By Katie Micik
DTN Markets Editor
MILWAUKEE, Wis. (DTN) -- Chinese soybean crushing companies signed agreements to purchase 4.8 million metric tons of soybeans, or 176 million bushels, for a total of $2.3 billion dollars on Monday afternoon.
Ten Chinese crushing companies signed 21 purchasing contracts and agreements with eight U.S. grain companies during a contract signing ceremony that helped open the U.S. Soy Global Trade Exchange, a joint annual meeting of the U.S. Soybean Export Council and Midwest Shippers Association.
Ray Gaesser, president of the American Soybean Association, said this year's contract signing ceremony is about even with last year dollar-wise, but more tons were sold under the contracts because prices are lower than they were a year ago.
"China's our top export market," Gaesser told DTN. While soybean sales to China make up an important part of the market value U.S. farmers receive for their beans, the soybean signing ceremony is a small part of the bigger picture.
"These relationships are long term and have taken more than 30 years to develop. That takes trust," Gaesser said. Twenty years ago, U.S. farmers grew less than 2 billion bushels of soybeans. Now, they're expecting a harvest of 3.8 bb. In the same time frame, South American farmers increased production from around 1 bb to nearly 5 bb in the next crop year.
"We're growing -- more than doubling supply globally -- and demand keeps consuming them all. We give our customers the quality they want, and our supplies help China with their goals of food security," Gaesser said.
Jim Call, chairman of the United Soybean Board, said his grandfather started raising soybeans in 1947. When China first purchased beans from the U.S., Call said his grandfather thought it wouldn't affect the farm.
"But our farm now is directly affected by the trade we do at the end of the day. It is extremely important to us, and to my sons, and I'm sure to my grandchildren if they're farming (down the road)."
Phil Karsting, the administrator of USDA's Foreign Agriculture Service, said he's learned the importance of thanking customers for their business over the course of his career.
"I have two messages I want to deliver today. One is thank you, and the other is congratulations," Karsting said. "It marks another milestone in our trade relations. Our trade relationship is strong, and we are glad to celebrate this development today.
"To the producers in the room: Congratulations. Our producers have really stepped up to the plate to deliver reliable, high-quality products year after year after year."
A representative from China's Chamber of Commerce explained that he hopes the signing ceremony and conference this week will strengthen the two countries' partnership and friendship. With the help of both governments, industry organizations and grain companies, "China-U.S. soybean trade has expanded to a new level, and everyone in this room should be proud of the progress we have made so far, and we should also feel confident about the agreements we will make in the future."
Two other high-profile conferences will focus on export markets and relationships over the next six weeks, including one hosted by the U.S. Grains Council and another by HighQuest Partners.
Katie Micik can be reached at email@example.com
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