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China commits to buying billions of dollars worth of soybeans

This news story was published on February 16, 2012.
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Gregg Hennigan, The Gazette, Cedar Rapids, Iowa –

DES MOINES —Chinese buyers made commitments Wednesday to buy $4.3 billion worth of U.S. soybeans in the upcoming market year.

The event in Des Moines was part of Chinese Vice President Xi Jinping’s visit to Iowa, although he was not present.

The U.S. tour is to conclude in Los Angeles this week, and officials said more agreements signed there are expected to lead to a new record for soybean commitments in one signing trip.

The intentions to purchase – they are not contracts – from 15 U.S. companies include a volume of 8.62 million metric tons, or 317 million bushels, of soybeans. The Los Angeles deals are expected to push the total past 12 million metric tons, topping the record of 11.6 million set in January 2011.

The soybeans will be a mix of old and new crops.

“China has been a great trade partner and a key customer of Iowa soybeans, and this agreement shows a commitment on both sides to continuing that relationship,” said Bill Northey, Iowa’s secretary of agriculture.

The conference and signing ceremony was hosted by the Iowa Soybean Association, U.S. Soybean Export Council, United Soybean Board and the American Soybean Association. It was attended by representatives from the soybean industry, Iowa and federal governments and Chinese officials.

Don Roose, president of West Des Moines-based U.S. Commodities Inc., a grain and livestock investment firm, said what the signing ceremony represented was probably more important than the actual volume involved.

“It’s kind of a symbolic gesture of a business relationship,” he said, “and business is solid.”

Iowa is the nation’s leading soybean producer, and nearly 27 percent of soybeans produced in the U.S. in 2010 were exported to China, at a value of $12 billion.

“One row out of every four of those (planted soybean rows) will be exported to China,” said Steve Wellman, president of the American Soybean Association. “That’s a lot of soybeans.”

Shao Bin, director of a Chinese investment company, said increasing demand for vegetable oil and protein is driving the market for soybeans.

Other Chinese officials spoke of the importance of cooperation between the two governments and avoiding obstacles to trade.

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