Ethanol Blog
Cheryl Anderson DTN Staff Reporter

Tuesday 08/05/14

Producers Should Take Advantage of Low DDG Prices

The recent trade issues with China have resulted in headaches for ethanol producers, but have turned into a great opportunity for livestock producers to take advantage of lower-priced dried distillers grains.

China recently announced they will require that all shipments of U.S.-produced DDG landing in their ports be accompanied by official certificates guaranteeing the shipments are free of the MIR 162 GMO corn trait. Since such certification does not exist and the U.S. is unlikely to agree to the demand, DDG trade with China has virtually ceased. With the loss of trade with a country that was previously the biggest buyers of U.S. DDG, prices of DDG have plummeted.

Those lower prices are potentially a great benefit to cattle profitability, according to Darrell Mark, an agricultural economist with South Dakota State University. In an article on The Cattle Site (http://bit.ly/…), Mark explained that typically DDG prices mirror corn prices. However, the price decline in DDG prices is proportionally larger than the decline in corn prices.

With such great values, producers may want to lock in low DDG prices for the winter, the time when DDG typically reaches seasonal highs. But before doing so, producers should consider their storage potential, the price of higher labor costs, prices of using covers or silage bags, as well the availability of feed for mixing if it is necessary.

Cheryl Anderson can be reached at Cheryl.anderson@dtn.com

(ES)

Posted at 12:44PM CDT 08/05/14 by Cheryl Anderson
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