Ethanol Blog

The July World Agricultural Supply and Demand Estimates report predicted only a small amount of growth in U.S. production of dried distillers grains. However, most of that increase will not be available for U.S. end users, according to an article by Ag Professional (http://bit.ly/…).

The report increased corn use for ethanol and DDG production by 25 million bushels, to a total of 5.2 billion bushels, due to increased ethanol production in June and higher estimates of demand for gasoline.

The predicted growth in the amount of U.S. distillers grains production will likely be small, in fact, projected growth in export demand will likely absorb that growth.

However, that expected growth in export demand has yet to materialize, as export demand has been down in recent weeks. China, previously the largest single buyer of U.S. DDG, began cancelling shipments of DDG in mid-June. Although the cancellations were solely the actions of individual companies and not the Chinese government, the cancellations renewed fears stemming from last year's tumultuous trade relations with China and resulted in DDG prices plummeting as much as $30 in about 10 days.

Andy Lindsay, territory sales manager at POET Nutrition in Sioux Falls, South Dakota, told DTN future purchasing by China will likely play a big role in DDG prices.

China's recent trade cancellations, however, have also served to spark interest in U.S. DDG from other countries such as Vietnam and some South American and African countries.

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

(CZ)

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