A trade delegation from China will sign agreements in Chicago on Thursday to buy an unspecified amount of U.S. soybeans, the U.S. Soybean Export
Council said in a statement.
U.S. grain analysts said the Chinese team was expected to agree to buy up to 2 million tonnes of new-crop U.S. soybeans, to be harvested this fall for the 2011/12 marketing year.
I don't know if it's anything different from what they would have done anyway, said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.
The team was not expected to make any agreements to purchase corn, analysts and traders said.
The signings will coincide with Chinese President Hu Jintao's visit to Chicago on Thursday and Friday following a state visit in Washington, D.C.
On Monday, the Chinese government kicked off its trade mission in Houston by signing six deals with undisclosed U.S. companies worth $600 million, according to state Chinese media reports.
China is the world's largest soy buyer, and its aggressive pace of purchases has helped drive front-month soybean futures on the Chicago Board of Trade Sc1 above $14 a bushel for the first time since September 2008.
Just over four months into the 2010/11 marketing year begun Sept. 1, sales of U.S. soybeans reached 1.319 billion bushels, with sales to China accounting for two-thirds of the total.
The U.S. Department of Agriculture has projected U.S. soybean exports for all of Marketing Year 2010/11 at 1.59 billion bushels.
However, U.S. soy sales to China have slowed in recent weeks, and poor profit margins among Chinese soy processors prompted traders to cancel two cargoes due for March to May shipment, the China National Grain and Oils Information Center (CNGOIC), an official think-tank, said on Tuesday.
Roose said the Chinese purchase agreements this week would offer only limited support to CBOT soybean futures, given that the signings are viewed by the trade as perfunctory.
It is not anything surprising ... I am sure everything has already been worked out, and this is just kind of a formality, Roose said.
One export trader from a large grain company said representatives from his office would attend the signing ceremony. He said the agreement would state that the Chinese companies will buy a specific amount of U.S. soybeans from a particular U.S. company over a period of time.
The source said the amount would not be for more than anything the Chinese company was already scheduled to buy for that period. It's an agreement that's for show only, he said.
The U.S. Soybean Export Council said the list of companies participating in the signings in Chicago would include COFCO (China National Cereals, Oils and Foodstuffs Corporation), Sinograin Oils, Jilin Grain Group, Bunge, Chinatex Grains and Oils and the Yihai Kerry Group.
Participating U.S. exporting companies include Cargill, Archer Daniels Midland Co (ADM.N) and CHS Inc (CHSCP.O).