By Lin Tan
DTN Markets Editor
DES MOINES, Iowa (DTN) -- Seven Chinese soybean buyers signed agreements here last week to buy 12.5 million metric tons (460 million bushels) of 2017-2018 U.S. soybeans, the second-largest deal after the 2015 agreement.
"This is a deal of 5 billion U.S. dollars," said Xiaoping Zhang, China country director of the U.S. Soybean Export Council.
"They basically bought the entire production we have in the state of Iowa," said Iowa farmer April Hemmes. "To have the Chinese come and basically buy our entire production is huge."
China had imported 66.36 mmt (2,438 mb) of 2016/17 crop soybeans so far. According to China market estimates, there will be more than 23.7 mmt (870 mb) of soybeans on the way to China in the following three months, bringing total imports of 2016/17 crop to 90 mmt, a little shy of USDA estimates.
In its July 12 World Agricultural Supply and Demand Estimates (WASDE) report, USDA estimated China would import 91 mmt of 2016/17 soybeans.
"Soybean exports have become the largest amount of U.S. commodities sold to China," Zhang told DTN after the signing ceremony. "Larger than Boeing aircraft exports."
A May 2017 report "Research on the Relation of China-US Economic and Trade" from the China Ministry of Commerce said, in 2016, the U.S. exported 33.6 mmt of soybeans, 440 aircrafts and 255,000 cars to China, valued $13.8 billion, $12.5 billion, and $12.1 billion respectively. Soybeans ranked first in U.S. exports to China.
While this is a large number of soybeans bought, we need to keep in mind that a Chinese delegation does this same sort of thing here in the United States every year. The fact that it is the second largest, to 2015, is more a statement regarding the continued growth of demand more than the value of U.S. soybeans on the global export market. It is a good start, but certainly continued business will need to be seen as the 2016-2017 marketing year ends (at the end of August) and 2017-2018 begins.
"There are still huge growth potentials for U.S. soybean exports to China in the future," said Hai Xu, counselor for science and technology with the Chinese Consulate in Chicago. Xu also contribute this results of contracts signing to the results of "the 100-Day Action Plan."
Chinese President Xi Jinping and U.S. President Donald Trump had agreed in their first meeting in April this year to carry out a "100-Day Action Plan" under the framework of the U.S.-China Comprehensive Economic Dialogue (CED).
USDA expects China to import more than 94 mmt (3,454 mb) of soybeans in the 2017-18 crop year.
To further facilitate Chinese consumers, "U.S. farmers will also produce higher-quality soybeans for the Chinese market," Jim Sutter, CEO of the U.S. Soybean Export Council, told DTN. "The U.S. Soybean Checkoff had supported several U.S. seed companies in breeding better soybean varieties with higher required animal acid content, which will add value to soybean meal products."
Statistics shows that 62% of U.S. exported soybean went to the China market, added Zhang.
© Copyright 2017 DTN/The Progressive Farmer. All rights reserved.