Export Exchange 2014 is heading to Seattle, Washington and will take place on October 20-22, 2014 at the Sheraton Seattle Hotel. The event is sponsored by the Renewable Fuels Association (RFA) and the U.S. Grains Council (USGC). Held every two years the Export Exchange is a premier international trade conference focused on the export of U.S. coarse grains and co-products. Last year’s event attracted buying teams from 33 countries, including all of the top U.S. international markets.
In 2014, approximately 150 foreign buyers of U.S. coarse grains and co-products are expected in Seattle, on hand to meet and build relationships with more than 300 domestic suppliers in attendance. There will also be more than two days of educational sessions and networking opportunities.
“Export Exchange 2012 exceeded all expectations,” said USGC Chairman Julius Schaaf, “and many of our foreign guests have already expressed their intent to return in 2014. Buyers will converge in Seattle next October, ready to make contacts and do business. U.S. grains sellers and ethanol producers can expect to rub shoulders with more than 80 percent of the world’s top buyers at Export Exchange. Key stakeholders will surely benefit from attending. We’re really looking forward to this event.”
Export Exchange focuses on bringing international buyers of U.S. coarse grains and distiller’s dried grains with solubles together with U.S. producers and agribusiness professionals. Attendees will also have the opportunity to participate in pre- and post-conference missions to view the U.S. production and export complex and learn more about the capacity, reliability and quality of the United States as a long-term supplier.
“There is an increased global demand for DDGS (distiller’s dried grains with solubles) and Export Exchange connects the dots by bringing interested buyers and sellers together to help grow the international market,” added Bob Dinneen, President and CEO of RFA.
The issue of the European Union’s treatment of ethanol imports from the United States came up during a Senate Finance Committee nomination hearing Thursday for U.S. Trade Representative (USTR) nominee Michael Froman.
Sen. John Thune (R-SD) noted that he and a number of other senators sent a letter in April to the Acting USTR asking for an investigation into the anti-dumping decision made by European Union regarding ethanol imports from the United States. “American ethanol producers believe that what the EU has done in imposing a countrywide anti-dumping duty on all U.S. ethanol imports is both unprecedented and unsupported from a legal standpoint,” Senator Thune said.
Forman answered in the affirmative when the senator asked him if he would commit to “carefully reviewing the EU’s action on ethanol” and pursue “every available remedy to ensure that U.S. ethanol exporters are treated fairly by the EU.”
The nominee said he was familiar with the issue and that his understanding is that “USTR is reviewing the methodology that the EU used in that case.”
Froman currently serves as the White House deputy national security advisor for international economic affairs.
The Renewable Fuels Association (RFA) and Growth Energy have filed a complaint with the General Court in Luxembourg challenging the European Union’s (EU) decision to impose a 9.6 percent antidumping duty on all ethanol imported from the United States.
The complaint outlines 10 specific violations of one established trade law committed by the European Commission in its investigation of anti-dumping claims, and the imposition of a country-wide anti-dumping penalty, against all U.S. ethanol. These include errors in the assessment of relevant facts in determining injury and dumping margins as well as violations of the EU’s own rules regarding the implementation of anti-dumping penalties, such as their refusal to calculate individual dumping margins and assign individual dumping duties, their incomplete and inaccurate calculation of an alleged injury margin, and their overstatement of the volume of imports from the U.S. The complaint from RFA and Growth Energy requests the complete and total end of the duty.
The RFA and Growth Energy are trying to remedy the situation through other avenues as well. EU’s determination to impose the duty violates various requirements put in place by the World Trade Organization (WTO). Consequently, RFA and Growth Energy are working with appropriate officials in the United States to pursue a challenge before the WTO.
Earlier this month, 14 Senators signed a bipartisan letter to Acting Commerce Secretary Rebecca Blank and Acting US Trade Representative Demetrios Marantis demanding that the Administration carefully evaluate the EU’s decision to impose a duty on imported ethanol and consider challenging the WTO requirements.
Fourteen Democratic and Republican Senators have joined together to sign a letter sent to the Acting United States Trade Representative (USTR), Demetrios Manatos and Acting Secretary of Commerce, Rebecca Blank, calling on them to review and consider a World Trade Organization (WTO) challenge to the European Union’s controversial and unprecedented anti-dumping duty recently imposed on U.S. ethanol producers.
The letter was co-authored by Senators John Thune (R-SD) and Amy Klobuchar (D-MN), and cosponsored by Senators Tom Harkin (D-IA), Chuck Grassley (R-IA), Al Franken (D-MN), Mike Johanns (R-NE), Heidi Heitkamp (D-ND), Deb Fischer (R-NE), Tim Johnson (D-SD), John Hoeven (R-ND), Claire McCaskill (D-MO), Pat Roberts (R-KS), Richard Durbin (D-IL) and Roy Blunt (R-MO).
“The EU Commission failed to make any particular finding of dumping by any producer or marketer investigated in connection with the case,” said Dinneen and Buis. “The EU’s recent actions are unprecedented and we believe that the World Trade Organization (WTO) will nullify this blatantly protectionist country-wide anti-dumping duty on exports of ethanol from the United States.”
The American ethanol industry has been vocal on the issue and the Renewable Fuels Association (RFA) and Growth Energy, jointly released a statement. “America’s producers and marketers of ethanol are outraged by the news that the European Commission has proposed to the European Council an anti-dumping duty equivalent to 62.3 Euro per tonne on all ethanol produced in the United States, regardless of who produces the product or who sells it. This decision is unprecedented. Not only does it fly in the face of over 30 years of consistent practice by the EC, but it also violates numerous provisions of the World Trade Organization’s Agreement on Antidumping.”
Bob Dinneen, president of RFA added, “This proposal is legally vulnerable on numerous grounds. They selected six producers for investigation and none were found to be dumping; nonetheless, duties are being imposed. In addition, all those producers not selected for review are also being penalized, again with no dumping having been found.”
“We are exploring every option to overturn this decision. Our producers and trading companies cooperated fully with the Commission’s requests for information. In the end, it was all ignored in favor of what can only be described as a political decision to erect an artificial trade barrier,” concluded Growth Energy CEO Tom Buis.
According to an article in Reuters, shipments of ethanol from the United States to the EU are worth more than $930 million, or 700 million euros, a year.
“This is simply one step in an ongoing process. While the Antidumping Advisory Committee has voted in favor of imposing an anti-subsidy duty on U.S. ethanol exports, this is one committee making a recommendation to a larger body and the matter is not final. While we are troubled by the Commission’s preliminary decision, we remain convinced that this matter lacks the merit necessary for imposing such a duty and that, when all the facts are considered, the European Union will rightly decide not to impose any antidumping duties on imports of ethanol produced in the United States.”
“We continue to cooperate with the Commission’s investigation. We are troubled by news that the Commission is recommending a 9.6 percent anti-dumping duty to its Member States. We remain convinced that if all the facts are considered, the European Union will decide not to impose any anti-dumping duties on imports of ethanol produced in the United States.”
Last year, the European Union (EU) initiated anti-dumping and countervailing duty investigations regarding U.S. exports of ethanol to Europe and current U.S. policies surrounding ethanol production and use, specifically the expiring volumetric ethanol excise tax credit, or VEETC, available to blenders of ethanol and gasoline. Allegations by EU ethanol producers suggested that U.S. ethanol exports to Europe were taking advantage of the tax incentive before export, thus lowering its price and harming EU ethanol producers. However, by August of this year it appeared the issue had been resolved and the EU would not be taking any action.
The Renewable Fuels Association (RFA) is calling on the Obama Administration to help remove certain trade distorting policies in Brazil that they say have contributed to the dramatic decline in exports of ethanol to Brazil. The organization’s President and CEO, Bob Dinneen, sent a letter to US Trade Ambassador Ron Kirk asking for assistance on the matter.
The letter seeks assistance from the USTR in convincing Brazil to reverse its decision to reduce blend volumes from 25 percent to 18 percent, and remove a tariff imposed by the state of Sao Paulo that is discriminating against a vast majority of exports to Brazil. While imports of ethanol from Brazil continue to flow into the U.S. at the rate of about 50 – 60 million gallons per month with the help of the RFS, exports to Brazil have been reduced significantly as a result of these trade barriers.
Most analysts expect the U.S. to export just 650-750 million gallons for the entire year, with only about 10-15 percent of the ethanol going to Brazil.
During the recent 2012 Export Exchange a few key leaders in the international market took the stage in a panel to share their perception on United States competitiveness in grain production.
Adel Yusupov, Southeast Asia Regional Director for US Grains Council, served as the moderator for the panel.
Panelists consisted of:
Willis Wu-Yeh Cheng, Chairman, Charoen Pokphand (Taiwan)
Mousa Wakila, General Manager, National Poultry Al Ahlieh (Jordan)
Jamie Rueda, General Manager, Escala (Colombia)
Dennis Inman, Vice President & Commercial Lead, Cargill, Inc.
The panelists were asked to share their candid thoughts on how the United States ranks in grain production and what attributes are most important to them when buying grain. Prices were at the top of all their lists, but they also want reliable market research and stressed that logistics were always a concern. Other items on the list included: consistency, a strong relationship and predictability.
Distiller grain production was a hot topic discussed throughout the 2012 Export Exchange. Dr. Bob Wisner, Agriculture Extension Economics at Iowa State University, shared his research on the future of DDGS and what we can expect in the coming years. He also spoke on how this years drought affected DDGS production and it’s long-term affect on our US supply.
“The biofuel industry has expanded extremely rapidly in the last six years. It has become a major feed ingredient domestically and in the international market. Here in the United States it’s marketed in several different forms. We have dried distiller grains, that are dried to 10% moisture. We have a modified distiller grain that is partially dried. We have a wet distiller grain that is especially useful in the beef feeding industry. It gives a higher feed conversion efficiency versus corn than dry distiller grains. We have quite the combination of alternative uses here in the United States that for those of you outside the US are not generally available.”
“This is the first year in the last 17 years that we have seen a significant decline in distiller grain production. That of course is being driven by the severe drought here in the United States.”
In conclusion, Dr. Wisner shared these major things that will determine the supply and demand of DDGS.
DDGS production follows ethanol production level and corn cost.
Prices as % of corn/sbm price higher than in the past: 105%-108% of corn this winter.
Prices for all feeds including DDGS will be extremely sensitive to South American weather in the next 4 months.
After the current marketing year, with a return to more normal US crop yields, DDGS supplies will likely resume a longer-term uptrend, but at a slower rate than in the last six years.
Risk of US domestic DDGS market saturation is low.
DDGS exports likely will be growing competitor with the domestic feed industry.
Longer-term future production and use depends heavily on policy issues and fuel prices.
Important emerging issue: Will oil removal from DGS impact the value by species?
Grain buyers from around the world in attendance at the 2012 Export Exchange had the opportunity to embrace the US producers perspective on the 2012 crop through a producer panel during the opening general session. Key panelists were Ron Gray, Illinois farmer and Secretary/Treasurer of the US Grains Council, and John Mages, Minnesota farmer and Chairman of the Minnesota Corn Research & Promotion Council.
They shared their personal experiences overcoming the 2012 drought and assured buyers of their fight and passion to raise a consistent and quality product.
Following the opening session I took the time to talk with Ron Gray, where he summed up the 2012 corn crop and how farming for him is more than a job, its a personal endeavor.
“For us the 2012 crop started out with all the hope of an extraordinary crop. We planted early, the crop went in very well, emergence was good. Then it didn’t rain. Beginning the second week of May through the first week of August we only had about three inches of total rainfall and because of that our corn crop was severely reduced in production. Our farm probably averaged 50 bushels an acre, which is approximately 1/3 of our normal production. The rainfall did come later and the soybean crop is a fairly good crop, but the corn crop was devastated.”
Beyond simply listening to producers, international grain buyers had the opportunity to visit farms across the United States. The goal was to gain information, assess the current US corn crop, explore the availability of other grains such as sorghum and barley, and build relationships leading to future sales.
Many participants expressed a preference for buying US grains due to the consistency and quality of the grain. They also appreciate the transparency and reliability of the US marketing and delivery systems. Clearly price and availability hindered US exports this year, but buyers are looking forward to a better crop next year.
To kick off the 2012 Export Exchange attendees heard from keynote speaker Carl Casale, President and CEO of CHS, Inc., on the outlook for global grains and renewable energy.
Casale started off stated that the outlook simply depends on lots of different things and we have to focus on what we do know. He left attendees with one question: Do we have a strategy to survive, or even thrive in a volatile world?
While interviewing him after his presentation, he discussed the long term goals for global grain production and what we should expect production wise in the next year.
“The first thing you need to do is just take a step back and look at what the global demand is going to be over the long term. We have talked about 9 billion people on the planet, that’s going to require a 50% increase in grain production. As importantly, the 9 billion people are going to eat meat so there is another 50% increase in grain production to be able to feed livestock around the world. I have not seen anything that says that that’s not probably where we are going to be in the long term.”
“If you look at the market signals, it’s telling farmers that we want more corn acres in the US coming off a bit of a short corp that we had this year. Farmers are very well capitalized. I don’t think that will be an issue interms of getting hte corn produced. I think probably the biggest physical challenge we are going to have right now is we typically apply a lot of fertilizer for corn in the fall. It was so dry this year we just didn’t have the opportunity to do it. So, that will put al lote more pressure on supply chains in the spring.”
The key purpose for the 2012 Export Exchange was for buyers and sellers to meet and establish important relationships. The event sponsored by the US Grain Council and Renewable Fuels Association focused on getting answers, making contacts and building business. During the conference I had the opportunity to talk with Tom Sleight, President & CEO of the US Grains Council, about what this event means for the DDGS and the worlds grain supply.
“What we’re telling customers around the world is how the US producers will be there for them. The US farmers will be there for them now and in the future. Yes, we have droughts, thats a problem we have, but for the future the US has always responded to production challenges with more acres, greater production. Our message to the international community is that the US farmer is there in the international market for keeps.”
“I think out biggest thing is being all around, having boots on the ground, representatives that are selling these grains, bringing the buyers in. That’s what we are doing today with over 200 buyers from around the world. Bringing them in, making contacts and making sales. It is a different kind of business and it takes being there and extending your influence and representing producers interest all around the world. That’s what US Grains Council is doing.”
The US Grains Council also announced the official approval of the Syngenta corn variety MIR 162 Agrisure Vipterra in the European Union. This opens the way for exports of US corn co-products, including DDGS and corn gluten free.
Cary Sifferath, USGC senior regional director based in Tunis, said “This approval is a great success as it opens the window of opportunity for U.S. products, including DDGS and CGF, to enter the EU market. This is especially attractive in big markets like Ireland, Spain, Portugal and the Netherlands. Their ability to import these high-protein feed ingredients is critical at a time of crop shortage in Europe and high prices. Everyone is looking for alternatives,”
A highlight for the 2012 Export Exchange was Dr. Joe Glauber’s comments on the supply and demand of the United States and worlds coarse grains. Dr. Glauber is the Chief Economist for the United State Department of Agriculture. Attendees from across the world listened as he discussed the aftermath of the US drought and the goals for price moderation worldwide.
“No surprise I talked about the drought and the effect on corn and soybeans primarily. This was a global conference so wheat, as well. Clearly the drought was a the big story this summer. It certainly affected prices. As we look forward I think the key thing in terms of price moderation is the world is now turning to the South American soybean crop and we should have more information on that in the next couple months. The real issue will be what it means for spring planting here in the United States. I think given these prices we are going to see strong acreage again for corn and soybean. Hopefully we’ll see better yields and some rebuilding of stocks and some moderation of prices because the livestock side of the sector has been hit pretty hard.”
Of particular interest to the ethanol industry, Dr. Glauber spent several minutes of his presentation discussing how the drought, corn prices and other factors have influenced ethanol production this year, as well as some insight on the blend wall and the Renewable Fuel Standard (RFS). Listen to that portion of his remarks here: Joe Glauber ethanol comments
Attendees for the 2012 Export Exchange were the audience for Geoff Cooper of the Renewable Fuels Association (RFA). Cooper, who serves as RFA’s Vice President for Research and Analysis, spoke to over 500 of the worlds feed producers, marketers and buyers. He explained that distillers grains and other ethanol co-products have become a tremendously important component of the global animal feed market.
“The American ethanol industry produced nearly 39 million tons of nutrient-dense animal feed in the 2011/12 marketing year, meaning the ethanol industry has surpassed the U.S. soybean crushing industry in terms of feed production,” Cooper said. “The feed produced by the ethanol industry is nourishing beef, dairy, swine, poultry, and fish around the world. About one-quarter of the feed co-products generated last year were exported to more than 50 countries.”
Cooper also explained that the U.S. ethanol industry has responded to the historic drought of 2012 by curtailing its consumption of corn. “There is a false notion out there that the ethanol industry is somehow insulated from the effects of the drought and high corn prices because of the Renewable Fuel Standard (RFS),” Cooper said. “That simply isn’t true. As crop conditions deteriorated in July and August and corn prices increased, corn use for ethanol dropped by almost 15 percent. That means the ethanol industry reduced its corn consumption by about 600-700 million bushels on an annualized basis in less than two months’ time. Without a doubt, the ethanol industry has not been spared from the effects of the drought.”