China makes biggest US Soybean deal ever

China closed its biggest ever US Soybean purchase Friday in a US$6.7B deal equivalent to nearly 50% of last year’s total trade, surprising dealers who had expected a more symbolic transaction.

With a 2nd tranche of deals Friday to buy 8.45M tonnes, Chinese firms traveling as part of President Hu Jintao’s state visit signed up to purchase 11.5M tonnes of Soybeans for delivery over the next year or so, enough to cover China’s total import needs for 2 to 3 months.
While a transaction was expected, traders were surprised by the size of the agreement. Although the bulk purchase does not necessarily mean that China will import more US Soybeans than last year’s 54M+ tonnes, it may be enough to boost prices at the open Monday on the CBOT.

The contracts also underscored the growing importance of US grain exports to the World’s largest country, which is expected to surpass Mexico this year as the 2nd largest buyer of US farm products. China needs to import increasing volumes of protein-rich food to feed its swelling urban ranks.

Several Chinese importers, including Cofco and Sinograin, signed deals with US grain companies such as Cargill, Archer Daniels Midland (NYSE:ADM) and Bunge (NYSE:BG) and international suppliers like Louis Dreyfus.

Grain traders said most of the Soybeans were for delivery in the Y 2011/12 (September-to-August) marketing year, a period in which Chinese companies have barely made any purchases to date.

US Soybean futures climbed to a 30-month high this month on a robust Chinese demand outlook and concerns about crop output in parts of South America, a Key production area.

(Source: http://www.livetradingnews.com/china-buys-record-level-of-soybeans-32693.htm)