More corn stocks than expected showed up in the latest report out from USDA on Friday, which was a big surprise for many of the market watchers.
Despite the fact that corn stocks are reported to be 34% lower than a year ago, it was expected to be much worse, even just a few weeks prior to the Friday Grain Stocks report. Earlier this year, USDA was predicting corn stocks would finish the year at just 675 million bushels, less than a three-week supply. But as of September 1, stocks instead totaled 1.13 billion bushels, with summer disappearance indicated at 2.54 billion bushels, compared with 2.60 billion bushels during the same period last year.
The report left even USDA’s Chief Economist Joe Glauber scratching his head. “Obviously our analysts are going to be looking at those numbers, but it poses a puzzle in that regard,” said Glauber. Some think the numbers are just off, while others think it could be that livestock producers are using less corn for feed than expected.
That leads us to say don’t look a gift horse in the mouth, because having corn stocks higher is a good thing for everyone. “Pushing corn stocks back above one billion bushels is important for the psyche of the market,” said Renewable Fuels Association Vice President Geoff Cooper. “Having more corn available should somewhat ease supply concerns brought on by poor growing conditions this year and provide more of a buffer until farmers complete the harvest of this year’s crop.”
With corn prices higher this summer, livestock producers may have been using more distillers grains (DDGS), the by-product of ethanol production. When the amount of corn used for ethanol feed co-products is combined with feed and residual demand, total feed demand becomes 6.35 billion bushels, or 47 percent of expected use in 2011/12.
So, if we did look that gift horse - or cow or pig - in the mouth, we might just find more DDGS than corn there. Surprise!
In a world of splashy magazine covers and sexed-up headlines, it can be easy to obscure the facts with so-called data. Correlating figures to create data may sounds simple, but in choosing how to present the aggregated collection and conclusions of research, the data suppliers become the gatekeepers to the truth. To effectively assess the validity of the information, it is imperative to know exactly how they paint the picture that colors our perceptions.
In the case of U.S. Department of Agriculture figures on corn usage, government categories are obscuring reality and, in doing so, fueling food-versus-fuel panic based in incomplete information and, sometimes, intentionally obtuse interpretations. Now, the National Corn Growers Association wants to help the public understand what agricultural experts already know- corn used in ethanol production actually creates both feed and fuel.
Notably, this third is not reflected in corn usage data released by the agency. Instead, the total sum is attributed to ethanol with no accounting for the addition of high quality feed products that enter the livestock sector post-production.
“People get a little hysterical about the food vs. fuel,” said NCGA CEO Rick Tolman. “They believe that we are taking corn away from livestock producers.” That’s not the case, however. “The big difference is the pie is growing. Those pieces that have been going for feed and food are still there—they are not any smaller—it’s just that the pie got bigger.”
As in so many cases, the truth calms fears based in a lack of knowledge. Instead of perpetuating the pandemonium, realize that sensationalized stories sell magazines without regard for their impact upon the country. Buying into the mass hysteria only harms both farmers and the industry providing a domestic, renewable, sustainable fuel for the United States. Take a look at the broader picture instead of being blinded by skewed stats.
The livestock feed generated as a co-product of ethanol production is enough to make 50 billion quarter-pound hamburgers each year, according to a new report from the Renewable Fuels Association.
According to the report, “Fueling a Nation; Feeding the World,” ethanol producers are expected to turn out about 39 million metric tons of livestock feed in the form of distillers grains in the current marketing year. That amount is equivalent to the 4th largest corn crop in the world, and is enough feed to produce 50 billion quarter-pound hamburgers – seven patties for each person on the planet - or enough to produce one chicken breast for every American every day for a year.
This is a message that needs to be shouted from the rooftops because it helps to visualize the point that ethanol uses much less of the nation’s corn supply than simple statistics imply. Last year, ethanol production provided 35 million metric tons (mmt) of livestock feed - more than the total amount of grain consumed by all of the beef cattle in the nation’s feedlots!
In other words, we are producing both food and fuel from every bushel of corn that goes into an ethanol plant. Why don’t people get this?
“It’s a very good ingredient for us,” said Dr. Smith. “We’ve used it successfully and the reason we would use a co-product like that is to save money in the diet. It gives us a good cost value, nutrient value, it flows and handles and the birds perform well on it.” He says it can be use as much as 15 percent of the diet for birds, or even more in breeder diets.
He recommended to international buyers who were at the Export Exchange that they try DDGS and work with it. “If it saves money, there’s that incentive, that risk is worth taking,” he said.
South Dakota State University Extension swine specialist Dr. Robert Thaler talked about the use of DDGS in hogs and how it helps supply phosphorus in the diet. “Phosphorus supplementation to the diet is very expensive,” he said. “The cool thing is that the phosphorus in DDGS is highly available. So, if you’re replacing dical or monocal with phosphorus coming from DDGS, you’re going to have less phosphorus in the manure, it will probably be cheaper and plus, you’re going to have less environmental problems.”
Dr. Thaler says exporters want quality assurances when it comes to DDGS and they are also wondering how high they can go including DDGS in the diet. “A lot of them are at 5-10 percent inclusion rate in swine diets. Here in the United States, on the growth/finish side, we’re probably 20-30,” he explained. “We just have to get them to realize that there’s nothing magical we’re doing to make that 20-30 percent work.”
We often hear about friction between the producers of corn and livestock over the growth in the production of ethanol. One Iowa farmer had an idea to diversify his operation and do both! Judging by the tour that the TATT Global Farmer to Farmer Roundtable participants received at his farm, Couser Cattle Company, he’s doing it very successfully.
Our host was Bill Couser. Bill conducted a fascinating presentation about his marriage of row crop farming (corn/soybeans), livestock production and ethanol production! You can see a portion of his explanation in the video below. He used a long table to display all the products he produces starting with an ear of corn and winding up with ethanol (2.81 gal/bushel of corn) as well as by-products like DDGS and ultimately fine quality beef. I loved his description about the whole food vs. fuel debate, “It’s rubbish!”
The Export Exchange 2010 is taking place in Chicago, IL. This event brings in international buyers and U.S. suppliers of DDGS and coarse grains. The attendance has met if not exceeded expectations. There are nearly 500 attendees, with about 180 of them coming from another country and there are 33 countries represented.
On hand is the President/CEO of the National Corn Growers Association, Rick Tolman. I asked Rick what he thought about the conference and its importance to the industry. Rick says it’s critically important and that the DDGS export market is one of the bright spots in the industry.
Exports of the ethanol co-product distillers dried grains with solubles (DDGS) hit a new record in July of 886,300 metric tons - which is more than was exported in one year prior to 2005. Total exports this year so far are 4.95 million metric tons, getting close to the total last year of 5.65 million.
Geoff Cooper, VP of Research with the Renewable Fuels Association (RFA), says 2005 was really the first year that DDGS exports started to take off. “2005 was the first year that we exported more than one million metric tons and the growth has been very rapid since then,” Cooper said. This year, the U.S. ethanol industry is on pace to export 8.5 million metric tons of DDGS, or about 28% of expected total DDGS production.
China was the top destination for U.S. DDGS exports in July, accounting for nearly 40% of the total. Mexico, Turkey, and Canada were the second, third, and fourth-leading importers, respectively.
One third of the nation’s ethanol production ends up as DDGS, a high quality animal feed which can be used for everything from cattle to fish, and livestock producers in other countries have been quick to see the advantages of feeding the protein rich product to their animals. Cooper says the U.S. Grains Council (USGC), along with other companies and corn grower organizations, have been promoting those advantages to help exports grow. Expanding exports of DDGS will be the subject of a conference coming up October 6-8 at the Hyatt Regency McCormick Place Hotel in Chicago, Ill.
Listen to or download my interview with Geoff Cooper here:
The event will focus on increasing exports of both coarse grains and the emerging growth market of the ethanol co-product dried distillers grains with solubles (DDGS), and features an array of international leaders in ag commerce, including Dr. Bob Thompson with the National Center for Food and Agricultural Policy and Gary Blumenthal, president and CEO of World Perspectives Inc.
Dr. Thompson is scheduled to deliver the keynote address on the first day of the conference to provide perspective and insight on the world supply and demand situation will give attendees a better understanding of the world market. Blumenthal’s remarks during the second day luncheon will focus specifically on the growing global demand for U.S. DDGS. “As long as global population continues to grow, the demand for meat, milk and eggs will increase, and subsequently the demand for livestock and thus for DDGS will climb as well,” Blumenthal says.
More than 170 international buyers of U.S. DDGS and coarse grains are scheduled to attend the event, including representatives from China, Japan, Taiwan, Korea and Vietnam. Why should a corn farmer plan to attend? Consider this. The United States grows 42 percent of the world’s corn and supplies more than 60 percent of the world’s corn exports. Nearly 2 billion bushels of corn were exported last year to about 60 different countries and the current forecast for this year is just over 2 billion, according to USDA. Exports of DDGS to Southeast Asia doubled last year over 2008 and were already up nearly 75 percent over 2009 at the beginning of this year. With yet another record corn crop expected this year, it is more important than ever to expand our exports.
Join more than 300 other U.S. producers and agribusinesses for the Export Exchange. Registration is available on-line with a $100 discount for registrations received before September 4.
In the last, but certainly not the least, of our posts from the recent 2010 Corn Utilization and Technology Conference (CUTC) in Atlanta, we hear from Steffen Mueller, principal research economist at the University of Illinois-Chicago Energy Resources Center.
Mueller did two presentations at the CUTC, both related to the increasing efficiency of ethanol production that continues to improve its carbon footprint under life cycle analysis. For one, Mueller says, the more useful co-products that can result from ethanol production, the better its carbon footprint. “With corn ethanol you also produce an animal feed product simultaneously, to which you have to assign a co-product credit, meaning you subtract the emissions to produce that feed product from the life cycle of corn ethanol,” Steffen explains in an interview. “Now, we’re also looking at other co-products. For example, a lactate which is a solvent that can substitute for petroleum-based solvents in the marketplace.”
Mueller also presented his findings from a recent study showing how ethanol plants are improving in efficiency. “We did a large survey of corn ethanol plants and assessed the energy consumption and showed that the thermal and electric energy that plants require to turn bushels of corn into corn ethanol has decreased by 30 percent over the last eight years,” he said. (read about that survey here)
Mueller says there is a lot of updated industry data coming together that shows that corn ethanol is becoming more efficient, which should help when it comes to regulations for low carbon emissions on both the national level and in states like California.
Listen to an interview Chuck Zimmerman did with Steffen Mueller at CUTC here:
Download the interview here: Steffen Mueller Interview
By replacing up to 20 percent of the flour used in a recipe with distillers dried grains, the scientists have managed to up the protein and fiber content of traditional breads such as naan and chapatti. People in Asia and the Indian Subcontinent are then able to increase the nutritional content of their diet despite lacking the money to purchase more expensive foods, particularly meat.
Many in the world fight malnourishment caused by lack of fiber and protein. Most are children who need even more nutrients during their vital years to even survive. With research showing that distillers dried grains and ethanol are part of the solution, it is unconscionable to insinuate that they are part of the problem.
Tell those with vested interests and poor science that you have thought about it already. As a humanitarian, you realize it is time to put rhetoric aside and push for a real change that can save lives and help our environment. Tell them you back ethanol.
Despite the fact that corn stocks are reported to be 34% lower than a year ago, it was expected to be much worse, even just a few weeks prior to the Friday Grain Stocks report. Earlier this year, USDA was predicting corn stocks would finish the year at just 675 million bushels, less than a three-week supply. But as of September 1, stocks instead totaled 1.13 billion bushels, with summer disappearance indicated at 2.54 billion bushels, compared with 2.60 billion bushels during the same period last year.
According to the report, 
Dr. Phillip Smith, a nutritionist with Tyson Foods, spoke at the recent 
South Dakota State University Extension swine specialist Dr. Robert Thaler talked about the use of DDGS in hogs and how it helps supply phosphorus in the diet. “Phosphorus supplementation to the diet is very expensive,” he said. “The cool thing is that the phosphorus in DDGS is highly available. So, if you’re replacing dical or monocal with phosphorus coming from DDGS, you’re going to have less phosphorus in the manure, it will probably be cheaper and plus, you’re going to have less environmental problems.”
Distillers grains exports keep piling up.
The event will focus on increasing exports of both coarse grains and the emerging growth market of the ethanol co-product dried distillers grains with solubles (DDGS), and features an array of international leaders in ag commerce, including Dr. Bob Thompson with the National Center for Food and Agricultural Policy and Gary Blumenthal, president and CEO of 
In the last, but certainly not the least, of our posts from the recent