Feed Formulators Turn to Distillers’ Grains to Replace Corn

April 25, 2011 09:43 PM

Demand for dietary energy in feed rations is pulling distillers’ grains into feed formulas in place of corn, but also displacing some soybean meal in the process.  

“The biggest product distillers’ grain is replacing is actually corn,” said Jim Ringo, director of marketing for distillers’ dried grains and corn oil at Renewable Products Marketing Group, LLC, Shakopee, Minn.
Recent weakness in soybean and soybean meal prices relates more to South America's crop than to competition from distillers’ grains.
May soybean meal futures climbed since June to their highs in early February, but backed off since then, and December futures are moving sideways in recent weeks. Soybean futures followed similar but more moderate patterns.
May corn futures slipped from their highs set earlier this month, while December futures kept climbing.
Distillers’ grains carry significantly more protein than corn—about 30 percent for the dried, processed product versus 8 or 9 percent for corn—so distillers’ grains replace some protein that might have come from soybean meal. However, “In today's market environment, the shortage is for carbohydrates and fats,” said Ringo.
When nutritionists formulate feedlot, swine, or poultry rations using distillers’ grains in place of some corn, “They're not necessarily thinking about displacing protein,” he said. However, they remove some soybean meal to balance the rations.
In dairy rations, distillers’ grains do replace soybean meal or other proteins, and the energy and fiber from distillers’ grains provide a secondary benefit, said Ringo. Dairy nutritionists for many years have limited the levels of distillers’ grains in rations because corn oil in the processed product could depress butterfat content in milk. However, many ethanol plants now extract that oil, so Ringo expects more distillers’ grains will go into dairy feeds.

Close to saturation

Much of the increase in feeding products from ethanol plants occurred in past years, said Mark Ash, an oilseed specialist at USDA's Economic Research Service. “We're probably getting close to saturation levels for how much distillers’ dried grains you can incorporate into feed rations in the United States,” said Ash. “It's probably replacing more of the corn in rations now.”
However, soybean meal has competition from increased supplies of several competing ingredients.
“We certainly have a lot of supply of cottonseed this year and that has provided some competition for soybean meal,” said Ash. USDA estimates the U.S. supply of cottonseed from the 2010 crop at 3.29 million tons, up nearly two-thirds from two years ago. But cottonseed prices have risen since last summer to one-year highs in some U.S. markets this month. August-January imports of canola meal from Canada increased 42 percent from a year earlier.
Prices for many grain-based feed ingredients also climbed while soybean and meal prices softened in recent months. Midwestern corn gluten feed prices soared from $40 to $60/ton in railcars last May and June to $140 to $165 last week. Eastern Iowa dried distillers’ grain prices shot from about $100 per ton last June to $205 to $212 in recent weeks.

Less domestic soy, corn demand

Domestic feed demand for soybean meal and corn have both declined in recent years. USDA expects U.S. soybean meal demand to reach 30.5 million tons this year, off slightly from last year, continuing the decline from the peak of nearly 31.2 million tons in 2006-07. Domestic corn feed and residual use peaked at 6.16 billion bushels in 2004-05 and is projected at 5.15 billion bushels this year, about steady from last year. 
Meanwhile, U.S. distillers’ grains production soared from 9 million metric tons in 2005 to 32.5 million in 2010, reported the Renewable Fuels Association. While beef and dairy cattle have provided the major domestic markets, USDA reported that exports surged from about 1 million metric tons in 2005 to nearly 5.5 million tons in 2009.

Distillers’ grains output moderating

Growth in distillers’ grain production is easing, wrote USDA economists in December. Linwood Hoffman and Allen Baker projected that production will increase from 33.3 million metric tons in 2009-10 to 38.6 million metric tons in 2019-20.
Average dried distillers’ grain prices had run at a premium to corn prices for the decade through August 2006, but in the past four marketing years they have averaged a discount to corn, reported Hoffman and Baker. They said that as distillers’ grains became more of an energy feed, soybean meal prices lost some of their past connection to distillers’ grains prices.


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Spell Check

4/26/2011 06:21 AM

  How much energy does 1 lb of corn have vs 1lb of dried distillers grain??? We need all info not just part of it.

4/26/2011 06:24 AM

  How much energy does one pound of corn contain vs one pound of 'dried distillers' grain? I'm referring to the distillers that has the oil extracted?

4/26/2011 12:06 PM

  For dairy steers it might as well be popal sawdust


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