China wants quality soybeans at a good price
A busload of visitors from China eagerly looked at partially shucked ears of corn and ripening soybeans at the farm of John Heisdorffer’s family near Keota, Iowa, Thursday afternoon.
The group of 23 was halfway through a ten-day tour of five Corn Belt states that ends with a stop at the Chicago Mercantile Exchange next Tuesday. They’re not ordinary tourists. These guests of the U.S. Soybean Export Council and other soybean producer groups buy up to 90% of China’s imported soybeans.
As some inspected the corn, others crowded around Heisdorffer at the edge of his soybeans, firing questions at him through Claudia Chong, an American Soybean Association marketing manager who was translating.
“In my opinion, the quality of the beans exported to China is too poor. The most concern is the FM (foreign material) is too high,” said Cai Qingxian, vice general manager for COFCO Eastocean Oils & Grains Industries Co, Ltd. Even without translation, you could understand the companies Cai was blaming – ADM, Cargill. And the amount of FM in U.S. soybeans has been rising, hitting up to 4.5% last year, he said.
Heisdorffer, a member of the Iowa Soybean Association board, didn’t argue with his guest.
“You have years like last year. It was very wet, and if you’d start pulling the leaves and things, you’ll have some dirt come in. There’s no way you can get away from that,” he said, as he described the combining process.
Heisdorffer and another Iowa farmer, American Soybean Association director Mark Jackson, fielded other questions. Some – What’s the crush margin for American soybean processors? – they couldn’t answer. Others – Why do some U.S. farmers have a $13/bushel break even on soybeans? – they could.
They broke down production costs, including land rents that run from $250 to $500 an acre in southeast Iowa, and herbicides that cost $15 to $20 an acre in Iowa but up to $60 an acre in the Southern states where weed pressure is higher.
“Here, land prices have tripled, from $3,000 an acre three or four years ago to over $10,000,” said Jackson, whose family farms near Rose Hill, Iowa.
How China views America’s soybean crop is crucial. It’s the world’s biggest importer of soybeans and the American Soybean Association estimates that almost 60% of U.S. soybeans go to that nation.
In recent days, ASA has predicted a 5% increase in U.S. soybean exports to China from the crop that will soon be harvested at Heisdorffer’s farm and across the Midwest. Farmers like Heisdorffer and Jackson, told Agriculture.com that they’re optimistic yields may be better than they expected during the summer, helped by late season rain in August.
If that holds up on many farms, any downward pressure on prices would be welcome to COFCO’s Cai, who told Agriculture.com that he expects Chinese imports of U.S. soybeans to fall in 2012 if quality doesn’t improve and prices remain high.
State-owned COFCO is China’s largest food importer and a major crusher. The Chinese crushing industry has struggled with poor margins this year, not only because China’s own soybean production was down about 10% this year, but because earlier in the year the Chinese government had put price caps on vegetable oils, according to Fred Gale, an analyst at USDA interviewed recently by Agriculture.com.