In a preliminary ruling, China’s Ministry of Commerce said it will put a duty of 33.8 percent on shipments of distillers dried grains from the United States, a step that could affect ethanol makers and rebound against U.S. soybean meal usage, said Agrimoney. Some in the commodity trade speculated China was playing tit-for-tat with a U.S. complaint to world trade authorities over Chinese farm subsidies.
DDGs are a co-product of ethanol production and are sold as a lower-cost, high-protein livestock feed. China is the world’s largest market for DDGs and almost all of it comes from the United States, said Agrimoney. Chinese ethanol makers have complained for months that U.S. DDGs were being dumped in their backyard.
The U.S. Grains Council, a trade group, and U.S. biofuels groups said U.S. DDGs are priced fairly and “have played a role in helping China’s animal feed industry to … supply China’s rapidly growing meat industry.” The groups said they hoped for a resolution “to meet China’s growing fee demand in a mutually beneficial way for all parties as China implements market-oriented agricultural pricing reforms.”
Some 39 million tonnes of DDGs are produced annually, estimates the Grains Council, and 11 million tonnes are exported, with more than 4 million tonnes shipped to China. A bushel of corn yields about 2.8 gallons of ethanol and 17 pounds of DDGs, or 30 percent of the weight of a bushel. From 35-40 percent of each U.S. corn crop goes to ethanol, so DDGs are a large source of livestock feed.