The deepening trade war between the US and Turkey is making it hard for Turkish importers to raise the letters of credit (L/Cs) they need to buy distillers dried grains with solubles, better known as DDGS, from US suppliers.

Turkey has sharply raised tariffs on certain US products in response to Washington's decision to impose sanctions against the country amid an ongoing row surrounding the incarceration of evangelical US pastor Andrew Brunson.

Diminishing prospects

DDGS is the main co-product of ethanol production. In the US, ethanol is produced primarily from cereal grains to blend with gasoline for automobiles.

Turkey is the second main destination for US DDGS after Mexico. In the 2017 marketing year, 13 per cent of US DDGS exports went to Turkey, US Grain Council data shows.

Currency crisis

Last week the New Orleans DDGS market plunged on concerns over financial turmoil in Turkey.

The Turkish lira exchange rate against the US dollar plunged 23 per cent in the last five days and 32 per cent in the last 10 days.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.