Ethanol Blog

Storage Shortage Could Push China to Stop Corn Stockpiling

Cheryl Anderson
By  Cheryl Anderson , DTN Staff Reporter

China is expected to stop its plans for stockpiling corn as early as next year, as the country struggles to sell-off huge reserves, according to an article by Reuters (http://reut.rs/…).

China has not been entirely successful in its recent efforts to auction off their glut of corn and other feed grains. Much of the grain up for auction has been of poor quality, only suitable for non-food use.

Such a move would follow the end of similar programs for cotton and soybeans, which are both being switched to new systems involving direct subsidies for farmers.

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If China ends its stockpiling scheme, some in the industry believe it could further curb imports, making the export situation even more dire for U.S. sellers of dried distillers grains with solubles.

Exports of DDGS recently plummeted with China's announcement that it would no longer issue permits for imports of DDG shipments containing the MIR 162 GMO strain. The announcement brought an immediate and unprecedented nosedive in DDGS prices, falling to the lowest level in several years.

While China's corn stockpiling was intended to support rural jobs and enhance food security, it resulted in massive inventory and overflowing storage facilities, as well as inflating domestic prices and stimulating the country's demand for cheaper overseas supplies.

China may indeed have "shot itself in the foot," as its GMO stance may be an obstacle in the availability of U.S. DDGS to Chinese buyers, since the now record-low prices could make it very attractive for those looking for lower-cost feedstuffs in China.

Cheryl Anderson can be reached at Cheryl.anderson@dtn.com.

(CZ)

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