Reports out of China suggest the country’s government may reduce its “antidumping duties” on U.S. distillers dried grains imports. Preliminary government findings in China determined that import prices were actually higher than domestic prices for the feed ingredient, according to the China National Grain and Oils Information Center.

The Ministry of Commerce opened an antidumping investigation into U.S. exports of DDG in December. The ministry's probe severely reduced the country's imports of the feed ingredient, to 645,000 metric tons in the first five months of this year, down 25 percent compared with the same period last year, CNGOIC officials said.

China’s ministry held an antidumping hearing on the case, inviting 56 domestic and global industry participants to assess the allegations, Dow Jones newswire reports. "The preliminary finding was that during the period under antidumping investigation, imported DDG prices were on average higher than comparable local prices," the CNGOIC report concluded.

"The case for U.S. dumping is not clear, and even if a case for material damage is found, the antidumping deposit may be lower than expected," it said. China customs authorities charge cash deposits against imports in accordance with government findings on antidumping margins.

China's antidumping probe on such grains were one among a series of trade actions Beijing opened against major trading partners last year. China also slapped antidumping duties on U.S. chicken last year, accusing the U.S. of subsidizing its poultry industry and hurting China's domestic industry.

The U.S. Grains Council has suggested that China's probe into U.S. feedstock imports was in retaliation for a U.S. investigation of alleged Chinese subsidies of wind energy. China has since agreed to end such wind-power subsidies, U.S. officials reported earlier this month.

Analysts estimated that U.S. DDG imports in mid-2010 were about CNY300 to CNY400 per ton cheaper than domestic DDG, but prices have since leveled.

U.S. farm interests have viewed DDG as an important inroad to the Chinese food market, as the country's domestic pork prices have soared to record levels due to changing domestic diet patterns.

Prior to the DDG probe, China's farm sector was incorporating increasing levels of DDG in livestock feed to offset high corn costs and because it is relatively high in protein and fiber. Just as importantly, DDG imports for use in animal feed aren't subject to China's corn import quotas or its rules on genetically modified food.

As one U.S. market analyst observed, “Perhaps China is in need of additional feedstuffs and does not wish to alienate this source.”

China imported a record 3 million tons of DDG last year, up from 652,000 tons in 2009, reported the CNGOIC. In 2008, levels didn’t even reach 10,000 tons.

China is the U.S.'s top agricultural export market. Unlike its broader trade patterns, China usually runs a trade deficit with the United States in the agriculture sector, importing $17.5 billion a year on average, compared to $3 billion a year in Chinese agriculture-related exports to the U.S., according to U.S. Grains Council estimates.

Source: Dow Jones Newswire, contributor Chuin-Wei Yap