Ethanol Blog

China Rumored to Purchase DDG to Blend with Low Quality Corn Stocks

Cheryl Anderson
By  Cheryl Anderson , DTN Staff Reporter

Reports have surfaced lately that China will sell approximately 78 million bushels of its surplus corn reserves, much of it believed to be of substandard quality.

According to an article in Mason City, Iowa's Globe Gazette (…), much of China's corn reserves would be considered sample grade in the U.S. -- the worst possible quality. These inferior quality corn stocks were rumored to be behind some of the antics China has pulled in recent years with the U.S. ethanol industry, such as refusing shipments based on the MIR 162 biotech trait and now its second distillers grains anti-dumping investigation against the U.S.

There are also reports that China has purchased as much as eight shiploads of U.S. sorghum and distillers grain, possibly to blend with its glut of poor quality corn to then use as livestock feed.

DTN market analyst Todd Hultman said that much of this year's concern about China's corn supplies and the move to release more corn from reserves has been a "bearish horror story that has lacked any real consequence for U.S. prices." While these changes signal an important shift for China domestically, China has not been a significant importer or exporter of corn in recent years, Hultman said.

So far in 2015-16, China imported about 7 million bushels of U.S. corn. The lowering of China's domestic prices is likely to make them a larger corn importer in the next few years.

"As far as estimating the size or quality of China's corn reserves, there is no way to make a credible guess and we are better served paying attention to the market's own clues," Hultman said. "Corn prices have been rising since April, largely because dry weather has reduced corn supplies in Brazil and made the U.S. the place to buy corn -- a bullish advantage that is likely to continue through this summer and help offset the bearish possibility of another large U.S. harvest."

He added that Dow Jones reported early Wednesday that China's soybean imports were up 14% in the first five months of 2016, another clue that they still need sources of protein and distillers grains will likely continue to be part of that mix.

Cheryl Anderson can be reached at



To comment, please Log In or Join our Community .