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China's thirst for US crops seen undimished by row
(Thursday, Nov. 20, 2003 -- CropChoice news) -- The following two articles deal with China, trade and agricultural products.
1. By K.T. Arasu
The growing affluence and incomes of China's 1.3 billion people and their steadily changing diets to include more meat products continue to fuel its demand for U.S. crops, the analysts said. At this time of year, the United States is also the main exporter.
"I suspect they will not (stop buying U.S. crops), although they do a good deal of political posturing by running something up the flag pole to slow things down in the short term," analyst Allan Dever of Doane Agricultural Services said of China's moves.
China abruptly canceled trips to the United States by teams of buyers of U.S. soybeans, wheat and cotton in what the markets saw as retaliation for U.S. import quotas on Chinese clothing announced by Washington early on Tuesday.
Expectations had been high China would buy a large quantity of wheat as a gesture of good will before its Premier Wen Jiabao visits the United States in December, and in an attempt to trim Beijing's huge trade surplus with Washington.
"They had promised to buy one million metric tons of (U.S.) wheat and it looks like this is not going to happen," said grains analyst Dan Basse, president of research firm AgResource Company, alluding to market talk of China's wheat purchase.
China had already bought huge amounts of U.S. soybeans and cotton this fall, along with other commodities like soybean oil and hides for its big tanning and leather industry.
Jolted by China's moves, big speculators stampeded out of the Chicago grain markets as well as New York cotton futures.
CBOT wheat for December delivery closed 24-3/4 cents a bushel lower at $3.63-1/2, down 11 percent from the 12-month high at $4.08 traded late last week amid China buying rumors.
CBOT January soybeans plummeted 28-1/4 cents at $7.48-3/4, down about 5 percent before the China visits were canceled. At the New York Cotton Exchange, December cotton eked out a gain of 0.30 cent a pound at 71.53 cents after falling sharply on Tuesday after the U.S. tariffs were announced.
The U.S. action also battered the dollar in international trading on fears of growing U.S. protectionism against China, which operates a huge trade surplus against the United States.
U.S. Commerce Secretary Don Evans said the quotas affected a "very, very tiny" portion of overall U.S.-China trade and the United States was willing to sit down with Chinese officials "to see if there were other ways of dealing with the issue."
Basse of AgResource said the trade dispute "would not be anything lasting" because of the size of bilateral trade.
"The markets are also sending a strong message to the Bush administration that it would not stand for protectionist measures, like those on textiles imports from China," he said.
Grains analysts said China's shrinking grain stockpiles also leave the country little choice but to become an importer of wheat and corn, crops it now exports.
Exporters said there was no other place than the United States that China could go to for soybeans, at least for the next four months until South American soy is harvested.
2. China US soybean imports to survive trade row
China buys nearly half of its annual soybean imports from the United States and traders said they had no indication that Beijing would stop encouraging importers to buy soybeans from the United States instead of South America.
"With or without a trip, the business has been done," said a trader at an international house based in Beijing. "I don't see the point of getting excited or disappointed about the trip."
In Chicago overnight, soy contracts plummeted on news that a delegation of Chinese soy buyers had cancelled a visit scheduled for this week due to what they called visa problems.
It sparked fears of a halt in soy buying by China as it coincided with a U.S. Commerce Department announcement of new quotas on Chinese textile imports.
But the traders in and around China said it was still possible that China might buy as much as 10 million tonnes of soybeans from the United States this season after having booked more than seven million tonnes so far.
With Chinese 2003/2004 total needs for soy imports estimated at up to 25 million tonnes, they said it would not be a surprise if 10 million came from the United States, the world's top single producer of the oilseed.
"Because of the tight U.S. supply situation, it (10 million tonnes) may look a little higher than it should be. But otherwise, 10 out of 22 is pretty much normal, I think," said another trader at an international house.
MEAL SOFT
The traders said the trip by Chinese soy buyers, planned ahead of Chinese Premier Wen Jiabao's visit to Washington, would have included a signing ceremony of a letter of intent, but it did not necessarily mean fresh business.
In line with the country's large demand, China has also placed orders for the new South American crop totalling 2.5 million to three million tonnes so far for shipment mostly in April, May and June, they said.
They said, however, their buying had come to a halt for the time being as domestic soymeal prices corrected after a sharp October rally, with margins also being pressured by high Chicago prices and freight rates hovering near all-time highs.
"Meal has softened the past three weeks. Oils prices have stabilised a bit this week," said the second trader. "If you buy today's C&F prices and calculated at today's products prices in China, probably you would be very close to break-even."
In addition to 1.2 million to 1.3 million tonnes of foreign soybeans arriving in China this month, they said, the Chinese government was helping to transport the domestic oilseed from the producing northeast to the consuming south and southeast.
Concerned by a more-than-20 percent increase in grains prices in October, some traders said the government had also provided a large tonnage of domestic beans from its reserve to some crushers in return for a promise to lower soy products prices.
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