UPDATE 3-China signs deals for record 13.4 mln T US soy

Fri Feb 17, 2012 4:39pm EST

* Delegation signs record-large US soy purchase agreement
    * Sales of 2.92 mln tonnes confirmed after signings in Iowa
    * Sale comes while Chinese vice president tours U.S.


    By Karl Plume	
    CHICAGO, Feb 17 (Reuters) - A Chinese trade delegation
signed deals to buy a record amount of U.S. soybeans during a
visit to the United States this week at a time when a harsh
drought has slashed crops in rival soy exporters in South
America.	
    The delegation inked agreements for 13.4 million tonnes
valued at $6.7 billion, the U.S. Soybean Export Council said on
Friday, a quarter of the more than 55 million tonnes the world's
largest soybean buyer will import from global suppliers this
year.	
    The deals included 8.62 million tonnes in purchase
agreements signed in Iowa on Wednesday and agreements for
another nearly 4.8 million tonnes signed in Los Angeles on
Friday, the USSEC said in a release.	
    The agreements -- signed during a visit by Chinese Vice
President Xi Jinping -- paired Chinese powerhouses such as
state-owned trading house COFCO Co Ltd and grain reserve manager
Sinograin with the likes of Archer Daniels Midland,
Bunge Ltd, and Cargill Inc, among others.	
    The deals, which are not technically sales but often lead to
confirmed sales, come as U.S. farmers begin preparing to plant
their 2012 crop amid thin stockpiles and as South American crop
prospects shrink following a drought.	
    The U.S. Department of Agriculture on Friday confirmed the
sale of 2.92 million tonnes of U.S. soybeans to China, a
single-day sales record which traders said were the product of
Wednesday's signings, helping to rally soybean prices on the
Chicago Board of Trade to four-month highs.	
    Additional sales confirmations could come in the days and
weeks ahead as exporters finalize purchase terms.	
    Almost all of the soybeans in Friday's record sale, 2.75
million tonnes, would be delivered in the marketing year that
opens on Sept. 1.	
    "This soybean purchase is just an example of what's become
an ongoing trend. As we see China's economy expand, that is
going to require greater imports of foodstuffs," said Sterling
Smith, analyst with Country Hedging.	
    "The Chinese are going to continue to be hungry for beans
and we are in no way holding a big bean carryout. This is going
to increase demand for (U.S.) acres going forward and that is
going to create upward pressure on row crops," Smith said.	
    	
    STRONG CHINESE DEMAND	
    The sale announced on Friday was worth around $1.4 billion,
based on current prices. The previous record for the largest
sale of U.S. soybeans was 2.74 million tonnes, also to China, on
Jan. 27, 2011, according to data from the USDA.	
    "These are big numbers and it tells you the seriousness of
China pricing," said Don Roose, analyst and president of U.S.
Commodities in Des Moines, Iowa. "That is a big number for a
new-crop bean sale."	
    Chinese importers often book large purchases of soybeans up
to a year in advance as a growing and increasingly urban middle
class increases the need for higher quality food.	
    Its advance purchases of yet-to-be-planted U.S. soybeans
were, to date, considerably smaller than last year. But more
new-crop sales are expected in the coming weeks and months.	
    "They are always buying about a year in advance. I see their
appetite for beans still holding every bit as strong or maybe a
little bit stronger than it was last year," said Mark Schultz,
chief analyst with Northstar Commodities.	
    To date, China has purchased nearly 3 million tonnes of U.S.
soybeans for shipment in 2012/13, compared with more than 5.1
million tonnes at the same point last year, according to USDA
data.	
    USDA will release forecasts for 2012/13 supply and demand at
its annual outlook conference next week, which many analysts
believe will show a ninth consecutive year-on-year increase in
Chinese imports of soybeans.	
    Imports in 2011/12 were projected at 55.5 million tonnes.
Private forecasters have said 2012/13 imports could be up to 59
million tonnes or more.	
    China is the No. 1 market for U.S. farm exports with
purchases that totaled $20 billion last year. Sales are forecast
to be slightly lower this year due to weaker commodity prices.	
    China buys 60 percent of the soybeans on the world market,
including about a quarter of the U.S. crop, and nearly half of
the cotton traded internationally. Analysts believe it will
become a sizable corn importer in the near term.	
    Benchmark soybean futures on the Chicago Board of
Trade rallied to a four-month high on Friday, helped by news of
the record sale, closing 0.74 percent higher at $12.67-1/2 a
bushel.
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