Even though declining corn prices are hurting farmers in corn-growing states, it may be beneficial to ethanol plants and livestock producers.
With corn prices about a half what they were a year ago, some farmers will find their profit margins seriously affected, according to an article by the Aberdeen News (http://bit.ly/…). For instance the cash price at an elevator in Ipswich, S.D. was $3.71 per bushel Monday; a year ago, it was $6.81 per bushel.
Lower corn prices, however, are good for ethanol plants and livestock producers. The lower corn prices boost margins for plants and usually results in greater production, especially for plants that ran at less-than-full capacity when corn prices were higher. Greater ethanol production brings greater production of dried distillers grains, which usually brings prices down. Also, prices of DDG typically mirror movement in corn prices, also acting to lower DDG prices.
With the growing popularity of DDG, lower prices are good news for livestock producers who routinely include them in their rations. Lower DDG prices are also good news for plants, as the value of DDG relative to corn has been in the 120- to 130-percent range for several months and has no doubt caused some end-users to closely examine the value of including DDG in their rations.
Cheryl Anderson can be reached at Cheryl.email@example.com
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