China, the world’s biggest soybean importer and consumer, signed agreements in Iowa to purchase 8.62 million metric tons of the oilseed from U.S. suppliers in a deal valued at $4.3 billion.
Soybeans will be supplied by companies including Cargill Inc., Archer Daniels Midland Co., Bunge Ltd. and CHS Inc., Iowa Soybeans Association Chief Executive Office Kirk Leeds said today in Des Moines, Iowa, during a U.S.-China trade cooperation conference. Iowa Governor Terry Branstad is hosting a two-day visit by Chinese Vice President Xi Jinping, 58, who is slated to become president in March 2013. Iowa is the biggest U.S. producer of corn, soybeans, hogs and eggs.
“It is phenomenally important to have Vice President Xi here because it says that Iowa is an important place to do business,” Leeds said yesterday in an interview. “These agreements are the direct result of activities by U.S. soybean groups in China since 1981 to promote soybean-meal demand in livestock, chicken and aquaculture feed.”
China became the largest buyer of U.S. farm products in 2010, and last year boosted purchases to $22.17 billion, U.S. Department of Agriculture data show. The nation purchased 20.6 million metric tons of soybeans from the U.S. last year, or 60 percent of the total shipped overseas. China probably will increase purchases from all suppliers by 62 percent in the next decade to 90 million tons from a projected 55.5 million this year, the USDA said Feb. 13.
“It would take half of the Iowa soybean crop just to feed China’s fish,” said Leeds, who will be traveling to China next month on a sales-promotion trip for the producer-funded organization. “Soybean profitability depends on international demand, especially from China.”
Additional sales agreements may be announced in Los Angeles on Feb. 17, bringing the total for this week above the 11.5 million tons reached during a similar trade visit in Chicago last year, Leeds said. The 2011 deals involved 21 purchase agreements valued at $6.7 billion.
Iowa farm exports to China in 2010 were 13 times larger than in 2000, data from Iowa Department of Agriculture show. Agriculture and related industries contributed 27 percent to the state economy in 2010 and 17 percent of Iowa workforce is employed in producing food.
Soybeans have jumped 5.1 percent this year on the Chicago Board of Trade, partly as hot, dry weather damaged crops in Brazil and Argentina, the two biggest exporters after the U.S. last year. Today, the price reached $12.765 a bushel, the highest since Sept. 27, on speculation that China may increase purchases from the U.S. to rebuild inventories and cushion against any additional adverse global weather later this year.
Earlier today, the government reported U.S. exporters sold China 116,000 tons of soybeans for delivery before Aug. 31.
Chinese and U.S. officials will attend a symposium tomorrow in Des Moines sponsored by the USDA. Chinese companies intend to invest more on advanced agricultural technology and sustainable farming from U.S., Xinhua News Agency reported, citing an interview with Minister of Agriculture Han Changfu, who is accompanying Xi this week on his trip to Iowa.
“The conference will help to improve relationships to achieve mutually beneficial development in the future,” Bill Northey, Iowa’s secretary of agriculture, said in a telephone interview on Feb. 13. “At the end of the day, it’s all about getting business done company to company rather than government to government.”