A recent sale of U.S. dried distillers grains with solubles (DDGS) to Saudi Arabia is an example of an increasingly diverse number of markets interested in the feed product and the impact of sustained market development in areas showing potential for long-term growth, according to the U.S. Grains Council (USGC).
Last month, Saudi buyers purchased 18,000 metric tons of U.S. DDGS, a relatively large amount and a dramatic increase from total sales of just 8,400 mt in 2014.
While the dairy and poultry sectors in Saudi Arabia are large and modern, with an estimated annual compound feed demand of 6.9 million mt, USGC’s progress in persuading the Saudi industry to utilize DDGS has been limited by shipping distance and local subsidies that did not incentivize use of the product.
Now, those policies are changing, and DDGS is priced well in the market. As a result, Saudi buyers - and others in the region, including Egypt, Turkey, Morocco and Pakistan - are taking a closer look at U.S. DDGS.
“The recent purchase is a clear signal to the council to continue market development, training and marketing efforts in Saudi Arabia to help capture the half-million tons of estimated DDGS demand from buyers there,” USGC said.
Ramy Hadj Taieb, USGC regional director for the Middle East and North Africa, will visit Saudi Arabia in March as part of the efforts to promote U.S. grains and co-products to Saudi importers and end users. In addition, USGC is working with agribusiness members on logistical challenges.
“The timing of the purchases by Saudi Arabia could not be better,” said Kurt Shultz, USGC senior director for global strategies. “The DDGS export market has been under pressure, with a slowdown in exports to key markets like China and Vietnam. However, other countries like Saudi Arabia are helping to fill that void."
Total DDGS exports are down only 2% from last marketing year, highlighting the importance of the USGC marketing efforts and the ability to respond quickly to changing trade flows, Shultz added.