By Jessica Domel
Multimedia Editor
If realized, a new contract between China and the United States will be the second largest deal ever for American soybeans.
A delegation of commodity importers from China signed a deal to buy 12.53 million tons of U.S. soybeans on Thursday, July 13.
The deal also called for the purchase of 371 tons of U.S. beef and pork, according to Reuters.
The combined value of the deal, according to the U.S. Soybean Export Council (USSEC), is valued at $5.012 billion.
“As China’s middle class expands, so does its appetite for protein. More livestock means more opportunity for U.S. soy as a preferred feed ingredient,” Xiaoping Zhang, USSEC country director–China, said before the meeting Thursday.
Last year, Chinese buyers purchased more than 330 million bushels, or nine million metric tons, of U.S. soybeans worth nearly $4 billion.
According to USSEC, exports to China this marketing year have already hit a record of 34 million metric tons, or about 1.25 billion bushels.
“This latest purchasing commitment signifies the strength of the soy industry and the integral partnership between the U.S. and China as the largest global producer and buyer of soy, respectively,” Jim Miller, USSEC chair and Nebraska soybean farmer, said. “International customers have many options. The decision of this Chinese delegation to purchase a large volume of U.S. soy, year after year, is testament to the reliability of the U.S. as a supplier and the continuous improvement and sustainability of the crop.”
Although the near-record deal is cheered by some, others are skeptical as the final prices and shipment dates were not specified in the frame contract, which is typically a non-binding agreement, Reuters reports.
The deal was called “meaningless” and “window dressing” by Charlie Sernatinger, global head of grain futures at ED&F Man Capital.
China is expected to import 93 million tons of soybeans in the 2017-18 marketing year, according to the U.S. Department of Agriculture. That’s up 89 million tons over last marketing year.
Reuters reports total soybean exports from the U.S. are estimated at 58.51 million tons, up from 55.79 million tons a year earlier.
The Chinese delegation was hosted at a soybean trade agreement contract signing ceremony at the Des Moines Embassy Club by the USSEC with support from the United Soybean Board, American Soybean Association and Iowa Soybean Association, in conjunction with the China Chamber of Commerce for Import and Export of Foodstuffs, Native Produce and Animal By-Products.
In September, USSEC will travel to Beijing to celebrate 35 years of U.S. soy in China.