China hinders US DDGS export drive
China has raised a bump in the drive of the US to export all of its surplus dried distillers grains from their ethanol production to various countries in the world.
The Chinese ministry of commerce has said it will begin an investigation into US dumping of livestock feed on China’s farm market.
From the an US point of view it is considered an international diplomatic game of tit-for-tat, because earlier in December the US asked the World Trade Organization to investigate China’s support for its domestic wind-turbine manufacturers.
US ethanol producers are expected to produce about 44 million metric tons of DDGs in the 2009-2010 crop year (September through August). That number is expected to top 45 million metric tons in the 2010-2011 crop year.
Major US producers of corn ethanol include Archer Daniels Midland, Valero Energy Corp., Pacific Ethanol, Inc. and privately held POET.
Local Chinese production
China’s ethanol producers also want to sell their DDGs, and it is their concerns that are presumably driving this latest investigation. China produces about 3.5 million tonnes of DDGs per year.
China cannot produce enough livestock feed on its own, and has been importing corn, soybeans, and DDGs. It is expected that the country is to import some 3 million metric tons of DDGs this year and as such will be the largest importer of DDGS.
"China’s unusual market and supply volatility over the last two years has resulted in new global trade flows," Thomas Dorr, president and chief executive of the US Grains Council said in a statement.
"As trade flows change, it should perhaps not be surprising there would be an adjustment period in response to unprecedented demand."
An industry official who promotes US exports said US DDGS prices have been higher than Chinese prices since October. China was still buying because the quality of US DDGS was better, with higher protein and fat content.
Backdoor for corn exports
China said last week is it investigating what is says may be illegal dumping of DDGs by the US Sales of US DDGS to China have increased from 8,000 metric tons in 2008 to more than 600,000 metric tons in 2010.
Although China is a major buyer of US soybeans, accounting for about 60 percent of US soybean exports, the Asian giant has bought only nominal amounts of US corn in the last decade.
DDGs have been seen as a backdoor way for US corn producers to get around China’s skittishness to buy biotech corn, although China has had no such reservation about biotech soybeans from the US.
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