Distillers' grain gaining importance as byproduct of ethanol
January 28, 2013
Lincoln Journal Star - Art Hovey
Distillersâ€™ grain, once regarded with about as much excitement as leftover mashed potatoes, is becoming an increasingly important part of sales from ethanol production.
Managers of Nebraskaâ€™s two dozen ethanol plants are finding livestock and poultry customers in other states and more buyers as far away as Canada, Mexico and China for the dried portions of corn kernels not consumed in conversion to ethanol, said Dennis Conley, an agricultural economist at the University of Nebraska-Lincoln.
In the past decade, exports to those three countries have gone from almost nothing to more than 4 million metric tons nationally. China, which sends a wide variety of products to the United States in ocean-going containers, is filling them with distillersâ€™ grain for the return trip.
â€œTheyâ€™re the 500-pound gorilla in the export market,â€ Conley told the Nebraska Ethanol Board on Friday.
Another revenue stream is especially important at a time when ethanol margins are thin and many plants have either shut down temporarily or reduced hours to get through a period of high corn prices and tight supplies.
â€œThank goodness for distillersâ€™ grain,â€ Conley said.
Several more years of increasing international demand, arising in part from the declining value of the dollar against overseas currencies, could make drought-inspired price spikes to $6 to $8 per bushel for corn into something more permanent, according to Conley.
International sales could reach 12.7 million metric tons by 2017 â€œif the exchange rate continues to decline.â€
Ethanol Board Chairman Galen Frenzen of Fullerton said distillersâ€™ grain is shedding descriptions as a byproduct.
â€œThe way itâ€™s going, ethanol may become the byproduct,â€ he said.
â€œThat mindset is coming to the market.â€
Increasing interest in distillersâ€™ grain from the livestock sector is also important because ethanol production associated with a federal renewable fuels mandate is getting close to the 15 billion gallon ceiling set for corn-based fuel.
Beyond that is a 36 billion gallon target set for 2022 that is supposed to be met with cellulosic ethanol made from crop residue, wood chips and other plant material.
Pelletizing dried distillersâ€™ grain could be the next step toward extending shelf life and saving space in bulk shipments.