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| 30. August 2004 China Assures U.S. Officials That Import Regulations Will Not Hinder Soybean Trade Two Bush administration officials met last week with China‰s ambassador to the U.S. in an effort to deal with several lingering trade issues. The biggest trade issue over China‰s Decree 73. Decree 73 was issued in late June by China's quarantine and inspection agency, the State General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), which extended the validity of China's quarantine inspection permits from three months to six months š a policy change that USTR said was agreed to by China during meeting in April 2004 of the U.S.-China Joint Commission on Commerce and Trade. USDA Secretary Ann Veneman and U.S. Trade Representative Robert Zoellick recently wrote several Chinese officials about a number of trade issues. Veneman and Zoellick wrote: "We seek your assistance in ensuring that the important soybean trade between our two countries is not disrupted. Given that China has not yet notified Decree 73 to the WTO, we respectfully urge you to consider suspending or rescinding the Decree (other than the extension of QIP validity to six months) until China can notify a revised version to the WTO and consider the comments of Members. This step would relieve the concern of exporters who have been confused by the Decree‰s purpose and effects." USDA Under Secretary J.B. Penn and U.S. Chief Agriculture Negotiator Allen Johnson met with China‰s ambassador August 26. The two also will travel to Beijing in the coming weeks to discuss bilateral agricultural trade issues, according to the Veneman/Zoellick letter to Chinese Minister of Commerce Bo Xilai, Li Changjiang, minister of AQSIQ, and Minister of Agriculture Du Qinglin. China responded to the U.S. concerns and offered assurances that its new agriculture import regulations "will not interfere with trade in U.S. soybeans and other commodities," according to USDA and USTR. Johnson said in a prepared statement: "The assurances provided by the government of China today should help alleviate the concerns of farmers and exporters as they prepare for the fall harvest and shipping season." "Soybeans are America‰s largest export crop, and China is the largest soybean export market," Penn said. "Continued access to the Chinese market is a high priority for American agriculture, and this administration is working to ensure that China continues to abide by its market access commitments." Despite China‰s assurances, Johnson and Penn said they will continue to request that China rescind a new rule it enacted that requires all contracts for soybean imports and other products be subject to the quarantine entry process and include Chinese quarantine requirements as a contract term. Veneman Says USDA Has No Verification Of Soybean Rust In Colombia Last week there were unofficial reports that Asian rust had been found in Columbia. The reports had many producers worried because once the fungus crosses the equator wind patterns could continue to push the fungus north. However, no official USDA statement on this was released. During a press briefing on August 26 Agriculture Secretary Ann Veneman was asked whether she could confirm that this is in fact the case š that USDA did find soybean Asian rust in Columbia. Veneman said the following: "My understanding of this is that there may have been some unofficial contacts among some researchers in Columbia. As far as I know there has been no verification that soybean rust has been found in Columbia. Having said that, I want to just reiterate that we‰ve been very aggressive in looking at this whole issue. As you know, it has been found in several places in Brazil. We‰ve had researchers reviewing how the rust moves from one area to another, what kinds of pesticides and chemicals it responds to. A lot is unknown about this disease. We do know that it‰s windborne and that the likelihood is š according to the scientists š is that it will continue to eventually move north, which is why we are trying to prepare, the best we can, for the possibility of soybean rust coming into this country at some point. Now this has all been ongoing activity, but at this point I cannot confirm that there was detection in Columbia, although I know that there have been rumors among the soybean producers that that was the case. We have no confirmation of that fact." U.S. Ag Exports Up In 2004 USDA‰s final export forecast for fiscal year fiscal year (FY) 2004 indicates sales are expected to reach $62 billion, $5.8 billion more than last year. This represents the highest sales ever, eclipsing the old record of $59.8 billion set in FY 1996. Canada remains the No. 1 market for U.S. agricultural products with exports estimated at $9.6 billion, followed by Japan at $8.9 billion and Mexico at $8.6 billion. USDA also released its initial forecast for FY2005, placing sales for next year at $57.5 billion. The decline in value from this year is mainly due to increased competition and lower expected prices for cotton, wheat and soybeans. The export volume of major bulk commodities actually is forecast to rise 2.1 million tonnes to 118.7 million tonnes, with increases for corn and soybeans more than offsetting decreases for wheat and cotton. Weather Damage To Canada‰s Canola Crop Alberta‰s government crop-insurance agency said a hailstorm on August 24 caused "catastrophic" damage to canola crops in southern and central parts of the Canadian province. The storm pummeled prime growing areas where ripe canola was ready for harvest and damage is expected to be "significant." Fields were covered in hail as deep as 20 centimeters (8 inches), wiping out some of the "best crops" farmers have seen in the three years, according to Calgary Herald newspaper reports. Over the previous week there was frost damage reported in portions of the eastern Saskatchewan and Manitoba canola crop, which also is still flowering. Assessment of that damage is still being conducted. The hail and frost concerns in Canada‰s canola area have moderately supported soybean oil prices. If the frost and hail were to seriously damage Canada‰s canola crop, there is potential that canola oil exports to the United States could be curbed to some extent and, consequently, U.S. end users would turn to soybean oil. Soy Complex Mostly Lower As Newly Harvested Beans Hit Market The soy complex closed mostly lower on August 26 as spot basis levels dropped sharply in some interior locations amid the arrival of newly harvested Southern beans. Soybean meal futures posted larger losses than soybeans as soybean oil futures edged higher and the oil share continued to climb amid ideas that oil yields would be reduced by cool temperatures. September bean futures closed down $2.39, finishing at $226.61; November was $2.20 lower, closing at $222.85 and January lost $2.30 ending at $224.78. September meal was down $9.04, closing at $204.81; October was $5.29 lower, finishing at $196.43 and December decreased $4.19 ending at $197.75. September oil closed $5.95 lower to finish at $549.39; October was up $0.44, closing at $539.02; and December gained $2.87, ending at $526.68.
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