A delegation of commodity importers from China signed agreements on Thursday to buy 12.53 million tonnes of U.S. soybeans. This is one of the largest soybean deals between the two countries, second only to the 2015 frame contract to purchase 13.18 million tonnes of the crop.
The U.S. supplies 36% of the soybeans that China imports, which are then used in feed for its pork, poultry, and fish farming operations. As China continues to expand its agriculture industries, the country’s increased demand will provide more opportunities for U.S. soybean exports to grow.
Some farmers are excited by what the deal could mean for the soybean industry, according to KCCI News in Des Moines. “As an Iowa farmer, this is huge,” said April Hemmes, a farmer who owns a 1,000-acre farm near Hampton in rural Franklin County. “They basically bought the entire production that we have in the state of Iowa.”
However, others in the industry think the deal will have little impact on China’s import volume from the U.S. Since it was signed as a frame contract, there is no set time for when the purchases must take place. While deals like this help establish business relationships that could lead to future agreements, some traders say price and demand will still be the primary drivers for China’s purchasing decisions.