Posts Tagged ‘corn markets’

China’s Imports Verify Corn Abundance

May 19, 2010

In late April, the U.S. Agriculture Department (USDA) announced the export sale of 115,000 metric tons (4.5 million bushels) of American corn to China.

As China’s population continues to increase, consumer demand for livestock/poultry does as well. More animal feed is required to feed its expanding livestock and the country has turned to American corn farmers to supply this need.

The U.S. Grains Council (USGC) is confident that an additional 250,000 to 300,000 metric tons or 9.8 to 11.8 million bushels may be headed to the country soon.

Many claim that the U.S. corn supply cannot serve all of its domestic markets – food, feed and fuel – but our country’s corn farmers are continually producing notable harvests using advanced technologies and equipment, and the latest seed varieties, to meet demand and China’s recent request is a case in point.

The majority of China’s corn imports come in the form of distiller’s dried grains with solubles (DDGS) – a co-product of the ethanol industry. Outside of the ag industry, most are unfamiliar with this valuable product. DDGS is the dried residue remaining after the starch fraction of corn is fermented with selected yeasts and enzymes to produce ethanol. Because it is protein and nutrient rich, this byproduct is commonly used in animal feed.

So much so, that approximately 3.2 to 3.5 million metric tons of DDGS are produced annually in North America.

According to Joe Victor, vice president of commodity-research advisory firm Allendale in McHenry, Ill., China is the No. 2 importer of U.S. DDGS with Mexico as the No. 1 importer. In 2009, China imported 661,320 metric tons (26 million bushels of corn and18.9 percent of the world market) of containerized DDGS from the U.S. compared to the previous year’s 97,940 metric tons.

“I don’t think the public at large knows the kind of DDGS exports we’ve been having,” Victor said.

In fact, some traders believe China’s corn imports may grow to more than 2 million metric tons for 2010, demonstrating the country’s reliance on American corn and a huge export opportunity for our corn market.

“The U.S. could easily sell 2 to 3 million metric tons of corn to China in the coming months without significantly impacting market conditions,” said Ross Korves, economic and trade-policy analyst. “U.S. farmers intend to plant about 2.3 million acres more corn in 2010 than in 2009, and early season planting weather is favorable for a quick start to the 2010-growing season.”

Though there has been concern about the capacity for the world corn market to handle another significant buyer, the American corn industry is again ready and able to deliver.

I know that our U.S. corn farmers will continue to supply more than enough corn to meet national and international demand.