremony was held at USDA headquarters in Washington, D.C., where Agriculture Secretary Tom Vilsack attended.

“The U.S.-China trade relationship continues to flourish, thanks in large part to agriculture,” said Vilsack. “U.S. farm exports to China have grown nearly tenfold over the past decade, from $1.5 billion in fiscal year 2000 to $15 billion in 2010. With each $1 billion in exports supporting 8,000 jobs, that $15 billion supports nearly 120,000 U.S. jobs.

“Last year, China became the second largest export market for U.S. agriculture overall and remained the largest market for U.S. soybeans, with 2010 sales of $9 billion.

“China will continue to be a key trading partner as agriculture contributes to President Obama’s goal of doubling total U.S. exports over the next five years.”

Also at the signing: Alan Kemper, western Indiana farmer and First Vice-President of the American Soybean Association (ASA). Kemper – who has just returned from China and Korea for soybean quality conferences -- spoke with Farm Press on Tuesday morning. Among his comments:

Can you explain a bit more about the quality conferences?

“Through the University of Minnesota, ASA conducts an annual soybean quality survey. I believe about 9,000 sample kits were sent out around the country and some 2,000 kits came back.

“Those samples are tested for quality of soybean oil and protein. Those results are released to the countries that buy soybeans from us.

“That’s what we were doing in China and Korea. We do that for the crushers and importers as well as tofu manufacturers.

“The quality of U.S. soybean this year was good and average. There were no super-bright stars and no real negatives.”

When you went over there was the deal with China already in the works?

“It was percolating before we left. The Chinese delegation actually left China and came to the United States the last day we were in their country. They traveled through Indiana and Illinois, touring farms and talking to farmers.

“So, it was in the works. But we never know exactly how much they’ll purchase at once.  This time, I believe they signed a commitment for $2.8 billion worth of U.S. soybeans.”

Did the amount surprise you?                                                  

“Actually, no. We’re a good supplier and have been in China for over 30 years with our offices. They look for reliable sources for soybeans and they see us as that.

“I think this buy equates to between a fourth and third of China’s purchases for a year.

“The significance of this is that Agriculture Secretary Vilsack cleared his schedule so he could be a part of the signing ceremony. The Chinese delegation was led by the Vice-Chairman of their Commerce Department. That put the signing up another notch, or two.”

Impact for farmers here in the States?

“I can’t comment on market prices.

“But for the fifth straight year soybeans have been a record export for the United States. We’re on track for another record year.”

What about Korea?

“We sell a lot of soybeans into Korea for tofu as well as crushing. They’re a steady customer, although not nearly on the scale of China. China is trying to provide their people with more protein through livestock and aquaculture. That’s good for our soybean farmers.”

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