Ethanol and DDGS trade flows into China to change dramatically with policy shift

April 5, 2016 |

In China, the government has decided to end its decade-long corn stockpiling program that has seen stocks grow to around 250 million metric tons, a move that will allow domestic corn prices to fall in line with international prices—currently at a 50% premium to the global market—and will lead to a significant shift in ethanol and DDGS trade flows. DDGS imports are expected to fall sharply as pig and other livestock producers buy domestic product that will be cheaper than importing foreign—mostly US—animal feed, while demand for ethanol will also shrink as local producers ramp production back up. Ethanol producers had been importing cassava as feedstock but will now switch back to corn. Some producers may become so competitive as to export ethanol to South Korea and other South East Asian countries, competing directly with the US and Brazil.

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Category: Policy

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