While there’s still been no official announcement from the Chinese government, the market is rapidly adjusting to the situation in China, after traders were told no new DDGS imports would be issued. In the meantime, existing import permits for U.S. distillers grains are still valid and contracts are still being written.

“Traders are feeling their way in this new situation but since existing permits are still being respected trade is continuing,” said Dick Kasting, director of strategic relations for the U.S. Grains Council in Washington, D.C. “The question is, how long will this informal and unannounced moratorium on new permits persist into the future? And that’s a decision the Chinese will have to make. We’ve had no word on how long this may continue.”

China discovered MIR 162 corn, or Syngenta’s Agrisure Viptera variety, in imported corn from the U.S. in November. Although that corn trait is approved elsewhere, such as in the European Union, it is not an approved corn trait in China. The corn varieties in question were planted on about 3 percent of U.S. corn acres in 2013, according to a Syngenta spokesperson. It wasn’t until this month, however, that China started putting distillers grains containing the corn trait into quarantine.

Sean Broderick, a CHS Inc. senior merchant who helps manage the DDGS marketing group, told Ethanol Producer Magazine that the company gets information from its Shanghai office but adds that it’s difficult to know what’s accurate because most of it is hearsay. As of June 20, CHS had heard that additional import permits were being issued. “The kicker on it is that they are giving preference to those that, A, never had any MIR 162 detected in their inbound shipments, or, B, if they did have it detected, and have subsequently moved it back out of the country,” he said.

CHS is hearing that there is about 300,000 metric tons of distillers grains in quarantine in the ports, Broderick said. “Judging by the list of companies in whose DDGS the MIR was detected—we saw a list of 48, with all of the major players—we are not sure to whom the permits are being issued. But it is a positive step.”

Kasting confirmed June 24 that there’s a rumor that new permits may be issued, but clarified that USGC can’t point to an actual example of a company receiving a new permit. The word is that the general parameters of new permits will be much more stringent, such as renewals only for companies that haven’t had a problem in the past or who have destroyed or re-exported any quarantined DDGS. “There are Is to dot and Ts to cross,” he said.

The Chinese situation has had an impact on prices. “[It] was a wakeup call to all involved—again—as to what the ramifications of putting so much of the export eggs into the China basket,” he said. Initially, distillers grains prices dropped $30 to $50 a ton, depending on the location. Recently, prices came back up about $10 to $20 but are still down about $30, for the most part. Chicago prices, for example, went from the low $200 range down to the mid-$160s and were bid in the high $180s as of June 23, Broderick said.

Overall, things are slowed down, but not stopped, as new forward contracts are still being made. “We have seen a slowdown in the enthusiasm for making them, but have not seen a dramatic downturn in the numbers being made,” he said. “The lower bids resulting from all of this is what is slowing things down.”

The USGC is having many conversations as it works on this issue. “We are in contact with the U.S. authorities at all levels in Washington, and we are in contact with end users and importers in China and our contacts across the Chinese government, expressing concern and asking for information,” Kasting said, adding that there are costs on the Chinese side of this situation as well. “The demand for DDGs is there in China, the Chinese animal feeders and feed manufacturers want to be able to access it,” he said.