A Chinese delegation visited Des Moines July 13 to sign contracts to buy a total of 12.53 million metric tons of U.S. soybeans. The purchase of 460.3 million bushels is about 11% of the projected 2017 U.S. harvest and the second-largest purchase agreement ever in what has become an annual event in Des Moines. China is the world’s biggest customer for U.S. soybeans.

The contract signing ceremony was sponsored by the U.S. Soybean Export Council (USSEC), with support from the United Soybean Board, American Soybean Association and the Iowa Soybean Association. The Chinese delegation was led by Bian Zhenhu, president of the China Chamber of Commerce for Import and Export of Foodstuffs. The buyers represented 11 Chinese companies, as two dozen contracts were signed with U.S. grain firms.

With the world’s largest swine herd and a growing middle class that’s eating more meat and consuming more protein, China remains the No. 1 customer of U.S.-produced soy. China buys more than 60% of all soybeans exported worldwide.

Why China likes to buy U.S. beans
“The U.S. soy industry has a rich, 35-year history working with Chinese processors,” says Xiaoping Zhang, USSEC country director in China. “Last week’s signing ceremony symbolizes the value of U.S. soybean farmers and their 2017 crop, before it is even harvested. This is evidence of the enhanced trade between the two countries.”

China’s preference for U.S. soy is attributed largely to U.S. Soy Advantage, a program demonstrating the attributes of U.S. soybeans. Those are exceptional composition and quality, a consistent supply, and a sustainable product, says USSEC Chairman Jim Miller, a Nebraska farmer. “U.S. soybean farmers have done an exceptional job of rising to meet the demands of global customers,” he says. “This commitment shows us our global customers are taking notice.”

Taking notice, indeed. The Chinese participants traveled 7,500 miles to attend the ceremony in Iowa. “We buy U.S. soybeans because they are sustainable and backed by reliable support,” says Chinese delegation member Jeffrey Xu, a participant in the contract signing. Representing the Shanghai branch of a Chinese company, Xu says China’s demand for U.S. soybeans is continuing to rise.

U.S. beans known for quality
“We see the U.S. soybean for its quality, especially protein content. When protein is higher, we have better quality. That’s why we prefer to import U.S. soybeans,” says Xu.

While this year’s 12.53 million tons is a huge pile of beans, the largest total amount ever in purchase agreements at one of these events occurred in 2015 when Chinese importers signed contracts to buy 13.18 million tons of U.S. soybeans.

At the July signing ceremony, Iowa Agriculture Secretary Bill Northey emphasized that the effects of Chinese purchases are far-reaching. “The first thing you think about is how these purchase agreements would impact folks on our farms,” says Northey. “Demand has grown over the last 20 years as China continues to buy more soybeans. The number of bushels they buy ends up being a much larger number than it used to be, and it sometimes surprises farmers.”

Northey says the trade relationship between China and the U.S. can’t be overstated. “Without the China market for our soybeans and other ag products, we’d be in much tougher shape on the farm,” he says. Other ag products the Chinese agreed to buy at the July 13 contract signing ceremony include 371 million tons of pork and beef. The entire purchase, including soybeans, tops $5 billion.

Trade with China important
The 460 million bushels of U.S. soybeans the Chinese signed to buy is roughly 80% of last year’s record Iowa soybean production. “The Chinese market in recent years has made a huge difference in demand for our soybeans,” notes April Hemmes, an ISA board member attending the ceremony. She says China has probably made at least a $2 to $3 dollar per bushel difference in the price of beans on her farm.

Whether soybeans arrive in China by ship as whole beans or in the form of red meat produced in the U.S., helping feed that nation’s 1.4 billion people benefits Iowa farmers, says Hemmes, who farms near Hampton in north-central Iowa. USDA is projecting a record 2.1 billion bushels of soybeans will be exported this year by the U.S., and more than 1 billion will go to China. As soybean meal fed to livestock, 60 million bushels of U.S. beans were exported via red meat to China in 2016.

“The Chinese market is very important,” says Hemmes, who recently returned from a USB trade mission to China. “China is urbanizing and its citizens are becoming more affluent. They want more protein to eat, which means more soybeans.”

China has big appetite for soy
Wang Yunchao, general manager of COFCO, a Chinese oilseed and feed corporation and China’s largest oilseed processor, says protein and vegetable oil consumption in China is rising at a fast pace. China imported a little over 3 billion bushels of soybeans in 2016. He expects China’s imports to reach 3.3 billion bushels this year. “Consumption of protein in China is growing. I’m optimistic it will continue.”

Tom Oswald, a northwest Iowa farmer and a USB director, points out that Iowa has cultivated a 30-plus-year friendship with China, now Iowa’s fifth-largest market for exports. That longtime effort was spearheaded by former Iowa Gov. Terry Branstad, now ambassador to China.

“The Chinese people respect and like Iowans,” notes Oswald. “Chinese visitors come to Iowa farms and are interested in learning about how we farm and what we are doing to advance sustainable practices and protect the land. They like our former governor, Terry Branstad. Iowa now has a lot in our favor that is going on with China; they are a good customer of ours. The strong friendship Branstad has with his longtime friend and president of China, Xi Jinping, is certainly helpful. Relationships matter in agriculture and international trade, and we are building on that.”