China continues to be the top importer of U.S. distiller’s dried grains with solubles (DDGS) and sorghum despite the current uncertainties in the Chinese economy and uneasiness about trade with the country in the international grain market. Factors contributing to the ambiguity in the Chinese market include a very large corn harvest in China set to begin soon, a new regulatory system for grain importers and an ongoing discussion about the support price of corn in China, according to the U.S. Grains Council (USGC).
The announcement of a new registration system in China for grain importers has generated anxiety about the potential for additional regulations for grain imports. Despite this, imports are continuing and most Chinese importers are working through these new regulations.
In addition, there is ongoing discussion that China’s Ministry of Agriculture will reduce its support price for corn, which could reduce the competitive price of U.S. coarse grains in China. The government has yet to announce the new measures, and disagreements over the level of the purchase price and how the policies should be revised may further delay an official announcement. Uncertainties over pricing, purchasing criteria and market reaction are also causing traders to be cautious about forward contracting. However, even if a price reduction occurs, it is likely that domestic corn in China will be above the international price of landed U.S. sorghum, corn and DDGS.
Even with these potential changes, vessels of U.S. sorghum and DDGS continue to arrive in China. In fact, as of Aug. 27, China had imported 8.3 million tonnes (327 million bushels) of U.S. sorghum, up 4 million tonnes (157 million bushels) over the same period last year, in addition to 4.2 million tonnes of U.S. DDGS for the January-July 2015 time period, up 20% for the same period last year, said USGC. This makes China the top U.S. export market for these two products.
With the U.S. sorghum harvest approaching, base price FOB Gulf for U.S. sorghum has dropped, giving the U.S. Grains Council (USGC) an opportunity to highlight the value of U.S. sorghum to Chinese customers. Upcoming seminars to promote U.S. sorghum and DDGS in two provinces in China already have more than 200 registered participants from the swine industry, the USGC said .
In addition to these two seminars, USGC said consultants are also scheduled to speak at a symposium organized by ATO Chengdu in Sichuan as a response to emerging interest in sorghum and DDGS in that province. The responses from those interested in attending indicate there is still significant demand, and untapped markets, for U.S. DDGS and sorghum in China.