* Vietnam says to suspend US DDGS imports from mid-December
* Says is taking step due to worries over beetle contamination
* Vietnam is No.3 importer of US distillers’ grain
* Suspension could drag on global prices for the animal feed (Adds comment from Vietnam trader, detail)
By Michael Hirtzer and Ho Binh Minh
CHICAGO/HANOI, Oct 21 (Reuters) - The U.S. Grains Council is working with Vietnamese importers of distillers’ dried grains with solubles (DDGS) to end the country’s planned suspension of U.S. shipments of the protein-rich animal feed, according to a letter sent to council members and seen by Reuters on Thursday.
Vietnam on Monday said it would suspend all imports of U.S. DDGS from mid-December due to contamination with the Ballion variety of beetle, according to a Vietnamese government directive also seen by Reuters. Media in the Southeast Asian nation reported the step earlier this week.
The loss of Vietnamese imports would be a big hit for U.S. DDGS suppliers as the country is one of the fastest growing feed grain markets in the world, with a rapidly growing middle class developing a taste for hamburgers and steak.
The move by the No.3 importer of U.S. DDGS could also drag on prices for the byproduct of corn-based ethanol DDGS-ILLINOIS, with markets already smarting after China last month said it would impose anti-dumping and anti-subsidy duties on U.S. imports.
“Both shippers and buyers are in a difficult situation as it will be tough to sell a cargo rejected by Vietnam because it is contaminated by the beetles to a third country,” said a Vietnamese trader at a foreign firm in Ho Chi Minh City. He declined to be identified due to the sensitivity of the matter.
U.S. DDGS prices have now dropped to around $190 per tonne, on a cost and freight basis to Vietnamese ports, from $210-$220 per tonne before the directive was signed, traders in Vietnam said.
The inspection of all U.S. DDGS cargoes will be tightened in the run-up to the suspension date, Deputy Agriculture Minister Le Quoc Doanh said in the directive.
The U.S. Grains Council did not immediately respond to requests for comment. Prior to news of the suspension, it had forecast Vietnam would import a record volume of 1 million tonnes of U.S. DDGS this year, a surge of 82 percent from 2015.
Vietnam through the first eight months of the year imported 687,620 tonnes of U.S. DDGS, about 9 percent of total U.S. exports and double the amount it shipped in a year earlier, according to the U.S. Department of Agriculture.
China’s DDGS imports total 26 percent of U.S. exports, but slid 61 percent from a year ago to 1.96 million tonnes in the first eight months of 2016. (Reporting by Michael Hirtzer in Chicago and Ho Binh Minh in Hanoi; Additional reporting by Naveen Thukral in Singapore; Editing by David Gregorio, G Crosse and Joseph Radford)