Nebraska Ethanol Board

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News: 2014

Distillers' grain gaining importance as byproduct of ethanol

January 28, 2013

Lincoln Journal Star - Art Hovey

Distillers’ 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 Nebraska’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 distillers’ grain for the return trip.

“They’re the 500-pound gorilla in the export market,” 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.

“Thank goodness for distillers’ grain,” 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 “if the exchange rate continues to decline.”

Ethanol Board Chairman Galen Frenzen of Fullerton said distillers’ grain is shedding descriptions as a byproduct.

“The way it’s going, ethanol may become the byproduct,” he said.

Conley agreed.

“That mindset is coming to the market.”

Increasing interest in distillers’ 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 distillers’ grain could be the next step toward extending shelf life and saving space in bulk shipments.

Lincoln Journal Star