Shippers Discontinuing DDG Trade With China

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China has warned that it could slap duties of up to 50% on U.S. distillers dry grain imports at any time as it pursues an anti-dumping investigation against the feed ingredient in apparent retaliation for U.S. trade actions against Chinese exports.

U.S. shippers have reportedly begun diverting west coast DDG supplies back into the domestic market, which could weigh on DDG prices and to a lesser extent on corn prices.

The biggest impact from this may be on ethanol producers, whose operating margins are now being kept in the black by DDG sales. Lower DDG prices could push margins into the red, causing a slowdown in ethanol output and corn-for-ethanol usage.

Chinese imports of DDG from the U.S. likely hit 2.6-3 million metric tons in 2010, up sharply from 652,000 metric tons in 2009.

Source: The Brock Report

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