SYCAMORE, Il. – Since last December China’s ports have remained closed to American corn, a restriction that has also bled over into the market for distiller’s dried grains, a ethanol byproduct used as a feed additive. In April, the National Feed and Grain Association estimated U.S. corn, soybean and DDG sectors will lose between $1-$2.9 million due to the trade disruption.
But would the market be significantly affected now, if China were to re-open its market to American corn?
“Not for the short term, says General Manager of the Hueber Report, Dan Hueber. “I think long-term, absolutely. And again, we know their buying patterns. When they come in, they usually come in on large quantities, and for extended periods, but right now, they just don’t have the need for it.”
There’s no shortage of corn around the world currently, and China is no exception.
“I understand, even internally there, there is a little disagreement. You know, one side of the grain industry over there sees profitabilty on importing right now, and you’ll want to have that lifted, where another whole facet there, Sinograin, looks at it and says ‘Geez, we’ve got way too much corn as it stands.” I mean, that’s one of the issues that they’ve confronted over the last year: after three good crops in a row, they don’t know what to do with it. So they were having a challenging time managing that inventory, but regardless, I think if that is shifted, psychologically, you know, short-term positive with the market. Long-term, it’s a good thing, but it’s probably not going to be a major market mover over the next year without seeing a crop issue, you know, next summer either here, or in Europe, or even in China, as far as that’s concerned. But it’s a good long-term [development]. Will it do much for price recovery over the next twelve months? Probably not so much.”
Unfortunately for the U.S. DDGs industry, the U.S. Grains Council reported Monday that Turkey is now shutting its ports to U.S.-sourced distiller’s grains.
To hear more about how the grain markets might react if China were to reopen its ports to American corn, click the audio player above this story.
