Rumors: China May Lift DDGS Restrictions
The buzz from the export trade last week was the China may possibly lift restrictions on imports of U.S.-produced dried distillers grains with solubles, according to the Sunday Outlook in Hoosier Ag Today by Arlan Suderman (bit.ly/
).
Trade with China took a serious dip in mid-December 2013 when China began rejecting shipments of U.S. DDGS because of the presence of MIR 162, a GMO variety unapproved by China. Prices of DDG began to plummet, but fell even more in June when China announced it would stop issuing permits for imports of DDGS. The latest demand in July was that China required any DDGS arriving in Chinese ports to be accompanied by an official letter of certification that it contains no trace of MIR 162. The U.S. did not comply as no such certification exists.
The rumors of Chinese feed mills once again purchasing U.S. DDGS, along with tighter soymeal supplies, have caused a rally in DDG prices in recent weeks. If the rumors were true, the resurgence in trade with China could boost ethanol grind margins, as well as tightening the protein market, Suderman said.
Most U.S. DDG exporters have found other homes for the product formerly destined for China. Although resurgence in trade with China would be beneficial for the protein market, it would increase ethanol production, since plants are already operating near capacity, he said.
Cheryl Anderson can be reached at Cheryl.anderson@dtn.com
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