DTN Weekly Distillers Grains Update

Storm Brews Over Feed Rule

DAVENPORT, Neb. (DTN) -- American brewery and dairy industries are joining forces to ask the Food and Drug Administration to reconsider proposed livestock feed regulations they claim would be costly to comply with and would make the sale of brewers' grains difficult.

A number of industries are asking FDA to exempt American brewers from draft regulations issued under the Food Safety Modernization Act (FSMA). The groups believe the proposed regulations go too far and would make it difficult to use brewers' or spent grains as animal feed.

Groups joining the effort to oppose the rule are the American Malting Barley Association, the Beer Institute, the National Milk Producers Federation and the International Dairy Foods Association.

The Beer Institute has worked for more than a year to present strong economic and scientific arguments why it is unnecessary for FDA to add additional regulations regarding spent grains and other by-products of brewing.

The marketing of spent grains is a practice that has dated back centuries, according to Chris Thorne, vice president of communication for the Beer Institute, a national trade association for the U.S. brewing industry.

For hundreds of years, brewers have disposed of their spent grains by giving or selling them to farmers and ranchers, yet there has never been a recorded incidence of any human health risk related to spent grains.

Thorne pointed out that because beer is consumed by humans, the production is already held to high standards required for human health. The proposed rules would essentially be a duplication of effort, he said.

"The standards by which the major brewers operate are already exceptionally high," he said. "These grains are produced in a swift, sanitary and safe manner, and are often consumed by animals within 24 hours of being separated from the beer.

"We start with a grain product that already exceeds human standards," he said. "If you were to visit some of the large brewers and watch the procedures they have in place, you would see they take grain quality exceptionally serious."

Thorne said that each batch of grain used at a brewery is labeled with information as detailed as who raised it and what acre/lot the grain came from.

The proposed regulation would put undue financial strain on brewers, he said.

"We have calculated that a single large brewery, in order to comply with the proposed rule, could see annual costs as high as $13.6 million per year," Thorne said.

Thorne also pointed out that there is a misconception in the industry that the proposed rule would require brewers to dry and package their grains, extra measures that would be very costly. However, that is not the case, he said.

The result, if breweries could not afford the extra expense, would be to either dump the spent grains in a landfill or burn them, cheaper options than complying with costly regulations.

The Beer Institute has made comments on the proposed rule and has taken the opportunity to talk with FDA and educate them on industry practices.

The Beer Institute filed two comments in response to FDA's proposed rule on "Current Good Manufacturing Practice and Hazard Analysis and Risk-Based Preventive Controls for Food for Animals" under FSMA. The first comment (http://bit.ly/…) was filed jointly with the Brewers Association and asked that hops be added to the list of produce exempt from regulation under FSMA since hops are not consumed raw and are very safe.

A second letter (http://bit.ly/…) filed with the American Malting Barley Association asked FDA to exempt spent grains from the FSMA regulation for human food since they are safe and are the byproduct of brewing.

"FDA has indicated that they will amend the proposed rule. We are expecting to see a new rule by midsummer, with another public comment period to follow," he said. "We are cautiously optimistic that the new rule will allow us to continue to market spent grains."

THE DAIRY INDUSTRY SPEAKS OUT

Under the Food Safety Modernization Act, the sanitation and safety standards required for human food would also apply to animal feed, making it much harder to use brewers' grains and would result in increased costs to dairy producers.

The National Milk Producers Federation, representing more than 32,000 dairy producers, argues that the proposed regulations incorrectly impose safety standards on animal feed that are similar to those for human food. The NMPF claims that the innate hygienic standards of humans exceed the hygienic standards of livestock.

Chris Galen, senior vice president of communications for NMPF, maintains there is not a public health risk feeding brewers grains to cattle, as cattle have different digestive systems.

"The proposal is something FDA is creating when there really isn't a problem to correct," he said. "There has never been a demonstrated health concern."

The concern with the proposed regulation is that it could act to cut off an available quality source of feed for dairy cattle, he said, adding that brewers' grains ending up in a landfill is not the best use of the product.

The NMPF also made comments to FDA on the proposed rule (http://bit.ly/…). The group is asking FDA to exempt animal feed products made during the brewing process from the proposed rule, and to revise the rule and ask for another new round of public comments. Galen said that FDA would be able to do so and still meet the deadline of publishing the final rule by Aug. 30, 2015, still 15 months away.

Galen said he believes FDA will resolve the issue.

"It's one of those things where there's just not common sense," he said. "I think cooler heads will prevail."

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

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IN THE NEWS

USGC Corn Export Quality Report Released

The 2013/2014 Corn Export Cargo Quality Report was released this week by the U.S. Grains Council, according to an article on the council's website (http://bit.ly/…).

The report contains reports from the quality of U.S. corn sampled and measured at the point of loading for export from three export channels: the Gulf of Mexico, the Pacific Northwest and inland terminals shipping corn by rail to Mexico.

The report found that overall quality of U.S. corn continues to be very good, and regularly exceeds standards for U.S. No. 2 on all grading scales.

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The report also found that the incidence of aflatoxin and DON in U.S. corn is very low, as all samples tested were below FDA action/advisory levels.

This is important for exports of U.S.-produced dried distillers grains as well. All nutrients in corn are concentrated by three times in the resulting DDG by the distillation process. Likewise, any levels of mycotoxins are also concentrated three-fold. So a safe report of U.S. corn ensures safety in DDG exports as well.

In coming weeks, the council will be presenting the report to buyers around the world. U.S. Grains Council President and CEO Tom Sleight said this level of data reporting in unparalleled.

"The council is providing an unmatched level of information about the U.S. corn crop, reinforcing the U.S. reputation for quality, reliability and transparency," Sleight said.

This marks the third year the council has released the report, which has gained popularity around the world and anticipation of its release.

"The interest generated in the report demonstrates we are meeting and exceeding our expectations," Sleight said.


Distillers Grains Less Likely to Cause Bloat Than Corn Fines

Using ethanol co-products can help livestock get the most out of rations, and with less risk of bloat, according to an article by Midwest Producers (http://bit.ly/…).

Chris Reinhardt, extension feedlot specialist at Kansas State University, said that DDG is often less likely to cause bloat than corn fines.

Most nutritionists recommend a coarse crack for corn in order to achieve good digestion and minimize risk of bloat or acidosis. Although the particle size of DDG is very fine, its high fiber content make it much less of a risk for bloat as corn fines. Adding moisture to the DDG (wet or modified distillers grains)

Another benefit of wet or modified distillers grains is that the high moisture content help prevent fine particles settling to the bottom of the feed bunk.

Reinhardt added that co-products such as dried distillers grains are often used between 20% and 60% of the dry matter of rations and are often priced at a value to corn.

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

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DTN WEEKLY DISTILLERS GRAIN SPOT PRICES

CURRENT PREVIOUS
COMPANY STATE 4/11/2014 4/4/2014 CHANGE
Bartlett and Company, Kansas City, MO (816-753-6300)
Missouri Dry $252 $252 $0
Modified $125 $125 $0
CHS, Minneapolis, MN (800-769-1066)
Illinois Dry $240 $235 $5
Indiana Dry $240 $255 -$15
Iowa Dry $235 $240 -$5
Michigan Dry $245 NO
Minnesota Dry $225 $225 $0
North Dakota Dry $225 $230 -$5
New York Dry $265 NO
South Dakota Dry $215 $230 -$15
Hawkeye Gold, IA (515-663-6413)
Iowa Dry $230 $235 -$5
Modified $88 $90 -$2
MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253)
Kansas Dry $240 $240 $0
United BioEnergy, Wichita, KS (316-616-3521)
Kansas Dry $245 $245 $0
Wet $100 $100 $0
Illinois Dry $265 $265 $0
Nebraska Dry $245 $245 $0
Wet $100 $100 $0
Wisconsin Dry $235 $235 $0
U.S. Commodities, Minneapolis, MN (888-293-1640)
Illinois Dry $245 $250 -$5
Indiana Dry $240 $245 -$5
Iowa Dry $230 $230 $0
Michigan Dry $240 $245 -$5
Minnesota Dry $215 $220 -$5
Nebraska Dry $240 $240 $0
New York Dry $255 $255 $0
North Dakota Dry $220 $230 -$10
Ohio Dry $240 $245 -$5
South Dakota Dry $220 $230 -$10
Wisconsin Dry $230 $230 $0
Valero Energy Corp., San Antonio, TX (402-727-5300)
Indiana Dry $250 $260 -$10
Iowa Dry $225 $230 -$5
Minnesota Dry $225 $230 -$5
Nebraska Dry $230 $235 -$5
Ohio Dry $250 $260 -$10
South Dakota Dry $220 $225 -$5
Western Milling, Goshen, California (559-302-1074)
California Dry $340 $350 -$10
*Prices listed per ton.
Weekly Average $236 $239 -$3
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 4/10/2014 $5.0125 $179.02
Soybean Meal 4/10/2014 $479.50
DDG Weekly Average Spot Price $236.00
DDG Value Relative to: 4/11 4/4 3/28
Corn 131.83% 133.84% 134.31%
Soybean Meal 49.22% 49.78% 50.16%
Cost Per Unit of Protein:
DDG $9.44 $9.56 $9.44
Soybean Meal $10.09 $10.11 $9.91
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 (Apr 4, 2014)

Dried Modified Wet
FOB PLANT PRICES PER TON
Iowa 225.00-255.00 88.00-120.00 58.00-65.00
Minnesota 235.00-245.00 90.00 80.00
Nebraska 230.00-240.00 85.00-120.00 60.00-76.00
South Dakota 225.50-244.50 92.00-104.00 65.00-70.00
Wisconsin 230.00-245.00 107.00-115.00 NQ
Eastern Corn Belt 235.00-265.00 90.00-110.00 NQ
Kansas 240.00-245.00 NQ 70.00-76.00
Northern Missouri 245.00-255.00 NQ 70.00
DELIVERED PRICES PER TON
CIF NOLA 255.00-290.00
Pacific Northwest 301.00-318.00
California 300.00-318.00
Texas Border (metric ton) 320.00-350.00
Lethbridge AB 275.00
Chicago 255.00-265.00

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

CALIFORNIA WHOLESALE FEEDSTUFF PRICES (Tue Apr 8, 2014)

Distillers Dry Grains 
  FOB Truck                           340.00         no comp
  Rail Delivered California Points    340.00-345.00  up 15.00-unch
PACIFIC NORTHWEST WEEKLY FEED (Tue Apr 8, 2014)
Offers for Distillers Dried Grains delivered in April by rail to feed mills in the Pacific Northwest were 315.00, mixed, from 2.00 lower to 20.00 per ton higher than week ago offers.  Offers for distillers dried grains trans-loaded onto trucks and delivered during April to Willamette Valley dairies were 330.00-333.00, also mixed, from 2.00 lower to 20.00 per ton higher than week ago offers.

*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.)
3/14/14 88650 9103 1686 99438 4640598
3/21/14 88053 9041 1674 98769 4609348
3/28/14 91734 9419 1744 102898 4802056
4/04/14 89148 9154 1695 99996 4666640

*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.

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