In a move that shouldn’t surprise anyone, China has halted import of U.S. DDGS, driving the market price of the ethanol co-product down to levels not seen since 2010. Despite their rhetoric, the Chinese government’s true intentions usually become apparent in this type of international trade maneuver.
Illinois Corn is very disappointed that the Chinese government has made this decision. The Illinois ethanol industry exports a good deal of DDGS. This type of decision can really put our Illinois plants in a bind. Illinois Corn Marketing Board partners with the U.S. Grains Council on export issues regarding corn, ethanol, and DDGS. USGC is also working on this issue.
“It’s very unfortunate that China is not embracing new technologies. They’ve had ample time to approve the MIR162 event, but for what we think are political reasons, they’re just not approving it,” explained Phil Thornton, IL Corn Value Enhanced Project Director.
Renewable Fuels Association President and CEO Bob Dinneen stated in a media report this week from NASDAQ that China’s alleged move to suspend DDG imports from the United States has affected grain prices and will tighten ethanol companies’ profits in the short term. The article states that China has reportedly ceased issuing permits to import DDGs because they may contain traces of a banned GMO corn trait. DDG sales can account for as much as a quarter of ethanol producers’ revenues.
Dinneen told the Oil Price Information Service (OPIS) this week, “China has been schizophrenic about DDGS. But, unfortunately, this is becoming the new normal.
“China needs our product, but, apparently, it doesn’t like that it needs our product,” he continued. “I don’t think this is a long-term issue; it’s more temporary. If it is long term, I think the U.S. government will get concerned about it.”