US Corn and DDGS Under Discussion in China

CHINA - China has long been considered a potential market for US corn. However, until last year, when China purchased nearly 60 million bushels (1.5 million metric tons) of US corn, that potential always seemed to be just out of reach.
calendar icon 7 February 2011
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In light of this, the US Grains Council’s Officers Mission participants last week learned that many in China expect imports of US corn to continue.

“Estimates given to us were that China is short 10-15 million metric tons (394-591 million bushels) in stocks and will need to purchase corn this year,” said Terry Vinduska, USGC chairman and Board member for Kansas Corn Commission.

“We learned the government normally keeps stocks at 30 per cent but they are currently a little over 5 per cent, which may lead to imports of 3-9 million tons (118-354 million bushels).”

While in China, USGC officers, accompanied by leaders from the National Corn Growers Association, met with analysts and industry experts who reported corn demand in China continues to be strong because of an economy growing at 8-10 per cent annually.

“Now is the time to stay focused on the long-term market development objectives of being a reliable supplier for China,” Mr Vinduska said. “We need to build a trusted trade relationship.”

The group also discussed China’s anti-dumping investigation against imports of US distiller’s dried grains with or without solubles (DDGS).

“Everywhere we went, we were encouraged that the case will be handled well,” Mr Vinduska said. “In fact, we found that importers would like to more than double the 3 million tons of US DDGS China imported last year, eventually reaching 10 million tons in annual imports. However, they recognize the tremendous growth shown in 2010 may need to slow down to allow internal markets to adjust. One way to slow the growth was to launch the anti-dumping case.”

In addition to meeting with analysts and trade groups in China, the Officers Mission participants met with representatives from China’s Ministry of Finance and Commerce and its Bureau of Fair Trade – organizations overseeing the anti-dumping investigation.

Thomas C. Dorr, USGC president and CEO, said that following the meetings, he believes there will be a positive outcome from the anti-dumping case.

“Because of the case, more individuals and ministries within China are familiar with the Council’s work and the respect we’ve earned over our decades of service,” Mr Dorr said. “Council efforts to maintain open and honest communication are helping everyone involved learn more about DDGS and the important role it can play in helping feed livestock and poultry in China.”

Mr Dorr and Mr Vinduska also noted that having members of NCGA’s leadership team on the Officers’ Mission was very useful in furthering discussion opportunities pertaining to international trade.

“Having farmer-leaders from the US corn industry engaged in our meetings provided important insight into the opportunities and challenges of the global marketplace,” Mr Vinduska said. “Their credibility added weight to the point that the United States is and will remain a reliable supplier of corn and DDGS to China.”

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