November 19, 2010

 

China's appetite for DDGs imports grows

China, already the world's largest importer of distillers' dried grains (DDGs), a by-product of ethanol, has the potential to take a lot more imports as more feed mills use it to replace corn and protein meals, industry officials said Thursday (Nov 18).

 

Imports of DDGs by China, the world's second-largest corn consumer, are likely to top 2.8 million tonnes this year, said Liu Xiaoyu, general manager with the feed division of COFCO Agri-Trading & Logistics, also China's top importer. China imported only 640,000 tonnes in 2009.

 

China's purchases have slowed recently due to the rise of US corn prices. DDGs have largely been used to replace corn this year because of a lower Chinese harvest and cheap US prices, said Liu.

 

China buys almost all its DDGs from the US.

 

"There is a potential market of eight million tonnes (of imports) because domestic production growth is slow," said Liu.

 

China has limited expansion of ethanol plants, which now produce 3.5 million tonnes of DDGs a year, while domestic demand could be as large as 11.5 million tonnes, given that animal feed production will reach 150 million tonnes this year, he added.

 

Imports of DDGs as an animal feed additive are not subject to controls such as corn import quotas or Chinese rules on genetically modified organisms, according to sources.

 

DDGs are getting popular among feed mills, and some had increased the proportion of DDGs in animal feed to 12% from 7.5%, Liu said.

 

However, currently 80% of the imported volume has to be shipped with containers. Bulk cargoes from the US are limited because of lack of port facilities and suitably sized ships in the US.

 

China, which will produce 250 million tonnes of animal feed by 2020, is shifting to being a corn importer from an exporter, Liu said.

 

"The growth of domestic supply will not be able to match the growth of consumption," he added.

 

He expected corn imports to continue next year after China imported more than one million tonnes this year.

 

China animal feed production is likely to grow annually by 10 million tonnes in the next decade after an average growth of eight million tonnes in the current decade, said Liu, who is also the vice chairman of China Feed Industry Association.