Distillers grain, ethanol linked

Ethanol market expansion linked to distiller’s grain Expanded trade needed Washington issues pending

Renewable Fuels Association President and CEO Bob Dinneen says the importance of U.S. ethanol policy and the expansion of foreign markets to the future of the U.S. distillers grains industry is closely linked.

“As a nation, failure to continue the growth of our domestic ethanol industry will not only limit our ability to reduce our dependence on foreign oil, but constrain our ability to provide a high quality livestock feed to our domestic livestock industry and world trade partners,” Dinneen said. “Make no mistake, the success of the distiller’s grains market is directly tied the fate of American ethanol production.”

Dinneen’s remarks came before nearly 500 producers, suppliers, importers and end-users of U.S. distillers dried grains with solubles (DDGS) and coarse grains from around the world at the Export Exchange in Chicago – a joint conference between RFA and the U.S. Grains Council.

Dinneen drew parallels between the markets for fuel ethanol and for distiller’s grains, underscoring the need for expanded trading relationships. “You have heard talk of the ethanol blend wall that limits the amount of ethanol that can be used. In much the same manner, we are rapidly approaching a feed wall in the U.S. Due to current limits in dietary rations, the livestock feed market will likely be saturated with distillers grains when the industry is producing between 35 and 45 million metric tons. As we spoke about before, we are rapidly approaching the lower end of the ‘feed wall’ estimates.”

Dinneen also touched on key policies currently being debated in Washington and around the country, including extension of the ethanol tax incentive, the move to higher ethanol blends, and low carbon fuel policy.

Dinneen’s full remarks and PowerPoint presentation can be seen here and here.

Key statistics

Key distillers grains statistics:

• In the 2010/11 marketing year, the U.S. dry mill ethanol industry is projected to produce 33.5 million metric tons (mmt) of distiller’s grains (including both wet and dried). Additionally, ethanol wet mills will produce approximately 3 mmt of corn gluten feed and 500,000 mt of corn gluten meal.

• Value: The 33.5 mmt of DG produced in 2010/11 is valued at approximately $4.5 billion. Corn gluten feed and meal output is valued at about $550 million.

• In 2010/11, it is projected that approximately 24.5 mmt will be consumed domestically. The remaining 9 mmt will be exported to countries around the world. As such, about 27 percent of U.S. DDG will be exported this year.

• In 2009, approximately 39 percent of DG was consumed by dairy cattle, 38 percent was consumed by beef, 15 percent consumed by swine, 7 percent by poultry, and 1 percent by other species (sheep, aquaculture).

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