Death comes to us all. Life's but a walking shadow | This is speculation on my part but.
China is sitting on some 65-75 million metric tons of corn stocks ( 2.75 billion bushel) much of which were purchased by the government at $8/bu. They probably made the same mistake that many of us did in thinking that $6-7 corn might be the norm going forward. In addition they've got the social problem of trying to keep their farmers down on the farm instead of moving to the cities and the only way to do this is to keep prices up.
Meanwhile China has a terrible air pollution problem caused in large part by the huge increase in motor vehicles. It's so bad that their population is calling for action and the one thing the Chinese don't like is open frustration with the government.
The success of the American ethanol industry probably hasn't been lost on the Chinese. Here in America ethanol has sucked up more than 5 billion bushel of corn per year, to the point where we are now exporting significant amounts.
Our success has presented the Chinese with the answer to two of their most serious problems, air pollution and internal migration, namely build their own ethanol industry. An added plus is the economic activity to build the infrastructure. Building a couple three hundred ethanol plants makes for considerable jobs.
However, a silver lining for us might just be that eventually down the road they might come to need more corn than they can grow themselves but we can.
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China/DDG's
