CHICAGO: A delegation of commodity importers from China on Monday signed agreements to buy billions of dollars’ worth of agricultural goods, mostly soybeans, during a ceremony in Iowa, the US Soybean Export Council (USSEC) said on Tuesday.
The agreements, signed at the China-US Sustainable Agricultural Trade Forum, were the first such bulk signings since 2017 between top soybean importer Beijing and the US, the world’s second-largest supplier of the oilseed.
The deals also included corn, sorghum and wheat, the US Soybean Export Council said.
China’s crop import purchases from the US are well below normal this year as Brazil, the world’ largest exporter of corn and soy, harvested bumper crops.
Top US crop merchants Archer-Daniels-Midland, Bunge and Cargill were among the companies that signed 11 purchasing agreements, the US Soybean Export Council said.
The deals were signed as “frame contracts,” which are typically non-binding letters of intent to buy at a later date, without formal sales terms.
“These contracts illustrate the gains from trade: food is moving from surplus regions to deficit,” said Jason Hafemeister, the US Department of Agriculture’s acting deputy undersecretary for trade and foreign agricultural affairs.
As of Oct. 19, soybean purchases by China from the latest US harvest were down 39% from the same time last year, according to USDA data. Its corn purchases were down 73% from a year prior.
“I think this is China saying, ‘Hey, we still want to have strong trade relations over soybeans but this is a year where we’re not going to be aggressively buying American soybeans,’” said Ted Seifried, chief market strategist for Zaner Ag Hedge.
Traders will be looking for confirmation of sales from the US Agriculture Department in coming days, Seifried said.
Chinese soybean buyers attending a large US soy export conference in August said that they do not see import volumes growing much more in the coming years as demand for the ingredient that is mostly used to make animal feed stabilizes.
China recently made rare purchases of US soft red winter wheat, however, after rains damaged the quality of the Chinese harvest.