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China Rules on US DDG
Thursday, January 12, 2017 12:08PM CST


By Mary Kennedy
DTN Cash Grains Analyst

OMAHA (DTN) -- In a further escalation of battles between the U.S. and China over trade, China's Ministry of Commerce on Tuesday increased some significant anti-dumping duties and tariffs on distillers dried grains from the U.S.

China duties and tariffs -- which have already had a significant impact on exports of distilled grains -- were increased Tuesday by China on distillers grains in a final ruling following a year-long trade probe. Anti-dumping duties were set at a range from 42.2% to 53.7%, while anti-subsidy tariffs will be between 11.2% and 12%.

The duties and tariffs apply to both distillers dried grains with and without solubles and will be in effect for five years from Thursday, according to news reports.

China originally launched an investigation into U.S. distillers dried grains -- with and without solubles -- a year ago after a petition was filed by the China Alcohol Drinks Association against the U.S.

Last September, in a preliminary ruling, China's Ministry of Commerce stated that the U.S. was dumping distillers dried grains in China, damaging the domestic industry, thus requiring them to pay a duty on distillers dried grains with and without solubles from the U.S. China had originally imposed an anti-dumping deposit of 33.8% and added an anti-subsidy tariff of 10% to 10.7%.

The duties and tariffs are a blow to the U.S. distilled grains market. USDA reported on Jan. 6 that U.S. exports of distillers grains were down 9% in the first 11 months of 2016 from a year ago, hurt by a 63% drop in China's total. China's absence has given other countries a chance to pick up the slack. In November, U.S. exports were actually up 9% from a year ago, led by Vietnam and Mexico.

Yet, there are also troubles in Vietnam for U.S. distilled grains. In mid-October, Vietnam, the third top importer of U.S. distillers dried grains with solubles, announced it would suspend imports in mid-December because of contamination from the "Ballion" variety of beetle. In mid-December, Vietnam did indeed ban imports of U.S. distillers dried grains with solubles until Vietnamese officials meet with USDA staff to address the fumigation process, the ban will stay in place. Expectations from merchandisers are that a meeting may take place by mid-February, but nothing official has been announced.

The U.S. Grains Council said in a statement Thursday that it was "deeply disappointed in this series of events that is a severe departure from our industry's three decades of broad, cooperative work with China's government and livestock industry and that follows a year of extensive cooperation on the part of the U.S. DDGS and ethanol industry with MOFCOM investigations."

"The decisions in the anti-dumping and countervailing duties investigations are not supported by the evidence and raise serious questions regarding the ministry's compliance with standard AD/CVD procedures and with China's international obligations," the Grains Council said in its statement. "While painful and damaging to the U.S. DDGS industry, their biggest negative impact will ultimately be on China's feed and livestock industries, which risk losing access to an important and cost-effective feed ingredient, and on millions of Chinese households that will likely face greater food price inflation and less access to affordable, wholesome pork, poultry and dairy products."

The China decision comes 10 days after action by the Chinese government to increase tariffs on imported U.S. ethanol from 5% to 30%. USGC said the latest action effectively stopped a "growth market for U.S. farmers and ethanol producers. U.S. farmers also continue to wait for China's approvals of biotech corn events, which last happened in 2014."

Here is a link to the complete press release: http://www.grains.org/…

Informa Economics said that the uncertainty of export demand from top destinations in coming months is keeping end users from booking very far forward. "Prices are apt to soften enough for other export destinations to realize the value of distillers and increase their usage. The lack of confidence in export sales in coming months suggests that relative prices to corn and soybean meal will continue to stay below five-year average levels."

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow Mary Kennedy on Twitter @MaryCKenn

(CC/AG)


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