Tracking Distillers Dried Grains Solubles Trends

Poultry and livestock farmers have long valued soy meal as an excellent and consistent source of protein and key amino acids. But other protein sources, including canola meal, meat meals and distillers dried grains with solubles (DDGS), used in combination with synthetic amino acids have made strides in recent years to better compete for a place in the feed ration game.

The  boom in ethanol production over the past few years has increased the supply and decreased the price of DDGS. And that increased supply coupled with a concerted effort to reduce variability has helped DDGS become a more competitive feed ingredient.

According to an analysis report,  soy meal remains attractive to animal farmers because of its superior quality.

Here’s a look at some recent developments related to DDGS production:

Supplies shrinking? Even as news spread that the U.S. ethanol industry produced enough DDGS this past marketing year to surpass the U.S. soybean crushing industry in feed production, recent reports from the ethanol industry indicate an expectation that DDGS production will decline next year. The prediction, explained in an Iowa State University report, is based on a smaller corn supply due to the 2012 drought and a declining demand for automobile fuel. A report by Iowa State University backs up those expectations of lower DDGS production and use for 2012-13. The ISU report predicts a “bounce back” in DDGS production and use in 2013-14, but volume will be limited by the required quantity under RFS2.

Prices rising?  Robert Wisner, Ph.D., an economist and professor emeritus at Iowa State University, recently predicted that the price of DDGS will inch higher. “Because of reduced supplies of all feed ingredients, DDGS prices will continue to be significantly higher than last season,” Wisner said.

Exports to China. The U.S. beef and dairy sectors continue to be the largest users of DDGS. The U.S. has also been exporting large quantities of DDGS. China, the top overseas buyer of U.S. soybeans, has become a big customer of DDGS, even though that country is a large producer of ethanol and DDGS itself. It is still undetermined how expanding DDGS exports could affect their price.