Imports of distillers' dried grains (DDGs) by China, the world's second-largest corn consumer, are likely to top 2.8 million tons this year, said Liu Xiaoyu, general manager with the feed division of COFCO Agri-Trading & Logistics, also China's top importer. China imported only 640,000 tons in 2009.
China's purchases have slowed recently due to the rise of U.S. corn prices. DDGs have largely been used to replace corn this year because of a lower Chinese harvest and cheap U.S. prices, said Liu.
China buys almost all its DDGs from the United States.
"There is a potential market of 8 million tonnes (of imports) because domestic production growth is slow," Liu told a DDG conference organised by an industry web site.
China has limited expansion of ethanol plants, which now produce 3.5 million tons of DDGs a year, while domestic demand could be as large as 11.5 million tons, given that animal feed production will reach 150 million tons this year, said Liu.
Fan Wenmin, general manager of the industry website, expects imports to reach 5 million tonnes next year if prices are favourable. The industry website, set up by COFCO Co. Ltd, is a trading platform for DDGs.
Imports of DDGs as an animal feed additive are not subject to controls such as corn import quotas or Chinese rules on genetically modified organisms, said Fan.
COFCO's Liu said DDGs are getting popular among feed mills, and some had increased the proportion of DDGs in animal feed to 12 percent from 7.5 percent.
But a majority, currently 80 percent of the imported volume, has to be shipped with containers. Bulk cargoes from the United States are limited because of lack of port facilities and suitably sized ships in the United States.
Liu said China, which will produce 250 million tonnes of animal feed by 2020, is shifting to being a corn importer from an exporter.
"The growth of domestic supply will not be able to match the growth of consumption," said Liu.
He expected corn imports to continue next year after China imported more than 1 million tonnes this year.
China animal feed production is likely to grow annually by 10 million tonnes in the next decade after an average growth of 8 million tonnes in the current decade, said Liu, who is also the vice chairman of China Feed Industry Association. (Reuters)
