DTN Weekly Distillers Grains Update

Low DDG Prices Are Good Value for Livestock Producers

DAVENPORT, Neb. (DTN) -- The record-low prices of distillers grains may be leading some cattle producers to consider purchasing larger amounts in order to take advantage of the good values. However, there are a number of considerations producers should look at before doing so.

Prices of distillers grains have been in a three-month downward trend, but especially took a nosedive last week when China announced it will require that all shipments of U.S.-produced DDG landing in Chinese ports be accompanied by an official certificate guaranteeing the shipments are free of the MIR 162 genetically engineered trait. Such certification does not exist, resulting in a complete stop in DDG trade with China and sending DDG prices plummeting.

In fact, a number of factors have also contributed to the price downfall, including:

-- Good run times and margins at ethanol plants leading to ample DDG supplies.

-- The loss of China as the largest buyer of U.S. DDG, leaving even more product on the market.

-- Predictions of a record corn crop and ample corn stocks.

The DTN weekly DDG spot price average has fallen to a four-year low at $101 per ton this week, the lowest since mid-March 2010. The average has fallen for 18 consecutive weeks and has dropped $138 per ton in that time, from $239 per ton the first week of April to this week's low of $101 per ton.

But while the plummeting prices are causing headaches for ethanol producers, they have turned into a great opportunity for livestock producers to take advantage of lower-priced dried distillers grains.

The value of DDG relative to corn fell to a low of approximately 79% this week, the lowest value since January of 2012. Since July 2013, that value has hovered most weeks above 100%, many weeks between 120% and 130%, and even rising to a record 145% during the last week of December 2013.

As a highly valued protein source in rations, the low prices make DDG even more attractive, as the cost per unit of protein for DDG was about $4.04 this week, compared to the cost per unit of protein for soybean meal, DDG's biggest rival as a protein source in rations, at $8.22.

When DDG prices were close to $300, DDG had priced itself out of some livestock rations, as DDG had ceased to be the most economical choice for that all-important "least-cost ration" that producers and nutritionists strive for. Now, with the seemingly impossible low prices and great values, DDG is finding its way back into livestock rations.

CONSIDERATIONS BEFORE PURCHASING

Producers wanting to stock up on distillers grains and take advantage of the low prices may want to consider a number of factors when deciding how much to buy, according to Aaron Stalker, assistant professor of ruminant nutrition at the University of Nebraska's West Central Research & Extension Center near North Platte, Neb.

-- Access to source: For producers considering purchasing DDG, if they are a long distance from an ethanol plant, they are also likely long distances from other feed sources as well, so they will have to truck in some kind of feed anyway.

-- Type of distillers grains: Wet distillers grains (about 65%-70% moisture) are much cheaper than dried (about 10% moisture), since the plant does not have to incur energy costs to dry it. However, WDG are also much heavier and cost more to truck in. Modified distillers grains (50%-58% moisture) rank about midway in weight and cost.

-- Capacity for storage: Distillers grains stored for more than a few weeks will start to mold, especially in hot weather. However, that mold is benign, Stalker said. He said the UNL researchers have sampled distillers from many different storage methods (cement bunkers, homemade bunkers, silo bags, covered, uncovered, mixed with straw, etc.) and said that whatever they found was safe for cattle. In feeding trials, distillers grains that were a little moldy or foul smelling produced the same performance in cattle as regular, unspoiled distillers.

-- Type of operation: Again, capacity for storage is important, but for ranch/grazing operations, the ability to transport the distillers to the cattle is even more vital, Stalker said.

What works best is to deliver the feed in bunks, but for grazing cattle, that is not feasible. Again, UNL researchers have done a lot of work measuring feed placed on the ground and have found a lot less loss if feeding wet versus dry. Dry distillers are typically in smaller, fine particles that are harder for cattle to pick up off the ground. Dry distillers are also more prone to be blown away by wind, resulting in more feed loss. Stalker said that the type of soil also makes a difference, as lighter, sandy soil makes it more difficult for cattle to pick up feed as well. He advised that wet and modified distillers feed the best on the ground.

The cost of equipment, labor and fuel is also an important consideration, Stalker said. Producers should think about the equipment needed to transport feed to grazing cattle, as well as fuel costs and labor involved.

One option becoming more and more popular is the low-moisture blocks that come in about 220-pound tubs. The tubs are very convenient, as producers can just load them on the back of a pick-up and dump them out, and they can last a week or so. But while the tubs are a lot less work than distillers, they are also much more expensive.

"You pay a lot for the convenience," he said.

UNL TOOLS

There are many tools available online, written by staff at UNL, to help producers with the economics of storing and feeding distillers grains.

A number of manuals are available that were joint projects of the Nebraska Corn Board and the University of Nebraska-Lincoln Institute of Agriculture and Natural Resources. Cattle producers might be especially interested in: Utilization of Corn Co-Products in the Beef Industry, Feeding Corn Milling Co-Products to Forage Fed Cattle and Storage of Wet Corn Co-Products.

These manuals are all available on the Nebraska Corn Board website (www.nebraskacorn.org) and can be downloaded for free.

The UNL beef website has a section on feeding co-products (http://beef.unl.edu/…), that has a number of valuable tools and information as well, including some of the manuals available on the NCB website.

The section has a series of videos on storage methods for ethanol coproducts presented in five learning modules through UNL Extension TV: Economics of Storage, Spoilage and Loss Considerations, Examples of Storage Process, Mixing with Forages and Nutrient Composition.

Other manuals are available on the UNL page as well. One that may be particularly relevant for producers considers purchasing larger quantities of distillers is "Evaluation of Storage Methods for WDGS with Added Forages and Byproducts in Silo Bags."

The tool is a spreadsheet intended to assist producers in purchasing coproducts during seasonal low prices and store them to feed at a later date. The spreadsheet helps producers calculate what the storage cost will be versus contracting DDG or purchasing it in the spot market later in the year. Producers can download the spreadsheet and instructions to their own computer at no cost, although they must have Excel on their computer. Entering information is broken into four, user-friendly steps: parameters, feed costs, equipment and structure costs, and other costs.

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

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IN THE NEWS

DDG Works Well to Supplement Low-Quality Forage

The ample spring rains are producing abundant pounds of forage this year in cool-season grasses in pastures and rangeland in areas like Nebraska's panhandle. However, the quality of those forages has declined significantly, as the plants may have already matured and set seed, according to an article by Aaron Berger, extension educator for the University of Nebraska-Lincoln (http://bit.ly/…).

The lower-quality cool-season and native grass species such as western wheat and needleandthread can spell problems for conception rates for late-spring calving replacement heifers and young cows bred between now and late summer, Berger said. Research from UNL has proved the importance of nutrition prior to and through the breeding season, as heifers and young cows with subpar nutrition tend to have lower conception rates.

Such high-risk heifers and young cows benefit from providing 1 to 2 pounds per day of fiber-based energy/protein supplements prior to and through the early breeding season to improve conception rates.

Distillers grains products make an ideal supplement to complement lower quality cool-season grasses because of its quality protein and energy content. Much research has proven that distillers grains work well to supplement low-quality forage.

The downward trend in prices of distillers grains to almost record low prices make it an especially good value currently.

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

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DTN WEEKLY DISTILLERS GRAIN SPOT PRICES

CURRENT PREVIOUS
COMPANY STATE 8/8/2014 8/1/2014 CHANGE
Bartlett and Company, Kansas City, MO (816-753-6300)
Missouri Dry $120 $125 -$5
Modified $63 $65 -$2
CHS, Minneapolis, MN (800-769-1066)
Illinois Dry $120 $95 $25
Indiana Dry $120 $105 $15
Iowa Dry $105 $100 $5
Michigan Dry $125 $125 $0
Minnesota Dry $95 $90 $5
North Dakota Dry $90 $90 $0
New York Dry $130 $140 -$10
South Dakota Dry $95 $90 $5
Hawkeye Gold, IA (515-663-6413)
Iowa Dry NO NO
Modified NO NO
MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253)
Kansas Dry $105 $110 -$5
POET Nutrition, Sioux Falls, SD (888-327-8799)
Indiana Dry $95 $110 -$15
Iowa Dry $100 $105 -$5
Michigan Dry $105 $130 -$25
Minnesota Dry $100 $105 -$5
Missouri Dry $120 $130 -$10
Ohio Dry $95 $120 -$25
South Dakota Dry $100 $105 -$5
United BioEnergy, Wichita, KS (316-616-3521)
Kansas Dry $110 $120 -$10
Wet $35 $40 -$5
Illinois Dry $125 $125 $0
Nebraska Dry $110 $120 -$10
Wet $35 $40 -$5
Wisconsin Dry NO $120
U.S. Commodities, Minneapolis, MN (888-293-1640)
Illinois Dry $100 $100 $0
Indiana Dry $105 $115 -$10
Iowa Dry $90 $95 -$5
Michigan Dry $105 $120 -$15
Minnesota Dry $90 $90 $0
Nebraska Dry $90 $90 $0
New York Dry $125 $135 -$10
North Dakota Dry $85 $85 $0
Ohio Dry $90 $100 -$10
South Dakota Dry $85 $85 $0
Wisconsin Dry $90 $100 -$10
Valero Energy Corp., San Antonio, TX (402-727-5300)
Indiana Dry $100 $100 $0
Iowa Dry $95 $95 $0
Minnesota Dry $90 $90 $0
Nebraska Dry $95 $95 $0
Ohio Dry $100 $105 -$5
South Dakota Dry $90 $90 $0
Western Milling, Goshen, California (559-302-1074)
California Dry $175 $175 $0
*Prices listed per ton.
Weekly Average $101 $105 -$4
The weekly average prices above reflect only those companies DTN
collects spot prices from. States include: Missouri, Iowa, Nebraska,
Kansas, Illinois, Minnesota, North Dakota, South Dakota, Michigan,
Wisconsin and Indiana. Prices for Pennsylvania, New York and
California are not included in the averages.

*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 grains 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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VALUE OF DDG VS. CORN & SOYBEAN MEAL
Settlement Price: Quote Date Bushel Short Ton
Corn 8/7/2014 $3.5950 $128.39
Soybean Meal 8/7/2014 $390.60
DDG Weekly Average Spot Price $101.00
DDG Value Relative to: 8/8 8/1 7/25
Corn 78.66% 82.35% 96.82%
Soybean Meal 25.86% 26.83% 31.62%
Cost Per Unit of Protein:
DDG $4.04 $4.20 $5.00
Soybean Meal $8.22 $8.24 $8.32
Notes:
Corn and soybean prices taken from DTN Market Quotes. DDG
price represents the average spot price from Midwest
companies collected on Thursday afternoons. Soybean meal
cost per unit of protein is cost per ton divided by 47.5.
DDG cost per unit of protein is cost per ton divided by 25.

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USDA MARKET NEWS/DISTILLER GRAINS PRICES

USDA WEEKLY DISTILLERS GRAINS SUMMARY (Aug 1, 2014)

Dried Modified Wet
FOB PLANT PRICES PER TON
Iowa 95.00-130.00 45.00-65.00 20.00-32.00
Minnesota 85.00-105.00 50.00 45.00
Nebraska 100.00-116.00 48.00-54.00 35.00-49.00
South Dakota 90.00-100.00 45.00-53.50 20.00-25.00
Wisconsin 105.00-125.00 45.00-65.00 NQ
Eastern Corn Belt 100.00-150.00 64.00-80.00 NQ
Kansas 125.00-140.00 NQ 49.00-55.00
Northern Missouri 130.00-140.00 NQ 40.00-45.00
DELIVERED PRICES PER TON
CIF NOLA 135.00-154.00
Pacific Northwest 141.00-145.00
California 142.00-155.00
Texas Border (metric ton) 180.00-200.00
Lethbridge AB NQ
Chicago 80.00-125.00

Dried Distillers Grain: 10% Moisture
Modified Wet Distillers: 50-55% Moisture
Wet Distillers Grains: 65-70% Moisture

CALIFORNIA WHOLESALE FEEDSTUFF PRICES (Tue Aug 5, 2014)

Distillers Dry Grains 
  Rail to California Points       155.00-158.00  dn 29.00-27.00
  Truck to California Points      163.00-165.00  up 2.00-dn 24.00
PACIFIC NORTHWEST WEEKLY FEED (Tue Aug 5, 2014)
Offers for Distillers Dried Grains delivered in June by rail to feed mills in the Pacific Northwest were 15.00 to 17.00 lower, from 158.00-170.00. Offers for distillers dried grains trans-loaded onto trucks and delivered during June to Willamette Valley dairies were 14.00 to 18.00 lower, from 176.00-185.00.

*All prices quoted per ton unless otherwise noted.

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RFA WEEKLY U.S. LIVESTOCK FEED PRODUCTION

CO-PRODUCT OUTPUTS (metric tons)
Week Ending Distillers Grains Corn Gluten Feed Corn Gluten Meal Total Feed Corn Oil (lbs.)
7/11/14 93824 9634 1784 105242 4911430
7/18/14 95416 9797 1814 107027 4994763
7/25/14 94918 9746 1805 106469 4968721
8/01/14 89137 9215 1706 100058 5306495

*Information from 2010 Weekly U.S. Fuel Ethanol/Livestock Feed Production report (http://www.ethanolrfa.org/…)

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DDG LINKS/RESOURCES

Organizations

*Distillers Grains Technology Council

http://www.distillersgrains.org

*National Corn Growers Association Corn Distillers Grains Brochure

http://ncga.com/…

*Iowa Corn

http://www.iowacorn.org/…

Nebraska Corn Board

http://www.nebraskacorn.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 Grains By-Products in Livestock

and Poultry Feed

http://www.ddgs.umn.edu

*University of Illinois - Illinois Livestock Integrated Focus Team Distillers Grains 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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DDG CONFERENCES

*Distillers Grains Technology Council Inc.'s 16th Annual Distillers Grains Symposium

The Distillers Grains Technology Council will hold its 18th Annual Distillers Grains Symposium on May 14-15, 2014, at the Omni Mandalay at Las Colinas, Dallas, Texas. For information, contact the DGTC office at (502) 852-1575 or (800) 759-3448, or check the DGTC website (http://www.distillersgrains.org).

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

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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 Grains Weekly Update. Please feel free to contact Cheryl Anderson at (402) 364-2183-1527, or e-mail cheryl.anderson@dtn.com.

(AG/BAS)

(PH/GH/ES/SK­)

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