DTN Weekly Distillers Grains Update

China Chooses Three Ethanol Producers for Anti-Dumping Investigation

John Harrington
By  John Harrington , DTN Livestock Analyst

OMAHA (DTN) -- China's Ministry of Commerce announced Monday it has chosen three U.S. ethanol producers to complete the next phase of its anti-dumping investigation against exports of U.S. dried distillers with solubles. However, industry leaders have requested that the Obama administration challenge the investigation through the World Trade Organization.

China announced on Jan. 12 it had initiated anti-dumping and countervailing duty investigations of U.S. DDGS exports to China and will study whether U.S. agricultural policies, mainly agricultural subsidies, in some way create unfair competition.

The MOC announced that Archer-Daniels-Midland Company, Big River Resources LLC and Marquis Energy LLC have been chosen for sampling as part of the anti-dumping investigation.

Tom Sleight, president and chief executive officer of the U.S. Grains Council, said this is just the next step in how anti-dumping/countervailing duty investigations proceed.

At the onset of the investigation, the MOC required U.S. companies exporting DDGS to China to fill out two questionnaires. After the council helped facilitate a unified industry response, a total of about 80 companies complied.

Since it is not feasible for China to investigate 80 companies, three companies were chosen to be the most representative of the trade with China. The MOC also tries to pick companies of difference sizes and volumes of exports, Sleight said.

"These companies will get a lengthy questionnaire they have to fill out that gets to the heart of the investigation and whether this product is being dumped or not," Sleight said. "And then, of course, the countervailing duty investigation goes on simultaneously."

Sleight added that the questionnaire the companies must respond to is very long and time-consuming and must be filled out within about 30 days.

"The questionnaire is very, very extensive. The information is very company-specific and asks for company-sensitive information," he said. "It's quite the undertaking for a company to comply."

The three companies stand ready to comply and put in the work necessary to answer the questionnaires, Sleight said. The council has been using a law firm that is an expert in such trade cases, and the three companies chosen for sampling will choose their own firm to assist them in responding.

Sleight said the council will continue to keep people informed, keep the response coordinated and make sure deadlines are met. In the countervailing duties case, the council is working very closely with the U.S. Trade Representative's office, as that office has to fill out a questionnaire as well.

After the companies' response to the questionnaires is received, China will review those answers, then make some sort of preliminary determination after the investigation ends.

"If all things go well, they'll withdraw the investigation or it could be the implementation of a preliminary duty," Sleight said. "But that point in time is still far down the road, and there are certain steps these investigations must go through by WTO rules."

CHALLENGE TO CHINA'S INVESTIGATION

In a letter to President Barack Obama on Wednesday, Bob Dinneen, president and chief executive officer of the Renewable Fuels Association, and Tom Buis, chief executive officer of Growth Energy, asked the Obama administration to launch a complaint with the World Trade Organization against China's anti-dumping investigation against the U.S., claiming it has hurt U.S. ethanol producers.

The letter said the uncertainty and market risk resulting from China's actions has triggered substantial financial losses for U.S. DDGS producers, causing DDGS price to plunge more than 25% since last summer, while prices of competing feedstuffs have remained stable or increased slightly.

While DDGS prices have already lost $30 to $50 per ton in value (equivalent to an annualized aggregate loss of $1.2 billion to $1.6 billion to U.S. ethanol producers), Dinneen and Buis said the losses could reach as high as $50 to $60 per ton or more is the investigation results in a total collapse of DDGS export to China.

In the letter, Dinneen and Buis ask the president to direct the Office of the U.S. Trade Representative, the Department of Commerce and the Department of Agriculture to challenge the process and preliminary determinations made through comments to the MOC through the WTO, as well as requesting the president working closely with the U.S. DDGS industry to mount an aggressive defense of U.S. access to the Chinese livestock feed market throughout the investigation.

HISTORY OF VOLATILE TRADE WITH CHINA

This investigation is one more event in a long history of trade disruptions with China in recent years, starting with another anti-dumping investigation announced in 2010. After bringing DDGS trade with China to a standstill, the investigation was dropped in mid-2012.

Other trade disruptions have occurred in recent years over China's rejection of shipments of U.S. corn and DDGS containing the MIR162 biotech trait during much of 2014, which was finally approved in December 2014.

China has been a vital DDGS export market in recent years. According to statistics from USDA's Foreign Agricultural Service, China was the largest importer of U.S. DDGS in 2015, importing nearly 6.3 million metric tons at a value of nearly $1.6 billion.

Mexico was the second-largest buyer with about 1.6 mmt worth $346 million, followed by Vietnam with 660,032 metric tons worth $155 million, South Korea with 643,572 metric tons worth $141 million, and Canada with 511,783 metric tons worth $95 million.

Cheryl Anderson can be reached at Cheryl.anderson@dtn.com.

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IN THE NEWS

Iowa Corn Board to Promote Corn, DDG Exports

A grassroots movement by the Iowa Corn Promotion Board is aimed at increasing the promotion of Iowa corn and corn co-products such as DDG, according to an article by Iowa Farmer Today (http://bit.ly/…).

In order to increases the number of farmers involved, the board now has district advisory groups and more members involved in state committees.

One of the ways the board spends its 1-cent-per-bushel checkoff money is to promoting corn exports as a way of creating demand. The promotion involves corn exports in all formers, including raw corn, ethanol, and distillers grains.

In order to further promote exports of corn and corn co-product, the Board is a member of both the U.S. Grains Council and the U.S. Meat Export Federation. The Board also works with corn groups such as the National Corn Growers Association to help leverage their investment, as well as with other farm groups.

According to Board Chairman Chris Edgington, other checkoff money is used on research for finding more uses for corn, improving the corn plant for production and funding genomic and phenotyping research.

Exports of DDG set a new record in 2015, according to statistics released recently by the Renewable Fuels Association. The record of 12.56 million metric tons shipped to 45 countries on five continents is 11% higher than 2014 exports and more than double the total exports in 2009.

Cheryl Anderson can be reached at Cheryl.anderson@dtn.com.

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DTN WEEKLY DDG SPOT PRICES

CURRENT PREVIOUS
COMPANY STATE 3/4/2016 2/26/2016 CHANGE
Bartlett and Company, Kansas City, MO (816-753-6300)
Missouri Dry $135 $135 $0
Modified $65 $65 $0
CHS, Minneapolis, MN (800-769-1066)
Illinois Dry $145 $145 $0
Indiana Dry $137 $137 $0
Iowa Dry $130 $130 $0
Michigan Dry $135 $135 $0
Minnesota Dry $118 $118 $0
North Dakota Dry $125 $125 $0
New York Dry $140 $165 -$25
South Dakota Dry $125 $130 -$5
MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253)
Kansas Dry $135 $140 -$5
POET Nutrition, Sioux Falls, SD (888-327-8799)
Indiana Dry $132 $132 $0
Iowa Dry $122 $122 $0
Michigan Dry $130 $130 $0
Minnesota Dry $118 $119 -$1
Missouri Dry $142 $143 -$1
Ohio Dry $130 $132 -$2
South Dakota Dry $120 $120 $0
United BioEnergy, Wichita, KS (316-616-3521)
Kansas Dry $130 $130 $0
Wet $50 $50 $0
Illinois Dry $140 $145 -$5
Nebraska Dry $130 $130 $0
Wet $50 $50 $0
U.S. Commodities, Minneapolis, MN (888-293-1640)
Illinois Dry $140 $145 -$5
Indiana Dry $130 $135 -$5
Iowa Dry $120 $120 $0
Michigan Dry $130 $130 $0
Minnesota Dry $115 $120 -$5
Nebraska Dry $130 $130 $0
New York Dry $155 $155 $0
North Dakota Dry $125 $125 $0
Ohio Dry $135 $135 $0
South Dakota Dry $120 $120 $0
Wisconsin Dry $125 $125 $0
Valero Energy Corp., San Antonio, TX (402-727-5300)
Indiana Dry $130 $130 $0
Iowa Dry $125 $125 $0
Minnesota Dry $120 $120 $0
Nebraska Dry $130 $130 $0
Ohio Dry $140 $140 $0
South Dakota Dry $115 $115 $0
Western Milling, Goshen, California (559-302-1074)
California Dry $190 $190 $0
*Prices listed per ton.
Weekly Average $129 $130 -$1
The weekly average prices above reflect only those companies DTN
collects spot prices from. States include: Missouri, Iowa, Nebraska,
Kansas, Illinois, Minnesota, North Dakota, South Dakota, Michigan,
Wisconsin and Indiana. Prices for Pennsylvania, New York and
California are not included in the averages.

*The spot prices gathered by DTN are only intended to reflect general market trends and may vary. Please contact individual plant or merchandiser for exact prices.

If you would be willing to take a weekly phone call and have your distiller grains spot prices listed in this feature, please contact Cheryl Anderson at (308) 224-1527 or (800) 369-7875, or e-mail cheryl.anderson@dtn.com.

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VALUE OF DDG VS. CORN & SOYBEAN MEAL
Settlement Price: Quote Date Bushel Short Ton
Corn 3/3/2016 $3.5375 $126.34
Soybean Meal 3/3/2016 $262.00
DDG Weekly Average Spot Price $129.00
DDG Value Relative to: 3/4 2/26 2/19
Corn 102.11% 102.68% 99.59%
Soybean Meal 49.24% 50.54% 49.15%
Cost Per Unit of Protein:
DDG $5.16 $5.20 $5.20
Soybean Meal $5.52 $5.41 $5.57
Notes:
Corn and soybean prices taken from DTN Market Quotes. DDG
price represents the average spot price from Midwest
companies collected on Thursday afternoons. Soybean meal
cost per unit of protein is cost per ton divided by 47.5.
DDG cost per unit of protein is cost per ton divided by 25.

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USDA MARKET NEWS/DISTILLER GRAINS PRICES

USDA WEEKLY DISTILLERS GRAINS SUMMARY (Feb 26, 2016)

Dried Modified Wet
FOB PLANT PRICES PER TON
Iowa 120.00-135.00 55.00-65.00 35.00-41.00
Minnesota 120.00-125.00 55.00 38.00-45.00
Nebraska 125.00-138.00 60.00-76.00 48.00-55.00
South Dakota 115.00-130.00 62.00-68.00 38.00-42.00
Wisconsin 120.00-130.00 52.00-60.00 NQ
Eastern Corn Belt 127.00-155.00 62.00-67.00 NQ
Kansas 135.00-155.00 NQ 45.00-60.00
Northern Missouri 135.00-146.00 NQ 42.00-49.00
DELIVERED PRICES PER TON
CIF NOLA 163.00-170.00
Pacific Northwest 178.00-195.00
California 182.00-195.00
Texas Border (metric ton) 193.00-210.00
Lethbridge AB 152.00
Chicago 142.00-148.00

Dried Distillers Grain: 10% Moisture

Modified Wet Distillers: 50-55% Moisture

Wet Distillers Grains: 65-70% Moisture

CALIFORNIA WHOLESALE FEEDSTUFF PRICES (Tue Mar 1, 2016)

Distillers Dry Grains

  Rail to California Points         185.00-195.00    unch
  FOB Truck to California Points    185.00-191.00    unch-up 1.00

PACIFIC NORTHWEST WEEKLY FEEDSTUFFS (Tue Mar 1, 2016)

Offers for Distillers Dried Grains delivered by rail to feed mills in the Pacific Northwest were 3.00 to 5.00 lower from 184.00-190.00. Offers for distillers dried grains trans-loaded onto trucks and delivered to Willamette Valley dairies were 3.00 to 5.00 lower from 202.00-205.00.

*All prices quoted per ton unless otherwise noted.

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NASS/USDA MONTHLY CO-PRODUCTS PRODUCTION

Dry and Wet Mill, Co-products and Products Produced - United States

December 2015 - January 2016

Mar. 1, 2016

Highlights:

Dry mill co-product production of distillers dried grains with solubles (DDGS) was 1.87 million tons during January 2016, down 4 percent from December 2015 but up 2 percent from January 2015. Distillers wet grains (DWG) 65 percent or more moisture was 1.31 million tons in January 2016, down 6 percent from December 2015 and down 11 percent from January 2015.

Wet mill corn gluten feed production was 322.0 thousand tons during January 2016, down 5 percent from December 2015 but up slightly from January 2015. Wet corn gluten feed 40 to 60 percent moisture was 291.9 thousand tons in January 2016, down 5 percent from December 2015 and down 7 percent from January 2015.

Co-products and Products Jan 2015 Dec 2015 Jan 2016
Dry Mill tons
Condensed distillers solubles (CDS-syrup) 162,127 134,196 133,919
Corn oil 103,780 130,652 124,541
Distillers dried grains (DDG) 438,936 423,632 383,131
Distillers dried grains with solubles (DDGS) 1,831,393 1,941,708 1,869,722
Modified distillers wet grains (DWG) <65% moisture 1,480,431 1,398,280 1,311,155
Modified distillers wet grains (DWG) 40-64% moisture 476,760 442,448 449,256
Wet Mill
Corn germ meal 71,492 69,669 63,787
Corn gluten feed 321,768 340,460 321,956
Corn gluten meal 90,617 88,921 87,266
Corn oil 41,961 57,578 45,976
Wet corn gluten feed 40-60% moisture 313,400 307,874 291,882

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DDG LINKS/RESOURCES

Organizations

*Distillers Grains Technology Council

http://www.distillersgrains.org

*National Corn Growers Association Corn Distillers Grains Brochure

http://ncga.com/…

*Iowa Corn

http://www.iowacorn.org/…

Nebraska Corn Board

http://www.nebraskacorn.org/…

*Renewable Fuels Association - Ethanol Co-Products

http://www.ethanolrfa.org/…

*American Coalition for Ethanol

http://www.ethanol.org/…

*U.S. Grains Council

http://www.grains.org/…

*South Dakota Corn Utilization Council

http://www.drieddistillersgrains.com

Government Sites

*Iowa Department of Agriculture and Land Stewardship/Office of Renewable Fuels & Coproducts

http://www.distillersgrains.com

University Sites

*University of Minnesota - Distillers Grains By-Products in Livestock

and Poultry Feed

http://www.ddgs.umn.edu

*University of Illinois - Illinois Livestock Integrated Focus Team Distillers Grains site

http://ilift.traill.uiuc.edu/…

*University of Nebraska - Beef Cattle Production By-Product Feeds site

http://beef.unl.edu/…

*University of Nebraska Extension

http://ianrpubs.unl.edu/…

*Iowa Beef Center - Iowa State University

http://www.iowabeefcenter.org/…

*University of Missouri - Byproducts Resource Page

http://agebb.missouri.edu/…

*South Dakota State University - Dairy Science Department - Dairy cattle research

http://dairysci.sdstate.edu/…

(select "Distillers Grains" from the topic menu)

*Purdue University Renewable Energy Web Site

http://www.extension.purdue.edu/…

(select "Biofuels Co-Products from the menu)

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DDG CONFERENCES

If you are sponsoring or know of any event, conference or workshop on distillers grains, and would like to list it in the DTN Weekly Distillers Grains Update, please contact Cheryl Anderson (see contact info below).

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We welcome any comments/suggestions for this feature. Please let us know what information is valuable to you that we could include in the Distillers Grains Weekly Update. Please feel free to contact Cheryl Anderson at (402) 364-2183, or e-mail cheryl.anderson@dtn.com.

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(AG/ES)

John Harrington