China increasingly good market for US corn, DDGS, experts say

By Holly Jessen | April 23, 2012

It’s a well-known fact that China—the largest swine producer and consumer—will become a large and permanent importer of corn, according to the U.S. Grains Council. In addition, China is also expected to be an increasingly more consistent importer of feed grains, such as distillers grains.

Over the next several years, China is likely to import between 10 million to 30 million metric tons of U.S. corn, according to USGC discussions with buyers and end users. However, lack of consistent market data and nontransparent market intelligence makes it a challenge to make more precise estimates, said Ross Korves, USGC consultant and economic policy analyst. And, although price is generally accepted as an accurate reflection of China’s grain supply, on-site consultations reveal that price may not always be a good measurement of supply in China. “Up to now, discussing what we don't know about China was an interesting sideline, but as China continues to emerge as a major buyer, market intelligence takes on real importance, Korves said. “The immediate question is how this information need will be reconciled.”

On the DDGS side, China has continued to be an important market for U.S. DDGS, despite an anti-dumping investigation that was announced at the end of 2010. The results of that investigation will be announced by a deadline of June 28 after being extended in December.  The country went from the No. 1 export market for DDGS to the No. 2 market in 2011.

In February, China imported 612,638 metric tons of DDGS, according to the most recent data released by the U.S. Census Bureau—a 1 percent increase from what was imported in January. China accounted for nearly 150,000 metric tons of February’s export total, or 25 percent. (See chart.)

In related news, China’s Ministry of Finance decreased the corn-based fuel ethanol subsidy, according to an April 16 announcement from the COFCO Biochemistry (Anhui) Co. Ltd. A ton of corn or grain ethanol will be eligible for a subsidy of 500 yuan ($79), a decrease from 1,276 yuan in 2011. Subsidies for ethanol made from cassava and other non-food crops are 750 yuan per ton, the statement said, without citing whether that figure was the same or different last year.