OMAHA (DTN) -- With this season's delayed harvest hindering available corn stocks, one might think the resulting rally in corn prices could drive livestock producers include higher levels of distillers dried grain in order to keep ration prices down.

As more farmers get into the field and finish harvest, inclusion rates for DDGs in feed may drop. (DTN file photo by Scott Kemper)

That has likely been the case for the past several weeks, but may not be for upcoming months, according to Darrell Mark, extension livestock marketing specialist at the University of Nebraska-Lincoln.

Between rain and snow, many farmers across the Midwest are behind in harvesting crops, as fields have been too muddy and grain has been too wet to harvest. Livestock producers expecting ample grain supplies in late October are finding that supplies are just now rolling in -- about three to four weeks behind schedule.

"A lot of supply that was expected to be in by now hasn't been harvested. That drove prices higher in late October/early November," Mark said. "That price rally was quite unexpected."

Corn prices continued to rally this week. However, that may change now that farmers are getting further into harvest.

"We haven't seen corn prices back off yet, but I believe we still could," he said. "Corn prices are likely to test the lows we saw right at the beginning of the harvest season."

Even the late harvest and corn rally hasn't necessarily spurred higher inclusion levels of DDGs than what is normally seen in a feedlot ration, Mark said. "We are harvesting a lot of high moisture corn this year, which gives feedlots access to larger volumes of corn that can't go elsewhere."

While the late harvest has pushed up prices of dry distillers grain, so has export demand, which remains strong. Export demand is entirely for the dried product because wet distillers has a shorter shelf life and can't be shipped great distances.

With wet distillers at a discount to dry distillers and corn, local feedlots and producers are mostly likely to use it. In comparing dry and wet distillers grain to corn, DDGs are currently valued at about 90 percent of corn on a dry matter basis, while wet distillers grain is running about 65 percent.

Another factor affecting DDG demand is the insufficient amount of drying capacity for a large, wet corn crop. Corn is being placed in grain bins at fairly high moisture levels between 17 and 22 percent, he said. Most of that is farmer-owned storage with just aeration fans and no drying equipment.

Although that storage method may work well through about March, corn could start going out of condition when temperatures warm up.

"As a result, I expect there will have to be a sizeable corn movement in March as farmers have to move grain," he said. "That may be hard for distillers to compete with."

Because of that early spring corn movement, feed yards may be in a better position to buy high moisture corn later in the winter months too.

Mark said he does not believe that DDG prices will continue to rise relative to corn. They won't virtually price themselves out of the ration as has happened occasionally in the past couple years when a number of ethanol plants were shutting down or going out of business.

Last year in March and April, distillers were valued at 105 percent of the price of corn, he said.

"This year more plants are back online and producing distillers, so I don't think we will see that much of a rally in distillers like we have seen the past couple years," he said. "If there is a rally, it will be due to other factors than livestock numbers that have shrunk dramatically, such as demand elsewhere in the world which will be influenced by the U.S. dollar and other factors."

For livestock producers waiting to see if there is movement in the corn and DDG markets, Mark said he would purchase DDGs hand-to-mouth for the next two or three weeks in anticipation of a drop in corn and DDG prices as farmers move deeper into harvest.

"Sometime in the next month we should find another low in the corn market," he said. "At that point, producers may want to use that as a trigger to starting locking in DDGs for the winter."

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DISTILLERS GRAIN SPOT PRICES

*The spot prices gathered by DTN are only intended to reflect general market trends and may vary. Please contact individual plant or merchandiser for exact prices.

If you would be willing to take a weekly phone call and have your distiller grain spot prices listed in this feature, please contact Cheryl Anderson at (308) 224-1527 or (800) 369-7875, or e-mail cheryl.anderson@dtn.com.

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USDA MARKET NEWS/DISTILLER GRAIN PRICES

CORNBELT WEEKLY FEEDSTUFFS (Tue Nov 10, 2009)

Distillers Dried Grains:

FOB the plant 10 pct moisture; 28-30 pct protein

CALIFORNIA WHOLESALE FEEDSTUFF PRICES (Tue Nov 10, 2009)

Distillers Dry Grains 

FOB Truck 169.00-172.00 up 1.00-2.00

 Rail Delivered California Points 162.00-166.00 up 4.00-1.00

PACIFIC NORTHWEST WEEKLY FEED (Tue Nov 10, 2009)

Offers for Distillers Dried Grains delivered by rail to feed mills in the Pacific Northwest were 155.00 to 160.00, with no recent price comparison available. Offers for distillers dried grains trans-loaded onto trucks and delivered to Willamette Valley dairies were 172.00 to 175.00, with no recent price comparison available.

*All prices quoted per ton unless otherwise noted

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DISTILLERS GRAINS IN THE NEWS

Wet Ethanol Process Yields More Ethanol

A new wet ethanol production process yields more ethanol and more usable co-products, according to University of Illinois scientists. OfficialWire reported that researchers have found that soaking corn kernels rather than grinding them results in more gallons of ethanol. The method involves more steps, but produces higher ethanol concentrations from the fermenter and better quality co-products than the dry method.

(OfficialWire, November 12, 2009)

(http://www.officialwire.com/…)

Nebraska Ranchers Extol Benefits from UN-L Extension

The University of Nebraska-Lincoln is helping a Nebraska rancher to increase profitability, efficiency and sustainability, Media Newswire reported. One of the ways the UN-L extension has helped The Vinton family -- who ranch near Whitman, NE -- stay competitive and expand was changing their mineral feeding program based on extension recommendations. Mixing their own mineral supplements, the Vintons eliminated phosphorus in mineral supplementation programs by feeding two or more pounds of distillers grains daily and saved $7 to $10 per head per year. Using that program could save a producer with a 500-cow herd between n$3,500 and $5,000 annually.

(Media Newswire, November 10, 2009)

(http://media-newswire.com/…)

North Country Ethanol Resumes Operations

Ethanol production will resume at a South-Dakota ethanol plant located near Rosholt, South Dakota, Ethanol Producer reported. Tenaska BioFuels LLC and Tri-State Financial LLC entered into an agreement which will allow ethnaol production to resume at the 26 million gallons facility. The plant began production in 2005, but has been idle since the company entered bankruptcy proceedings in October 2008. The facility is expected to resume operations in mid-November due to the establishment of the two companies' two-year tolling agreement.

(Ethanol Producer, November 9, 2009)

(http://ethanolproducer.com/…)

Biotech Traits Approved in EU Positive Move

The European Union has authorized three types of genetically enhanced corn for food, feed, import and processing, but it is still unknown when exports of U.S. corn gluten feed and distillers dried grains with solubles will resume, according to the U.S. Grains Council's Global Update. End-users and feedmillers in the EU want to resume imports of U.S. corn and coproducts -- especially DDGS and CGF - as they did prior to the strict regulations being enacted. The timeline, however, is unknown as each EU country has different testing procedures when it comes to biotech-derived products.

(U.S. Grains Council Global Update, November 5, 2009)

(http://www.grains.org/…)

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DDG CONFERENCES (EVENTS SOLELY DEDICATED TO DDGs)

*Distillers Grains Technology Council Inc.'s 14th Annual Distillers Grains Symposium

The Distillers Grain Technology Council will hold its 14th Annual Distillers Grains Symposium on May 12-13, 2010 at the Sheraton Indianapolis Hotel & Suites in Indianapolis, Indiana. For information, contact the DGTC office at (502) 852-1575 or (800) 759-3448, or check the DGTC website (http://www.distillersgrains.org).

*Fuel Ethanol Workshop

BBI International will hold its 2010 Fuel Ethanol Workshop on June 14 to 17 in St. Louis, Missouri. The Workshop will include a track of distillers grain and co-products. For more information, contact BBI at (701) 746-8385

CONFERENCES OFFERING SESSIONS ON DDGs

* Husker Beef Nutrition Conference

The University of Nebraska-Lincoln will holds its 2009 Husker Beef Nutrition Conference on Nov. 6 at the UNL Agricultural Research and Extension Center in Mead, Nebraska. Among the presentations are the The Impact of Distillers on Beef by UNL meat scientist Chris Calkins, The Use of Distillers Byproducts in the Southern Plains, by Jim MacDonald from Texas A&M AgriLife Research, and Meta-Analysis of Using Distillers Grain by UNL animal scientists Terry Klopfenstein and Virgil Bremer, UNL animal scientists. There also will be a research update from the animal science department. The fee is $25. To register by Nov. 2, contact Galen Erickson at 402-472-6402 or at geericks@unlnotes.unl.edu.

(If you are sponsoring or know of any event, conference or workshop on distillers grain, and would like to list it in the DTN Weekly Distillers Grain Update, please contact Cheryl Anderson (see contact info below).

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DDG LINKS/RESOURCES

Organizations

*Distillers Grain Technology Council

http://www.distillersgrains.org

*National Corn Growers Association Corn Distillers Grain Brochure

http://ncga.com/…

*Iowa Corn

http://www.iowacorn.org/…

*Renewable Fuels Association - Ethanol Co-Products

http://www.ethanolrfa.org/…

*American Coalition for Ethanol: http://www.ethanol.org/…

*U.S. Grains Council

http://www.grains.org/…

*South Dakota Corn Utilization Council

http://www.drieddistillersgrains.com

Government Sites

*Iowa Department of Agriculture and Land Stewardship/Office of Renewable Fuels & Coproducts

http://www.distillersgrains.com

University Sites

*University of Minnesota - Distillers Grain By-Products in Livestock

and Poultry Feed

http://www.ddgs.umn.edu

*University of Illinois - Illinois Livestock Integrated Focus Team Distillers Grain site

http://ilift.traill.uiuc.edu/…

University of Nebraska - Beef Cattle Production By-Product Feeds site

http://beef.unl.edu/…

*University of Nebraska Extension

http://ianrpubs.unl.edu/…

*Iowa Beef Center - Iowa State University

http://www.iowabeefcenter.org/…

*University of Missouri - Byproducts Resource Page

http://agebb.missouri.edu/…

*South Dakota State University - Dairy Science Department - Dairy cattle research

http://dairysci.sdstate.edu/…

(select "Distillers Grains" from the topic menu)

*Purdue University Renewable Energy Web Site

http://www.extension.purdue.edu/…

(select "Biofuels Co-Products from the menu)

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We welcome any comments/suggestions for this feature. Please let us know what information is valuable to you that we could include in the Distillers Grain Weekly Update. Please feel free to contact Cheryl Anderson at (308) 224-1527 or (800) 369-7875, or e-mail cheryl.anderson@dtn.com.

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