The world’s two biggest trading partners in agriculture boosted their soybean business before meeting face to face next week.
Exporters from the U.S., the top producer, reported sales of 482,500 metric tons of the oilseed in two days to China, the largest consumer. That precedes a visit to the U.S. by Chinese President Xi Jinping and his trade delegation. The Asian nation’s imports from around the world soared 35-fold since 1997 as the economy boomed.
The U.S. is the most attractive source of soybeans currently with prices about $10 a ton below rival Brazil, said Roy Huckabay, an executive vice president at Chicago-based Linn & Associates, a commodity analyst and broker. U.S. government data show that exports to China in the 12 months that started Sept. 1 trail the 2014 pace by 53 percent after the Asian nation increased shipments from the South American country in July.
“U.S. soybeans are the cheapest available until March because Brazil is focused on exporting corn after record soybean shipments to China earlier this year,” Huckabay said Thursday in a telephone interview. “U.S. sales are so far behind that China is playing catch-up.”
U.S. shippers probably will agree to sell 4 million to 5 million tons to China during the trade delegation’s visit, mirroring accords in previous years, Huckabay said. These sales carry no specific shipping dates or price and usually are part of the annual trade.
Bunge Ltd., one of the top agricultural processors and traders, will host Xi and the trade delegation at a Longview, Washington, export terminal next week, company spokeswoman Susan Burns said Thursday in an e-mail.
Bunge will attend the signing ceremony for U.S. soybean sales in Des Moines, Iowa, on Sept. 24.
“Whatever the China group agrees to buy next week is what they would normally buy in the course of the year, so it not that important to total demand,” Dan Anderson, a grain broker and analyst at ED&F Man Capital Markets Inc. in Chicago, said in a telephone interview.
Last year, members of the Chinese delegation agreed to buy 4.8 million tons valued at $2.3 billion from U.S. shippers after a trade visit. The Asian nation buys soybeans to make meal for livestock. The country is the biggest pork consumer.
Soybean futures in Chicago have dropped 14 percent this year.