Western Railroad Discussion > DDG Exports by rail?

There's an article in seeking alpha about a Chinese decision to raise taxes on imports of Distiller's Dried Grains.  DDG is a product of ethanol making, it's the sludge like residual product, dried to create a healthy animal food.  The Chinese have been major purchasers, using it to feed hogs for their domestic market.  US ethanol producers have a significant business selling the DDG residual to farmers, both in the US and overseas.

Are DDG shipments major components for the railroads, and will a reduction in these exports to China be significant for rail loadings?  I don't see anything specific, so I'm guessing DDG is bundled under agricultural commodities.

(The bigger picture is Archer Daniels Midland, Valero, etc are taking a hit as the Chinese believe that the "unloading" of US DDG exports at a low price is choking off jobs in the fledgling Chinese ethanol industry. By raising taxes on imports they believe hurt domestic jobs and ethanol producers in China, the Chinese government creates a wall around their home market.)

Will this be similar to President-elect Trump proposed American tax increases to protect American products/manufacturing jobs?

Let the trade wars begin!

There is a major domestic market here for DDG and it is part of the grains group on the railroads. China really doesn't matter. There are several large feed lots across North America that receive 80-100 car units weekly.
JC

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I suspect that if Chinese feedlot operators cannot pay the world commodity price (with transportation and tarrifs) for DDG then others will.  Other buyers at wherever the price settles may be domestic or overseas, the market will respond.
If this makes Chinese pork products higher priced then we may see fewer of them in the world market.
It's complicated....

about 11 million tons of exports in 2014, that's a lot less than I had thought.  China received about 38%, Mexico was next


Grains council

DDG is lighter than whole grains so it moves in the largest covered hoppers available, those big ones with four hoppers. That would be about 102,000 cars. Mexico is a good market for it, until Trumps kills trade with them. He doesn't know stuff moves both ways.

Trump seems to listen to business leaders, if no one else.  When the CEOs of Wallmart and Target walk into the oval and explain the facts of trade with China, the bluster about tariffs will end without so much as a tweet.

My wife has an old saying that she learned from a relative with a Southern background: "Telling him how the hogs ate the cabbage"  only in this case it will be "how the hogs ate the dried distillers' grain."

You can read the script now, Trump destroys Mexican car manufacturing and hits China with punitive Trade Tarrifs, China and Mexico get their heads together, China invests in Mexico, Mexico manufactures and sells cars at half the price of US models, Mexican models swamp US, US car manufacturers lose market share!

It will take about 5 - 10 years to happen and the long term effect on the US car industry will be devastating.

 

China is already a significant investor in Mexico, Colombia, Peru, etc. They would be delighted to take over more of the world wide parts and assembly process.

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