While We Were Meeting: China Sales Boom; Peru Decides On Ethanol; Trade Priorities Emerge

While U.S. Grains Council (USGC) members were meeting virtually during their 18th Annual International Marketing Conference and 61st Annual Membership Meeting this week, positive moves in the grain trade world were also coming to the fore, portending a brighter outlook for U.S. corn and ethanol exports.

China’s Buying Spree Continues

As of Jan. 29, China purchased another 2.1 MMT (82.7 million bushels) of U.S corn, which totals 17.7 MMT (696.8 million bushels) purchased this marketing year – an amount that surpasses the U.S. Department of Agriculture’s (USDA’s) 2020/2021 China import estimate without factoring in sales to unknown destinations that often turn out to be from Chinese buyers.

“China is purchasing more now than they ever have,” said USGC President and CEO Ryan LeGrand. “We must continue to maintain that relationship because they are such a strong source of demand and because they hold even more potential. We are seeing only some of that potential this year in the export sales that we have on the books, but it could grow much more and it’s up to us to help capture that demand.”

Domestic corn demand within China is high with margins favoring imports.

Peru Ethanol Case Yields Positive Outcome
The Peruvian National Institute for the Defense of Free Competition and the Protection of Intellectual Property (INDECOPI) Tribunal announced on Jan. 29 the U.S. ethanol industry and the U.S. government won an appeal on a countervailing duty case brought against U.S. ethanol in Peru. This reversed a previous decision handed down by Peruvian authorities that applied a 15-cent per gallon duty on U.S. ethanol and resulted in loss of market access in the country.

The Council participated extensively in this case, arguing at hearings in both the initial investigation and the appeal in Peru on behalf of the U.S. ethanol industry.

“We are pleased that Peruvian authorities reached the right result, and we look forward to continuing our close work with Peru to further enhance our mutually beneficial trade relationship development efforts including urging them to increase their blend rate beyond 7.8 percent,” LeGrand said in a joint statement with Council partners Growth Energy and the Renewable Fuels Association.

“Doing so would also help Peru to meet its Paris Agreement commitments and lead to opening more global trade of ethanol.”

USGC Trade Priorities Lined Out For Biden Administration

While at the Council’s conference this week, LeGrand shared that the Council has been in contact with members of the new the Biden Administration to express its priorities for U.S. corn and ethanol industries.

“We have contacted members of the Biden Administration as the transition has occurred to make sure they understand that corn, sorghum, barley and ethanol industries in the United States have prioritized export market development to build overall demand, support the U.S. agriculture sector and meet global climate objectives,” LeGrand said.

Trade policy engagement goals include continued work with China, Brazil and India; a focus on U.S.-Mexico-Canada Agreement (USMCA) implementation issues; a push for free trade agreements with the United Kingdom as well as Kenya; and development of a comprehensive strategy alongside our sister organizations to engage in trade openings with countries in Southeast Asia and with Japan, Vietnam.

Learn more about the Peru ethanol decision.