Prices for distillers grains plunge after China rejections
Prices for dried distillers grains (DDGs)—a by-product of corn-based ethanol that is used as animal feed—fell $30 a ton at U.S. export markets after top buyer China rejected two shipments last week because of the presence of an unapproved strain of genetically modified grain, traders said Tuesday.
Bids for shipments during the first quarter of 2014 fell to $190 a ton in the Mississippi River market that feeds export terminals along the Gulf Coast, traders said.
That is down from $220 last week, when Chinese news agency Xinhau reported that two cargoes of DDGs from the United States were rejected from Shanghai, and from $275 earlier this month.
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"The DDG market continues to work lower, [with] buyers backing away and sellers looking for homes,'' an export trader said.
The rejection of 2,000 tons of DDGs represents only a small portion of China's expected imports. During the last marketing season, the country imported a record 2.8 million tons, according to U.S. Agriculture Department data.
Still, some U.S. exporters were said to be halting shipments of DDGs to China, leading to a bigger domestic supply that is likely to weigh on other high-protein animal feeds such as soy meal.
"The people I am talking to [say] there have been some additional containers that have been canceled,'' said AgResource analyst Dan Basse. "The backup of DDGs in the United States is going to cause some pressure and likely will affect meal prices also.''
China has rejected 545,000 tons of U.S. corn during the past two months after cargoes were found to contain Syngenta AG's MIR 162 corn, a genetically modified variety that has been awaiting China's approval for more than two years.