China may be exploring ending the anti-dumping investigation into US DDGS imports after the ministry of commerce responded to a request from the US Grains Council to review the current situation, market sources have told Agricensus Tuesday.
President and CEO of the US Grains Council, Tom Sleight, confirmed that the council had raised the question of the review with the Chinese government.
Documents seen by Agricensus sent by the Chinese Alcoholic Drinks Association (CADA) to two separate companies, state that the ministry has received a request from the US Grains Council to re-evaluate China's anti-dumping and anti-subsidy probes on US DDGS.
DDGS are an animal feed produced as a by-product to the production of alcohols like ethanol, typically using corn as a feedstock.
CADA is a central umbrella group that oversees China’s burgeoning ethanol production sector, with the letter sent by the association asking for the companies to submit details on their income over the last year, and their current DDGS production levels.
They are also asked to evaluate the potential impact on domestic companies and farmers’ incomes in the event that the probes are terminated.
All responses are required to be returned by April 10, according to the document, with CADA then submitting a summary to the ministry’s Trade Remedy and Investigation Bureau within a week.
The move sparked some excitement across Asia markets in early trading, although it stops short of greenlighting the restoration of US exports to the country as it appears to amount to another goodwill gesture rooted more in symbolism.
For the US, limits on DDGS exports into China predate the current trade war, with a series of measures enacted against US DDGS that has massively reduced the country’s export outlet.
In 2016, China was the biggest customer for US DDGS, soaking up 2.3 millon mt over the year before a series of import duties slashed the competitiveness.
That slashed exports to 371,667 mt in 2017, with further measures paring that figure back to 206,657 mt in 2018, according to data from the US Grains Council.
As of January 2019, the latest month for which export data is available, China imported just 1,918 mt of US DDGS, down 91% on the same month of 2018.
“It is good news, but it will depend on how the trade talk goes," one corn importer told Agricensus, although he expected that the review could be completed prior to the end of trade talks.
The impact on the feed market in China was not expected to be significant, according to market sources, as domestic production only accounts for one or two million mt , while soymeal has been relatively cheap this year and demand has been hit by African swine fever outbreaks.
"If the trade talks do go well in April, this should be approved," a second China-based source said.
“We did ask the ministry of commerce to review the tariffs, as per their rules. This was not at the request of US Trade Representative,” Tom Sleight, president and CEO of the US Grains Council told Agricensus.
The Chinese Alcoholic Drinks Association declined to comment when contacted by Agricensus, while no comment had been received from the US Grains Council at time of publication.
