WASHINGTON, D.C., U.S. — In a recent study commissioned by the U.S. Grains Council (USGC), the respected Chinese market analysis firm JCI reported that the new Five-Year Plan in China will restrict ethanol and dried distiller’s grains with solubles (DDGS) production growth to no more than 5% annually.
Assuming an appropriate price for DDGS relative to corn and soybean meal, JCI projects that China’s imports of DDGS will grow steadily, reaching 6 million tonnes in 2016 and accounting for 42% of total DDGS use.
Chinese ethanol/DDGS production followed a rapid growth trend until 2007. At that time, as growth in corn demand outstripped growth in production, the government of China placed limits on domestic ethanol production growth, leading to a dramatic increase of DDGS imports — almost all from the U.S.
As DDGS imports reached 3.1 million tonnes in 2009-10, China announced an anti-dumping investigation which led to a slow-down in DDGS exports last year. JCI does not foresee in its outlook that the investigation will result in significant barriers to U.S. DDGS exports to China in the future.