China signs first soybean deal with the US in 2012

This soybean deal is considered to be the biggest ever one-off US soybean purchase with a total value of US$6.7 million and volume of 13.4 million tonnes, based on CCM International’s latest issue of Crop Protection China News.

 

Leaders from several Chinese state-owned grain companies travelled along with Vice President Xi, such as those from China National Cereals, Oils and Foodstuffs Corporation (COFCO) as well as China Grain Reserves Corporation (Sinograin), signed the deal with US grain companies such as Cargill Inc., Archer Daniels Midland Company and Bunge Ltd.

 

According to the United States Department of Agriculture (USDA), the US sold 2.92 million tonnes of soybeans to China just on the same day that the deal was made, 17 Feb., 2012.

China has continuously increased the amount of soybean import in recent years due to the climbing soybean demand from its swelling urban residents.

Farmers and dealers in the US felt very excited when USDA predicted at the end of 2011 that China’s total import amount of soybean in 2012 would reach 55 million tonnes.

And in the next ten years, China’s soybean import amount will increase by 62% over 2012, reaching over 90 million tonnes.

Domestic soybean industry, especially soybean planting field, has become the direct victim in the trade. Under the impact of foreign soybean, domestic soybean, which is with higher price and lower oil content for oil processing, has gradually lost its market share.

As a result of chain reaction, China’s soybean planting area has been largely shrinking since 2010, about 10% less than that in 2009.

Peasants’ planting intention has changed to planting more grain, cotton, vegetables, etc. even though the government has carried out lots of preferential policies for domestic soybean planters.

So far, China still hasn’t permitted GM soybean to be planted in domestic farmland and it is believed not to be permitted in the short run.

Thus, aiming to meet the need of soybean products except for edible soybean oil domestically, Chinese government will continue to struggle to save the decreasing planting areas of domestic soybean and finally seek for a balance between foreign soybean and domestic soybean.