MARION, Iowa – China’s market remains shut to cargoes of U.S. corn and distiller’s dried grains (DDGs). That’s not quite as bad as it sounds.
According to market analyst Rich Balvanz with AMS Commodities in Marion, China’s harbors remain closed to shipments of American corn and DDGs, which are an ethanol byproduct used as animal feed.
“They’re in a new mode of the way they handle their internal price supports,” says Balvanz. “The intention is to reduce their government-owned stocks. For that to happen, they have to keep the price internally high enough to dispose of them, and so I don’t really anticipate any big movement toward China reopening its market to the United States’ corn until they’ve done a little better job of getting rid of their excess stocks there.”
Balvanz says at this point, it seems that even Mother Nature is powerless to reopen China to American corn.
“You have to look at Chinese weather at the same time,” he says, “and they, too, are starting to experience some drier conditions in some of their principal growing areas for corn and soybeans. The thing we know is that they’ve experienced droughts before and somehow, in the last few years, they keep coming up with record or near-record corn crops so, even though there may be a bit of a weather threat in China developing right now, I don’t see that as anything that would change their opinon of how they want to deal with the U.S. in the short run.”
However, the U.S. Grains Council reports Taiwan’s imports of distiller’s dried grains are up to about 28,000 metric tons; 13 percent of which are from China. Mexico is also stepping up its purchases due to adjustments in prices, while Europe, the Middle East and North Africa have also expressed interest in distiller’s grains, as USGC’s member companies seek to diversify their export markets to hedge against current risk related to China.
To hear more about the situation on U.S. corn and DDGs in China, click here.
