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Outlook for China DDGS Supply & Demand

10 February 2012
U.S. Grains Council

CHINA - In a recent study commissioned by the US Grains Council, the respected Chinese market analysis firm JCI reported that the new Five-Year Plan in China will restrict ethanol and dried distiller’s grains with solubles (DDGS) production growth to no more than 5 per cent annually.

Assuming an appropriate price for DDGS relative to corn and soybean meal, JCI projects that China’s imports of DDGS will grow steadily, reaching 6 million metric tons in 2016 and accounting for 42 per cent of total DDGS use.

Chinese ethanol/DDGS production followed a rapid growth trend until 2007. At that time, as growth in corn demand outstripped growth in production, the government of China placed limits on domestic ethanol production growth, leading to a dramatic increase of DDGS imports – almost all from the United States.

As DDGS imports reached 3.1 million metric tons in 2009/10, China announced an anti-dumping investigation which led to a slow-down in DDGS exports last year. JCI does not foresee in its outlook that the investigation will result in significant barriers to US DDGS exports to China in the future.

TheCropSite News Desk

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