
News
US DDGS carve way into Chinese market and expands exports to others
The flow of distiller's dried grains with solubles (DDGS) continues from US ethanol plants to points in China, with exports expanding to other markets including Turkey, Morocco and Bangladesh.
March 24, 2008 By United States Grains Council
Mar. 20, 2008
China is one of the latest countries to import U.S. distiller’s dried grains with solubles (DDGS), having recently purchased 150 metric tons from U.S. Grains Council member Midwest Ag Enterprises. Fifty tons of U.S. DDGS arrived at Tianjin Port on March 14 and were shipped to a USGC partner farm 37 miles east of Beijing after clearing customs. An additional 100 tons of the product, which are destined for two receivers in Guangdong province, currently await inspection results at Huangpu Port before they will transfer to feed mills in the city of Guangzhou.
The Council’s partner farm, Huaxia Dairy Farm in Sanhe city, Hebei province, will use its first-ever purchase of DDGS in feeding trials. The Council’s Beijing office has had a very good relationship with Huaxia Dairy Farm for several years, having cooperated together on many projects. Huaxia Dairy Farm will compare the U.S. DDGS to the domestic feed ingredients currently in use.
The other 100 tons of the product will be used in Guangzhou city by Guangdong Haid Group Corp., Ltd. and Wen’s Food Corp., Ltd. The two feed companies have imported 50 tons of DDGS each.
"There is great potential for U.S. DDGS in Guangdong province and it could be as high as 70,000 tons if they only use 5 percent of U.S. DDGS in their rations," said Sam Niu, assistant director of the Council’s Beijing office. "Huaxia Dairy Farm and Guangdong Haid Group Corp. Ltd. have shown great interest in U.S. DDGS," he added, saying both plan to import more in the near future.
"Each may fix U.S. DDGS into their rations if it is not too expensive," he said.
The current price for U.S. DDGS is about $50-60/MT higher than domestic DDGS, but similar in price to domestic cotton seed meal and rapeseed meal, and much lower than local soybean meal. Supply for local cotton seed meal, rapeseed meal and domestically produced DDGS is tight, according to Niu. As Huaxia Dairy Farm and Guangdong Haid Group Corp. Ltd. undertake feeding trials using the newly imported DDGS, the Council will assist them in monitoring the results.
At the same time, DDGS are beginning to make their way into several non-traditional U.S. export markets, creating an unusual trend. The U.S. Grains Council has played an active role in DDGS exported to Turkey, Morocco, China and most recently, a smaller market in Bangladesh, which received its first consignment of 251 metric tons on March 16 and is expecting an additional 251 tons next week.
"There are three factors contributing to this trend," said Dan Keefe, USGC manager of international operations — DDGS. "First, these exports are a result of the Council’s efforts over the last three years in organizing feeding trials, conducting logistics studies, and targeting key buyers in our regional trade missions," he said. "Secondly, the product has increased to the point where both bulk and container buyers can get enough volume to meet their demands. The third reason is that there is an increased world demand for U.S. feedstuffs, especially corn, which has aided the growth of DDGS exports by providing competitive combination cargo freight costs."
According to Keefe, the Council’s regional promotion of DDGS has experienced great success in non-traditional export markets such as Turkey, which imported 136,519 tons last year compared to 416 tons in 2006. Council involvement led to Turkey amending DDGS import policies that makes it more attractive to import, resulting in increased purchases. The Council’s regional efforts have also influenced Morocco’s imports. Morocco bought 43,246 tons of U.S. DDGS last year compared to 27,858 tons in 2006. Overall, total global exports of U.S. DDGS have risen 100 percent in 2007, with 2.4 million metric tons exported, up from 1.3 million in 2006.