April 10, 2006
China Commits To U.S. Soybeans
The U.S. Soybean Export Council and the Illinois Soybean Association hosted a special delegation of Chinese soybean processors at the Chicago Board of Trade last week. During the visit the Chinese delegation signed a letter of intent with U.S. soybean exporters at the Chicago Board of Trade April 6 to demonstrates the commitment of the Chinese industry to continue purchasing U.S. soybeans.
Leading the delegation of 13 Chinese companies is Cao Xumin, President China Chamber of Commerce for Import/Export of Foodstuffs, Native Produce and Animal By-Products. Others on hand for the agreement-signing will be Illinois Lieutenant Governor Pat Quinn; Curt Raasch, United Soybean Board president; Rick Ostile, first vice president of American Soybean Association; and Phil Laney, American Soybean Association, country director-China.
China is the number one export market for U.S. soybeans with 435 million bushels, more than 40 percent of total U.S. exports, sold to China in the last marketing year. The delegation currently visiting the U.S. represents 67 percent of those 435 million bushels. Since 2002, the value of China’s agricultural imports has more than doubled, with soybeans accounting for 30 percent of the increase.
While visiting the United States the delegation also met with industry representatives, state and federal government officials, to gain better understanding of the U.S. soybean industry and promote better trade relationships between the U.S. and China.
Including soybeans, the Chinese trade mission signed $4.4 billion worth of contracts for “Made-in-America” products. Dow Jones Newswires reports that the soybean portion of the purchase includes 4.98 million tonnes of soybeans and 20,000 tonnes of soyoil during the current calendar year.
One of the lead Chinese trade negotiators said after the signing of the agreement that China expects some trade friction with the United States, but views stable economic ties as crucial. Meanwhile, the Bush administration is pushing China to act as a more “mature trading partner,” according to USTR Rob Portman. That goal – to make sure China plays fair by international trading rules – will be tested this week when U.S. and Chinese officials convene a senior-level dialogue aimed at easing economic tensions between the two powers.The April 11 meeting, to be held in Washington, will set the stage for Chinese President Hu Jintao’s visit to the United States next week.
Despite the progress shown on trade through pacts such as last week’s soybean agreement, the Bush Administration is remaining vigilant on resolving substantive issues that is feels have been elusive. U.S. officials have begun to damp expectations for any breakthrough on their priority objectives –– such as widening access to China’s domestic market and stiffening China’s enforcement of intellectual-property rights –– when the Joint Commission on Commerce and Trade formally meets.
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Senators Attach Ad Hoc Ag Disaster Spending To Supplemental Bill
The Senate Appropriations Committee last week approved about $4 billion in agricultural disaster money as part of a massive spending bill designed to pay for the Iraq war and Hurricane Katrina.
Highlights of the bill include:
- Crop quantity and quality losses – Farmers who lost 35 percent of their crop are eligible for a payment of 50 percent of the crop’s value. For quality losses, a payment of 50 percent of the crop’s value will be paid on 65 percent of the affected crops;
- Supplemental energy payments – All producers of program crops will receive a payment equal to 30 percent of the direct payments they receive under the 2002 farm bill. This assistance is aimed at offsetting rising prices for energy; and
- Additional Farm Service Agency personnel – The legislation provides additional funding to the FSA to expedite the administration of the disaster program.
Brazil Crop Update
Several Brazilian soybean production forecast have been issued recently. The most recent was Brazil’s Institute of Geography and Statistics (IBGE) at 55.9 million-tonne forecast published April 6. This was down 1.4 million tonnes from its early March forecast. On April 4, the Ministry of Agriculture’s supply agency (CONAB) forecast Brazilian soybean production at 55.7 million tonnes, which was 1.5 million tonnes below its late March forecast. Dry weather in pockets of Parana, Bahia and Mato Grosso do Sul, coupled with Asian soybean rust in Mato Grosso and elsewhere led to the lower crop estimates.
Meanwhile, Brazil’s Association of Oilseed processors (Abiove) also issued its forecast of 57.4 million tonnes, down 200,000 tonnes from its previous forecast outlook. Abiove also pegged its soy crush estimate for 2006-07 at 29.4 million tonnes. Low domestic prices and an unfavorable currency exchange between the U.S. dollar and Brazilian real have led soy farmers to hold onto some of the newly harvested crop.
Brazil’s harvest was expected to be about 60 percent complete by April 7, which would be slightly behind last season’s 63 percent but equal to average. The harvest was reported 49 percent complete as of April 3, which was about equal to average and last season. Mato Grosso harvest was 80 percent complete, Parana 70 percent, Mato Grosso do Sul 66 percent, and Goias had 47 percent harvested. Rio Grande do Sul soybean harvest was 8 percent complete, which is normal.
Soy Complex Higher On Weak Sales From Brazil And Argentina
The soy complex closed higher on April 6 reflecting a lack of Brazilian producer selling and the Real trading near recent lows. There have been reports that the Argentine sales also have been slow. May bean futures closed up $0.92 finishing at $207.23; July was $0.73 higher, closing at $212.38; and August gained $1.56 ending at $214.49. May meal was up $0.44, closing at $190.37; July was $0.33 higher, finishing at $192.79; and August increased $0.22 to finish at $194.34. May oil closed $6.61 higher to finish at $499.78; July was up $6.39, closing at $509.04; and August gained $6.39, ending at $512.57.
