A Chinese business group signed agreements Thursday to buy just over 3 million tons of soybeans from the United States worth about $1.8 billion, cementing agricultural trade ties between the two countries.
The delegation, led by Chinese Vice Minister of Commerce Wang Chao, inked 10 deals with U.S. grain companies like Cargill Inc. Archer Daniels Midland Co and Bunge Ltd , and international suppliers like Louis Dreyfus Co.
The group of Chinese businessmen and officials were a part of Chinese President Hu Jintao’s state visit to the United States where the leader of the world’s most populous nation met with President Barack Obama.
The amount of soybeans purchased was bigger than expected by traders, and could support Chicago Board of Trade soy futures when markets reopen later.
“It was a little better than people thought,” said grains analyst Don Roose of U.S. Commodities in West Des Moines, Iowa. He had expected the purchases to total 2 million tons.
“They want to make this significant and not just a token deal because the Chinese president is here and the trade delegation is here,” he said.
Trade sources said the trade delegation would sign more soybean purchase agreements at another ceremony in Chicago, where deals will include non-agricultural goods.
The Chinese government kicked off its trade mission in Houston by signing six non-agricultural deals worth $600 million with undisclosed U.S. companies.
No details on the tonnage, prices or shipment period were announced during the signing ceremony in a Chicago hotel.
But Jim Sutter, chief executive officer of the U.S. Soybean Export Council, said the deals amounted to about 3.07 million tons (about 110 million bushels).
Grain traders said the soybeans were likely for delivery in the 2011/12 (September-to-August) marketing year.
China is the world’s largest soybean importer and the United States is the top exporter.
China is projected to import 57 million tons of soybeans in the 2010/11 marketing year which ends on Aug. 31, including 24 million tons from the United States.
A trader with Sinograin, one of the only two state-owned oilseeds and grains trading firms allowed to import agricultural products into China, said his company signed agreements to buy 600,000 tons.