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Market reaction mixed to China buys of U.S. soybeans

Agriculture.com Staff 04/06/2006 @ 2:12pm

CHICAGO (Agriculture Online) -- The impact of China's soybean purchases announced in Chicago today is getting mixed reviews from market analysts.

A delegation of Chinese soybean importers committed to purchasing 4.98 million metric tons, and 20,000 metric tons of soyoil. The soybean buys are expected to be shipped in calendar year 2006.

Despite Thursday's announced purchases, the amount of Chinese imports of U.S. soybeans so far this year is still 2.0 million metric tons behind a year ago. On December 15, 2005, China had purchased 5.4 million metric tons of U.S. beans.

Last year, total China imports of U.S. soybeans was 12.0 million metric tons.

Mark Pacelli, an independent trader at the Chicago Board of Trade (CBOT), doesn't see the purchases as being earth shattering news for the market.

"It's a photo opportunity," Pacelli said. "It's great they are buying, but they should be buying 10.0 million metric tons not 5.0 million. We need that business bad."

Pacelli added, "China's import progress is a little better than last year but not by much."

Christian Mayer, North Star Commodity Investment Co., sees the Chinese purchase agreements will provide a boost for the market on Friday.

"Anytime anyone is talking about the China and the market it gets people excited. If they are coming into buy, it's going to move the market," Mayer said.

Mayer added, "Because soybean exports are behind year ago, and the market is very bearish beans right now, any kind of good export news is going to help this market quite a bit right now. Plus, the soybean market is trying to bottom out and any kind of good news will help."

The May CBOT soybean futures closed 2 1/2 cents higher after the announcement, at $5.64 per bushel.

"At one point today, beans traded 6 cents higher, and that could have been as a result of this news. I think Friday's trade will get a boost from the soybean sales," Mayer said.

CHICAGO (Agriculture Online) -- The impact of China's soybean purchases announced in Chicago today is getting mixed reviews from market analysts.

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