May 21, 2012
US Q1 2012 DDGS exports to Southeast Asia down 11%
"The typical seasonal downturn in DDGS prices hasn't happened and many buyers in Southeast Asia are still on the side-lines waiting for prices to fall," US Grains Council's Regional Director of Southeast Asia, Adel Yusupov said on the sidelines of an international grains conference here.
Usually during this time of the year, US cattle goes off feed lots into pastures, thus softening domestic DDGS demand and dragging down prices, he said.
DDGS is currently quoted around US$330-335/tonne, basis cost and freight, up from US$305/tonne, a month earlier amid strong demand in China, Japan and South Korea and tight supply of soymeal, another feed ingredient.
An increase in the production of DDGS with lower fat and higher protein content in the US is also one of the reasons for fall in imports, Yusupov said.
DDGS is a by-product of corn and sorghum when they are used to make ethanol and is popular as animal feed because of its high fat content. A third of the grain that goes into ethanol production comes out as DDGS.
Under a modified production process to extract more corn oil, many ethanol units now produce DDGS with 7-8% fat content, down from 9-10% earlier, while the protein content has gone up to 35% from 26-28% earlier.
The new product has longer shelf life and the US Grains Council plans to hold road shows in Malaysia and Indonesia in July to promote it, Yusupov said.
Malaysia imported 14,700 tonnes of DDGS from the US during January-March, down 10% on year. In Indonesia, they fell 20% to 40,000 tonnes ahead of a big domestic corn harvest. In Thailand, another major corn producer, which has a 9% import tariff on DDGS, imports fell more than 50% to 33,000 tonnes, he said.
Yusupov said Vietnam and The Philippines bucked the trend. Vietnam, the largest importer in the region, saw imports rise 2% to 120,000 tonnes amid rising meat consumption. Vietnam's per capita annual pork consumption has increased 28% in the last five years.
The US is the main exporter of DDGS globally and shipped around 7.6 million tonnes in 2011, including 1.1 million tonnes to SE Asia, Yusupov said.
US exports of DDGS to SE Asia rose above one million tonnes for the first time last year but due to the latest slowdown, exports have slowed to a monthly average of 22,000 tonnes in the January-March period from 97,000 tonnes in 2011, he said.
