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China inks the first soybean deal with the US in 2012

China inks the first soybean deal with the US in 2012 during 15 Feb. to 17 Feb., 2012 when Chinese Vice President Xi Jinping made a visit to the US. This soybean deal is considered to be the biggest ever one-off US soybean purchase with a total value of USD6.7 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 soybean 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.

Although China also imports soybean from other countries every year, such as Argentina and Brazil, the expectation of output reduction in South America in 2012 due to severe drought forced China to seek more help from the US. It is predicted that the soybean volume that China will import from the US in 2012 will account for a large part of the total import amount.

Besides soybean, China will also largely import other agricultural produces from other countries. "With the implementation of the strategy of domestic demand expansion during the 12th Five-Year Plan (2011-2015) period, the consumption power of Chinese residents will be further released. Thus the total value of import products will reach USD8,000 billion and that of agricultural produces will account for a large part of it. " said Yu Jianhua, Assistant Minister of the Ministry of Commerce.

However, on the other side, the large import amount of agricultural produces has frustrated domestic agricultural planting, even if it indeed meets the demand from related domestic industries and residents.

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.

Source: Crop Protection China News 1204 ...

by S. C.
12 march 2012, World News > Asia