The U.S. Grains Council (USGC) held its winter meeting last week in Costa Rica where more than 250 delegates met to take a look back at last year and assess export opportunities.
Chairman Ron Gray says one of big issues of 2014 was with the ethanol co-product distillers grains (DDGS) and China. “At the end of the year, our exports were one of the highest years for DDGS on record,” said Gray. “The Grains Council was instrumental in mitigating that process so that trade can continue.”
Gray, who is a farmer from Illinois, believes it’s important for producers to be involved in trade policy. “I think combines would be easier to fix than trade policy,” he said. “We try to address the next problem so we can keep trade moving.”
Gray says U.S. sorghum picked up some exports to China last year to pick up the slack caused by the biotech trait issue with corn, which allowed them to remain active in the market, but ultimately it’s the growing demand for corn that is benefiting farmers back home.
The U.S. Grains Council (USGC) has compiled its top 10 list of potential U.S. ethanol markets for the upcoming 2014/2015 market year, starting September 1.
While Brazil and Canada remain the top two, the Council is assessing Japan and Korea, Latin America and Southeast Asia as potential markets for U.S. ethanol exports. In the number three spot, USGC believes Japan has the potential to import 459 million gallons of U.S. ethanol in the year ahead, which would account for 11 percent of global demand for U.S. ethanol. Seventh placed Mexico has the potential to import 236 million gallons of U.S. ethanol and the Philippines at number nine could import 90 million gallons. Those three markets combined could to represent almost 20 percent of global demand for U.S. ethanol.
Rounding out the top ten, USGC puts the United Kingdom in fourth place with nearly 305 million gallons, India and Nigeria ahead of Mexico in 5th and 6th place with 250 and 240 million gallons respectively. Australia is ranked in 8th place with 220 million gallons and the Netherlands completes the top 10 with just over 86 million.
Exports of U.S.corn to Colombia have soared this year, thanks to bigger crops, lower prices, and a favorable free trade agreement. The U.S. Grains Council (USGC) also sees great potential for increasing exports of the ethanol co-product and livestock feed distillers grains (DDGS).
“We currently see about 90,000 metric tons of distillers grains moving into Colombia,” says USGC Director of Global Strategies Kurt Shultz. “We believe the market has the potential to easily exceed 700,000 tons, so there’s a lot of upward opportunity in Colombia for increased exports of distillers grains.”
Under the free trade agreement, there are no duties on distillers grains, so the Grains Council is actively working to bring technical knowledge on how to use the product to the region. “We had some feeding trials last year with the dairy industry which should good acceptance in the dairy sector,” said Shultz. Now they are looking at doing trials in swine and poultry as well.
“We’ve been working since late March, early April to determine which markets we’re going to do market assessments in and then next year we’ll shift into market development activities,” said Ashley Kongs, USGC manager of ethanol export program. The Grains Council is planning three regional market assessment programs this year, going to Japan and Korea in September, Latin America in November, and southeast Asia in early December.
Earlier this year, USGC participated in a trade mission to China with USDA Undersecretary Michael Scuse where they were able to discuss the possibility of ethanol exports to that country. “They visited with a Chinese ethanol plant and they had meetings with the National Energy Administration in China,” said Kongs. “Currently ethanol can only be sold in six designated markets in China for blending with fuel, but the group had discussions about the possibility of expanding ethanol use nationwide.” Kongs says while there are challenges in the Chinese market, the Grains Council sees great potential for the future to open the door for U.S. ethanol exports.
USGC continues to build on its success in promoting exports of the ethanol co-product distillers grains and will be again this year joining RFA in hosting the Export Exchange, an international trade conference focused on the export of U.S. coarse grains and ethanol co-products held every two years. Early registration for the event is open until July 31 and USGC and RFA members are eligible for discounted pricing.
Registration is now open for Export Exchange 2014™, an international trade conference focused on the export of U.S. coarse grains and ethanol co-products.
Approximately 300 U.S. suppliers and agribusiness representatives and more than 180 international buyers are expected to attend Export Exchange 2014. The conference is being held Oct. 20-22 at the Sheraton Seattle Hotel and is co-sponsored by the U.S. Grains Council (USGC) and the Renewable Fuels Association (RFA).
“Export Exchange brings together a group of U.S. suppliers and international buyers in a unique event focused on the expansion of established export markets and the development of new markets for U.S. coarse grains, distillers dried grains with solubles (DDGS) and other ethanol co-products,” said USGC Chairman Julius Schaaf.
“Over the past decade, the U.S. ethanol industry has emerged as a major producer of high quality animal feeds like DDGS and corn gluten feed,” said Bob Dinneen, RFA president and CEO. “Export Exchange is the premier forum for connecting the producers and marketers of those co-products with customers around the world.”
Export Exchange is held every two years. The 2012 event broke records in attendance and attracted buying teams from 33 countries, including all of the top U.S. international coarse grains and ethanol co-products markets. Attendance at this year’s event is expected to set a new record, creating more opportunities for U.S. merchandisers to connect with buyers and build business.
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.
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.
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.
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,”
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.”
China‘s commerce ministry is ending an 18-month anti-dumping investigation into imports of the ethanol co-product distillers dried grains (DDGS), offering the opportunity to bring U.S. exports back up as it means no anti-dumping tariffs will be imposed.
China’s imports of DDGs dropped by nearly half last year compared to 2010 when they topped 2.5 million metric tons, up 385 percent over the previous year. U.S. Grains Council President and CEO Tom Dorr says U.S. exports to China have already shown an increase this year over last in anticipation of this decision. “Imported DDGS from the U.S. the first four months, January through April of 2012, are up about 84% over 2011,” Dorr said in a press conference this morning. “We think people were sensing that this may be the outcome and were willing to take the risk that there probably would not be tariffs imposed.”
Dorr gave special recognition to Ray Defenbaugh, President and CEO Big River Resources, for his help during the investigation. “One of his plants was selected for the investigation phase of the case,” said Dorr. “He was very supportive of dealing with this issue head-on which helped everyone.” The three plants originally chosen for the investigation were Big River, United Wisconsin and Golden Grain.
Saudi Arabia has always been the oil capitol of the world, but when Venezuela took the number one spot last year, the Saudis began to focus on diversifying into new revenue streams, like agriculture, and started to satisfy feed demand for dairy and livestock with the ethanol co-product distiller’s dried grains (DDGS).
Saudi Arabian group tours U.S. ethanol plant to see DDGs being made
The USGC launched the effort to expand market access for DDGS into Saudi Arabia through such activities as taking officials on tours of ethanol plants in the United States so they could see how the product was made. It was difficult at first to overcome the Saudis’ mistrust of ethanol as competition for petroleum, not to mention the fact that it is alcohol, which is prohibited in that country. But the Council ultimately succeeded in getting DDGS on the Saudi’s “feed ingredient subsidy list” which allows financial support for importers to aid them in bringing foreign feed ingredients to the market in order to reduce water consumption.
To gain placement on the list, the Council addressed various obstacles through an aggressive marketing campaign focused on stimulating demand and improving market access and is now introducing programming to educate traders and nutritionists about the tremendous benefits of DDGS. With 16,000 tons of U.S. DDGS already entering the Saudi market, the Council anticipates the demand to grow along as increased emphasis is placed on expanding the agricultural sector.
The U.S. Grains Council recently held workshops in Guangzhou and Qingdao to promote the ethanol co-product distillers grains (DDGS) in China.
“The day-long sessions were designed to provide an exchange of comprehensive DDGS market information, including discussions and analysis of the value of U.S. DDGS,” said Alvaro Cordero, USGC manager of DDGS.
Cordero says they had 200 to 250 people, including buyers and USGC member companies. “This created a good opportunity for buyers and sellers to make connections,” he said.
The conferences, organized in cooperation with FoodChina Company, included presentations on DDGS use in swine, poultry and dairy rations, in addition to quality control, DDGS supply and demand, and pricing.
The United States continues to export a good volume of DDGS to China, despite an anti-dumping case initiated by the Chinese government last winter. U.S. shipments in the January-to-September period were down 49 percent from the previous year but still totaled almost one million metric tons, making China the number two export market for distillers grains.
Get out your 2012 calendars and mark the date for just under a year from now to attend the next global event to help increase exports of ethanol co-products for livestock feed.
Once again, the U.S. Grains Council (USGC) and the Renewable Fuels Association (RFA) are teaming up for the Export Exchange 2012, an international trade conference focused on the export of U.S. coarse grains and co-products, including distiller’s dried grains with solubles (DDGS) and corn gluten. The last such event was held last year about this time in Chicago.
“Export Exchange 2010 was a huge success,” said Wendell Shauman, USGC chairman. “People from all around the world gathered in one central location to make deals and get information regarding these vital commodities. Business contacts made during the conference are still being used today.”
The U.S. Grains Council (USGC) is helping U.S. companies register as interested parties to China’s anti-dumping investigation against imports of U.S. origin distiller’s dried grains with solubles (DDGS), an ethanol by-product.
The first step in the investigation involves helping DDGS producers register as interested parties, a process that must be completed no later than Jan. 17 in Beijing (which is Jan. 16 in the United States) and is further complicated by the need to translate all registrations into Chinese. Nearly 70 companies have already registered with USGC.
Registering as an interested party is an important step, since registered parties can qualify for lower, negotiated tariffs if there is a finding in the investigation. In contrast, unregistered companies could face the highest tariffs of all. Once the registration process is complete, Chinese authorities will begin a fact-finding process that will include investigations of specific company practices. To reach a final ruling against the U.S. trade, China must show evidence that DDGS has been dumped in the Chinese market at prices below what other buyers pay and that Chinese interests have been injured by the dumping. Provisional tariffs on DDGS could begin as early as June 2011. China is expected to make a decision on its findings by Dec. 28, 2011, though that deadline can be extended by six months if needed.
U.S. shipments of DDGS to China skyrocketed from almost nothing three years ago to more than 2 million metric tons in 2010 and may reach as much as 3-5 million tons in 2011.