Is the U.S. Playing Dirty with DDGs?
Dec 29, 2010
China has a problem with the U.S. practice of sending too many DDGs to their country, it appears. A column on the Wall Street Journal (subscription required) explains the situation.
It appears we'll close out 2010 with U.S. DDG exports to China that are more than five times the amount of shipments sent there in 2009. A good number by any measure. But the Chinese say because our prices were about $45-$60/ton less than their domestic prices from June 2009 to July 2010, even after shipping costs, we were dumping product to depress prices.
The Chinese have a problem with this because they really want to develop their own their own corn infrastructure.
Here's a portion of the column:
In June, the U.S. Department of Agriculture’s Foreign Agricultural Service was already calling "China’s emergence as a key growth market… (an) important driver behind the surge in shipments." (PDF)
So wouldn’t all this make for a chummy trade relationship?
Not quite, it would seem—perhaps because China is also eager to both ensure self-sufficiency in food and develop its own corn-related agribusinesses.
Beijing doesn’t have a slam-dunk case. At current prices, DDG imports are slightly more expensive than the domestic product, which weakens the dumping argument.
This might be why China’s Ministry of Commerce focused its DDG dumping probe on the period from July last year to June this year – a time, analysts noted, when U.S. DDG import prices undercut domestic DDG by 300 yuan-to-400 yuan a ton. The ministry also gave itself an unusually long window of investigation, up to the end of 2011, and if necessary up to mid-2012, a move that could be positioned to guard against a resurgence of cheap imports.