Morocco's Saw Tooth Production and Drought Creates US Opportunities

Morocco's coarse grains supply and demand

This chart illustrates the dynamics of Morocco's coarse grains supply and demand. The grey area in the chart shows production, which in Morocco is mostly barley. The saw-tooth nature of the production area reflects the weather dependency of Morocco's crop production. The total use and feed use lines show strong growth over time. But that growth can be derailed by a series of bad harvests, as was the case in 2007 and 2008.

U.S. DDGS Exports

U.S. DDGS exports

The Census Bureau reported U.S. DDGS exports at 612,638 metric tons in February, which is a 1 percent increase over January exports. China (blue line) accounted for 25 percent, or almost 150,000 metric tons, of total shipments.As the largest swine producer and consumer, China will increasingly become a more consistent importer of feed grains.

High Commodity Prices Encourage Purchases of Alternative Feed Ingredients

South Korea is one of the best examples of how high commodity prices encourage the search for alternative feed ingredients.

The columns in blue show total Korean corn feed use (all imported) over the past decade, rising to 7 million metric tons (278.6 million bushels) in 2007/2008 and declining to 6 million tons (236.2 million bushels) in 2011/2012. But that decline in corn use is more than compensated for by increases in wheat feeding and distiller's dried grains with solubles (DDGS) imports.

Chart of the Week: Coarse Grain Import Demand Growth

Coarse Grain Import Demand Growth

The USDA 'Baseline to 2021' includes this projection for coarse grain import demand growth over the coming decade. Coarse grains here are mainly corn, sorghum and barley. The USDA model anticipates that China's coarse grains imports will rise 16 million metric tons. Mexico is the second most important growth market, with import growth of 8 million metric tons. Korea also shows import growth of more than one million tons.

DDGS Market Potential

DDGS Market Potential

The chart above displays actual distiller's dried grains with solubles (DDGS) imports for selected markets for calendar year 2011 against projections for DDGS imports by those markets in 2013. The third column shows the U.S. Grains Council's internal calculations of the maximum potential demand for DDGS in those markets.

While actual DDGS trade will depend on price relationships in coming years, this chart illustrates the assessment of the U.S. Grains Council's international staff that export markets still have untapped growth potential.

Outlook for China DDGS Supply & Demand

Outlook for China DDGS Supply & Demand

In a recent study commissioned by the U.S. Grains Council, the respected Chinese market analysis firm JCI reported that the new Five-Year Plan in China will restrict ethanol and dried distiller’s grains with solubles (DDGS) production growth to no more than 5 percent annually. Assuming an appropriate price for DDGS relative to corn and soybean meal, JCI projects that China’s imports of DDGS will grow steadily, reaching 6 million metric tons in 2016 and accounting for 42 percent of total DDGS use.

Market Recap: Keeping Close Eye on Future Competitor, Ukraine

Recent activity in Ukraine’s national grain production has attracted attention and potential concern over global market impact.

To offset a record bumper crop, Ukraine removed its export duties on wheat and corn last year. As the chart below illustrates, coarse grain production in 2010/2011 exceeded 20 million metric tons. While domestic demand only currently accounts for half of production, if Ukraine’s government continues to remove trade restrictions and open its markets, the surplus in grain exports could potentially flood neighboring markets and undercut suppliers.