DDGS Exports to China: Update

DDGS
The market is rapidly adjusting to the new ground rules for U.S. distiller’s dried grains with solubles (DDGS) exports to China.

The market is rapidly adjusting to the new ground rules for U.S. distiller’s dried grains with solubles (DDGS) exports to China. While the government in China has yet to issue a formal announcement, traders have been told unofficially that no new DDGS import permits will be issued for the time being, and that incoming cargoes of DDGS entering under existing permits will be subject to more stringent inspection for biotech events that are not approved in China.

Existing import permits, however, are still valid, and contracts are still being written. Feed prices in China remain above world market levels, and buyers in China are still eager to obtain DDGS if possible. A key issue is financial loss if a cargo does not pass inspection at the port of entry. Trade sources indicate that buyers in China are willing to accept this risk, and expect that shipments will pass inspection.

A second issue is the re-export of cargoes that fail inspection at the port of entry in China. U.S. Grains Council staff are working with traders to obtain documentation and identify new destinations. The current situation has created many buying opportunities, and traders have expressed confidence in their ability to adjust rapidly.