December 29, 2010
China probes into US DDGS exports
China also slapped antidumping duties on US chicken this year, accusing the US of subsidising its poultry industry and hurting China's domestic industry.
US farm interests have viewed DDGS, a byproduct created when corn is turned into ethanol, as a big new trade opportunity in China. Imports rose strongly this year as some in China's farm sector chose it over corn as a feedmeal for livestock, in part because the feed is relatively higher in protein and fiber.
Domestic corn and imported DDGS prices are now roughly level, though DDGS was cheaper earlier this year. Perhaps more importantly for the industry, DDGS imports for use in animal feed aren't subject to China's corn import quotas or its rules on genetically modified food.
Chinese imports of the commodity have soared this year to an estimated three million tonnes, from around 640,000 tonnes last year, according to private-sector estimates. This year's imports would be worth about US$650 million at current prices.
Farm goods are some of the US's biggest exports to China. The US sold US$10.58 billion of agricultural products to China in 2009, accounting for about 15% of total exports to the country.
"The government may be focusing on a period when large import volumes were undercutting domestic prices," analysts said.
Imports in the middle of this year were cheaper by about RMB300-400 (US$45-$60) a tonne compared with domestic DDGS.
While prices have since leveled, the government may still be moving on the investigation with an eye toward assisting domestic DDGS mills, experts said.
China's government has long stressed the need to retain self-sufficiency in agriculture. However, it has been buying more imports of some grains as rising wealth, changing diets, and shrinking farm land alter the domestic market. This year, China broke with years-long convention to become a big new net importer of US corn, importing 1.5 million tonnes of the grain. All together, China has bought more than US$1 billion of corn and corn-related exports from the US this year.
