A 20% drop in the price of distiller dried grains, or DDG, after top consumer China turned away two shipments that may contain unapproved genetically modified corn strains are "clearly a negative" for US ethanol producers which rely on the product for a significant share of their revenue, futures exchange CME said in a report Monday.
China has rejected around 2,000 mt of DDG from the US said to contain Syngenta MIR 162 corn, a genetically modified corn strain that has not been approved for consumption in the Asian nation.
DDG is a high-protein animal feed made with the remaining nutrients and proteins of corn crops after the starch of the plant has been removed to produce ethanol.
A third of the grain that goes into ethanol production comes out as DDG, according to industry sources.
Beijing's decision to reject the DDG shipments comes amid increased scrutiny over US-produced corn. China has refused imports of nearly 550,000 mt of US corn spread across 12 regular cargoes since November because of the unapproved corn gene.
DDG prices in the Pacific Northwest have fallen to $247/mt from $285-295/mt in mid-December, CME said, citing data from the US Department of Agriculture.
The rejection represents only a small portion of China's demand for the animal feed product. In the last marketing season, the country imported a record 2.8 million mt of DDG, according to the USDA.
