Ethanol Blog

The story of distillers grains going into the future will largely be driven by exports, according to Steve Markham from CHS, Inc.

Markham spoke about issues that will affect the future sales and marketing of distillers grains Wednesday at the 18th Annual Distillers Grains Symposium in Dallas, hosted by the Distillers Grains Technology Council.

Markham said he is bullish on exports because the U.S. ethanol industry has developed a lot of good, long-term export customers who are happy with how their livestock responds to U.S. dried distillers grains. To prove his point, Markham shared that in the 2006-07 marketing year, the U.S. exported just 12.76% of the DDG it produced. By 2012-13, that percentage grew to 24.36%. China, in particular, now buys 10% of all U.S. DDG, constituting about half of all DDG exports.

U.S. consumption has dropped in the U.S. because of high prices and high values of DDG relative to corn and soybean meal. Those increases have decreased inclusion rates, especially in swine and poultry rations.

Despite the continuing wait for China to approve the MIR 162 trait, Markham said that China has domestic corn stocks, although not good quality, in excess of 90 million metric tons, some from as far back as two years ago. He added that the U.S. may not be able to count on China buying as much DDG as in past years. With Europe still not budging on the GMO issue, Markham added he would like to see seed companies develop seed that is more acceptable to the rest of the world.

Another factor that will affect future markets is the Panama Canal expansion due to be completed in 2016. The expansion will increase the number of ships 40 to 55 vessels a day and will increase container ships and bulk vessels accessing eastern ports and New Orleans, which be more efficient than delivering shipments on the West Coast and shipping by rail or truck.

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

(ES)

© Copyright 2014 DTN/The Progressive Farmer. All rights reserved.