Ethanol Blog

Rumors that China has cancelled cargos of dried distillers grains from the U.S. has the DDG market running scared and is likely responsible for price declines as much as $15 a ton last week.

China's attempt on increasing its domestic farm incomes resulted in domestic prices rising as high as 30% more than import prices, according to an article by Agrimoney.com (http://bit.ly/…). Another consequence was a glut of corn as large as 120 million metric tons in the country, much of which is believed to be of poor quality.

The Agrimoney article said that China may try to lower its sky-high domestic prices, about $9.80 a bushel, by lowering state corn prices. The country hopes to encourage more domestic corn use and curb imports of cheaper foreign corn.

Reports are surfacing that China may also attempt to resolve its excess corn situation by cancelling DDG imports from the U.S. Rumors are that China has already cancelled two cargos of DDG and are considering cancelling or postponing an additional six cargos. Some news reports theorized that China may postpone some DDG shipments until fall.

Cancellations could cause excess of DDG supplies in the U.S., which could cause DDG prices to fall even further.

After the volatility in the U.S. DDG market, caused by China ceasing all imports of U.S. DDG until the country approved the MIR 162 biotech trait, many in the industry are wondering just what the next trade disruptions with China will bring.

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

(ES)

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