Agro Perspectiva

U.S. Ethanol Growth to Feed China’s Hogs, Dorr Says

09.04.2010 13:27 "Agro Perspectiva" (Kyiv) — U. S. Ethanol Growth to Feed China’s Hogs, Dorr Says The U. S., the world’s largest corn exporter, plans to double overseas sales of a by-product from ethanol distillation in the next five years as demand from animal feed makers in China expands, an industry group said. Total U. S. exports of dried distillers’ grains with solubles, or DDGS, a high-nutrient feed used in the livestock industry, may jump to as much as 11 million metric tons a year, from 5 million tons now, U. S. Grains Council President Thomas Dorr said in an interview in Tokyo yesterday. «As China has set an import quota for corn, Chinese demand for DDGS is expected to grow» as the product is not covered by quotas, Ruan Wei, senior researcher at Norinchukin Research Institute Co. in Tokyo, said in a phone interview. Output of DDGS is likely to increase as the U.S. expands ethanol production under the government’s policy to boost renewable fuel use, Dorr said. Feed mills in China, the world’s biggest pork producer, are seeking cheaper alternatives to locally grown corn as consumption of meat, milk and eggs booms in the world’s fastest-growing major economy, Wei said. «We all know that there is significant potential in China,» Dorr said. «Demand for high-quality protein is growing aggressively.» U.S. demand for corn to make ethanol will jump 17 percent this year, the country’s Department of Agriculture said on Feb. 9. Ethanol processors will use 4.3 billion bushels in the year ending Aug. 31, up from 3.68 billion the previous year, the department said. Tightening Stockpiles U.S. sales of DDGS to China may climb to as much as 2 million tons this year from about 600,000 tons last year, Dorr said. The target is in line with the goal set by President Barack Obama of doubling U.S. exports over the next five years. It’s cheaper for feed mills in southern China to buy DDGS from overseas than to buy corn from the nation’s growing region in the north, Wei said. China remains a net corn exporter under the government’s policy of maintaining grain self-sufficiency. Tightening corn stockpiles in China are also spurring feed makers to seek supplies, Xu Lihuan, vice president of Dacheng Food Ltd., said on March 19. While the government is wary that imports of large quantities of corn may displace domestic production, a smaller commodity like DDGS may not be seen as a threat, he said. The country’s DDGS purchases may increase to 1.5 million tons this year from 650,000 tons last year, Xu said. China’s corn exports may rise to 500,000 tons in 2009–2010 from 172,000 tons a year earlier, according to the USDA. China Focus Corn futures for May delivery in Chicago gained 0.4 percent to $3.4775 an ounce at 11:56 a.m. in Singapore. The price has slumped 16 percent this year as rising output in South America increased global stockpiles. DDGS is the nutrient left behind after starch is extracted from grains to make ethanol. A bushel of grain produces 2.7 gallons (10.2 liters) of ethanol and 18 pounds (8.2 kilograms) of DDGS, according to the Kansas Ethanol Web site. The U. S. Grains Council is focusing its export expansion efforts on China and other emerging Asian markets like Indonesia because demand from Japan, the largest buyer of U.S. corn, has matured, Dorr said. The world’s largest grains exporter faces competition from Eastern European and Central Asian wheat, Door said. Wheat can also be used in animal feed. «Countries like Russia, Ukraine and Kazakhstan will export in the fiscal year ending June 2010 probably 47 million metric tons» of grains, he said. «That’s the competition we have to deal with.» The U. S. was the biggest corn exporter ahead of Argentina, Brazil and Ukraine in 2008–2009, according to the USDA. Corn shipments from the U.S. may reach 48 million tons in 2009–2010, the department forecast. Japan, the world’s largest corn importer, purchased 11 million tons of the grain for feed use last year, data from the Ministry of Finance show. The U. S. supplied 10.6 million tons, or 96 percent of the total, while Ukraine shipped 212,458 tons.