USGC China DDGS situation update: Impacts in other markets

By U.S. Grains Council | July 11, 2014

China’s new inspection and permit regime for U.S. distillers dried grains with solubles (DDGS) has created increased interest for DDGS in other markets around the world. Contracts continue to be written and DDGS continue to be shipped to China. However, with the new uncertainty and disruption in trade with China, bargain hunters elsewhere are sensing opportunity.

Among the first to seize the opportunity was Taiwan, which boosted imports of DDGS to 27,919 metric tons in June, of which about 13 percent was re-exported from China. The U.S. Grains Council is in close contact with Taiwanese feed millers and almost every feed mill in Taiwan is alert to the opportunity to purchase U.S. DDGS rejected from China, because of the price discount. Mexico is another traditional major market for U.S. DDGS, and Mexican buyers are now stepping up purchases in response to current price adjustments.

Increased interest is also surfacing across Europe, the Middle East and North Africa. The Council is working in the region with several member companies to establish new contacts with traders, importers and end-users. Most of these exporters had been focused on China and Southeast Asia but are now seeking to diversify given the unpredictability and risk associated with the market in China.

The Council continues to work at all levels to normalize the situation in China. At the same time, however, the Council is working to encourage both current and potential buyers of DDGS in other countries around the world to take advantage of this new opportunity.