DTN Weekly Distillers Grains Update

Nebraska Company Produces Distillers Grain/Corn Residue Pellet

OMAHA (DTN) -- A Nebraska company is putting plans in motion to build bioprocessing facilities across the Midwest, which will produce a newly-developed pelleted product made from treated corn stover, corn syrup and distillers grain.

Pellet Technology USA, LLC. (PTUSA) headquartered in Gretna, Nebraska, was started because of the founder's background from working in the ethanol industry. Russ Zeeck, founder and chief operating officer, said he was looking at cellulosic and advanced biofuels opportunities when he realized that the most stable biomass chemistry profile was corn stover.

"I started focusing on corn stover and realized that the primary objective to commercializing corn residue was getting it into a form that could be handled and transported like grain, that could be stored like grain, and that could be processed like ethanol plants, 24 hours a day," he said.

After reviewing various processes and technologies, Zeeck said he found that corn residue was a product that could withstand variables such as drought or commodity pricing.

Zeeck said he was witnessing some of the changes that were occurring in the ethanol industry such as fractionation and removal of oil or fiber from dried distillers grains, and the fact that DDG can fluctuate in price and in quality from one plant to another. He said he realized that by using the pellet technology, the fractionated DDG can be used and the process adjusted to take the variability and volatility out of the equation.

Joe Luna, Manager of Business Strategy for PTUSA, said, "The hope for the distillers grains side of it is that today there's a lot of volatility with distillers grains based on China and export volumes. But if we can find more purposes on the domestic end to utilize distillers as ethanol technology advances, then that's a good thing for all parties, especially the ethanol plant."

Luna added that the company prides itself on the consistency of its product, which is valuable to different sectors of the cattle market, other livestock breeds and to poultry as well.

PTUSA teamed up with researchers from the University of Nebraska in a trial, feeding various amounts of the pellet feed with modified distillers grains with solubles to steer's calves in finishing diets. The researchers found that with 40% modified wet distiller's grain (MDGS), producers can feed up to 20% of the pellet and not give up any animal performance. Likewise, with 20% MDGS, producers can feed up to 10% of the pellet and not sacrifice performance.

Although the University research was conducted with beef cattle, PTUSA has done multiple studies on using the pellets for swine, as well as poultry and horses.

The formulation of the pellet is changed for each individual species. For example, the focus on swine is sows and their gut health or in baby piglets, and in using the pellet as a means to provide fiber in a palatable and nutrient-digestible way.

Luna mentioned that the process increases the digestibility of corn stover. He said another study at the university, which compared the pellets to high-quality forage, found that the pellets had about 156% more digestibility than high quality forage.

PTUSA is working with a group that sells the pellets commercially from the Gretna facility, but since that facility was primarily for research and development, it has reached its capacity for production. The company is now close to commercial development of its first 10 to 15 plants to be built in the Midwest, the first of which is estimated to be up and running sometime in 2016.

The company is looking at various delivery methods for the pellets once they are available on a commercial scale. The pellets can be sold by the ton, like a commodity for larger feeding operations, but can also be sold by the ton in containers or sacks that can be loaded on a pickup. The company is also looking at 50-pound bags, as well as containers and rail for transport both domestically and overseas.

As far as Zeeck and Luna know, there have been some early-phase trials by others with pelleting corn stover, but Pellet Technology is likely the furthest along in development of using corn stover, which Luna describes as an under-used resource.

"Three years ago the conversation was: who cares about corn stover? The conversation two years ago was that this stuff's beginning to be a problem on the field. It acts as an insulator to the soil and hinders emergence," Luna said. "Now the question is: where do we take it?"

"The challenge with corn stover is that it is a very low value and under-utilized feed stock. Some people use it as bedding, others as a very low-quality forage in livestock diets. So there's a big opportunity out there with corn stover and how to utilize it."

Zeeck said he believes the key is harvesting stover in a sustainable and responsible manner.

PTUSA has a distinctive stover sustainability program that growers who want to sell the company their stover must use for soil health. The company has developed specific harvesting protocols, from timing and equipment, to testing before and after harvest, to various management practices for soil and fields.

Farmers can choose whether to harvest the stover themselves, according to the grower stover harvest program, or if they don't have sufficient labor available, the company will come in and harvest the stover for them.

The company takes great care as to how much stover can be removed from the field.

"Depending on the soil types of the field, the slopes of the field, and other characteristics of the field, you can have the exact same soil, but you're going to take different levels of residue off," Luna said. "Nitrogen and phosphorus are key elements, but maintaining the organic matter in the soil and preventing erosions are also important factors."

Cheryl Anderson can be reached at cheryl.anderson@dtn.com.

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IN THE NEWS

China Still Largest DDGS Importer

Despite unease in the market over trade with China, that country still retains its position as the top importer of U.S. dried distillers grains with solubles, according to an article by the U.S. Grains Council (http://bit.ly/…).

Uncertainties in China's economy and worries over trade surfaced after China announced a new registration system for importers of grain and DDGS. Also factoring into the anxiety is a bumper corn harvest in China and corn price supports. Although there is some worry over China's Ministry of Agriculture will reduce its support price for corn, and traders appear to be cautious about forward contracting, it is likely that domestic corn in China will be priced higher than the international price of imported U.S. sorghum, corn and DDGS.

Chinese importers are reportedly working through the new regulations and shipments of U.S. sorghum and DDGS continue to arrive, still placing China as the top importer of U.S. sorghum and DDGS. As of Aug. 27, China's imports of U.S. sorghum were up 4 million tons over last year, and the 4.2 million tons of U.S. DDGS imported between Jan. and July 2015 were 20% more than the same period last year.

To encourage further imports, the council is planning upcoming seminars to promote U.S. sorghum and DDGS in two Chinese provinces and already has more than 200 participants registered from the country's swine industry. Consultants from the council are also scheduled to speak at a symposium organized to respond to the energy interest in sorghum and DDGS.

Cheryl Anderson can be reached at cheryl.anderson@dtn.com.

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DTN WEEKLY DDG SPOT PRICES

CURRENT PREVIOUS
COMPANY STATE 9/11/2015 9/4/2015 CHANGE
Bartlett and Company, Kansas City, MO (816-753-6300)
Missouri Dry $155 $155 $0
Modified $70 $70 $0
CHS, Minneapolis, MN (800-769-1066)
Illinois Dry $140 $140 $0
Indiana Dry $138 $140 -$2
Iowa Dry $135 $138 -$3
Michigan Dry $140 $150 -$10
Minnesota Dry $120 $125 -$5
North Dakota Dry $125 $125 $0
New York Dry $160 $155 $5
South Dakota Dry $125 $125 $0
MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253)
Kansas Dry $135 $135 $0
POET Nutrition, Sioux Falls, SD (888-327-8799)
Indiana Dry $135 $140 -$5
Iowa Dry $120 $125 -$5
Michigan Dry $140 $145 -$5
Minnesota Dry $120 $125 -$5
Missouri Dry $135 $140 -$5
Ohio Dry $130 $135 -$5
South Dakota Dry $120 $125 -$5
United BioEnergy, Wichita, KS (316-616-3521)
Kansas Dry $130 $130 $0
Wet $50 $50 $0
Illinois Dry $145 $150 -$5
Nebraska Dry $130 $130 $0
Wet $50 $50 $0
U.S. Commodities, Minneapolis, MN (888-293-1640)
Illinois Dry $135 $140 -$5
Indiana Dry $130 $135 -$5
Iowa Dry $115 $120 -$5
Michigan Dry $135 $140 -$5
Minnesota Dry $115 $120 -$5
Nebraska Dry $120 $120 $0
New York Dry $145 $150 -$5
North Dakota Dry $115 $120 -$5
Ohio Dry $130 $135 -$5
South Dakota Dry $115 $120 -$5
Wisconsin Dry $125 $130 -$5
Valero Energy Corp., San Antonio, TX (402-727-5300)
Indiana Dry $120 $120 $0
Iowa Dry $120 $125 -$5
Minnesota Dry $115 $120 -$5
Nebraska Dry $125 $125 $0
Ohio Dry $130 $135 -$5
South Dakota Dry $110 $115 -$5
Western Milling, Goshen, California (559-302-1074)
California Dry $190 $190 $0
*Prices listed per ton.
Weekly Average $128 $131 -$3
The weekly average prices above reflect only those companies DTN
collects spot prices from. States include: Missouri, Iowa, Nebraska,
Kansas, Illinois, Minnesota, North Dakota, South Dakota, Michigan,
Wisconsin and Indiana. Prices for Pennsylvania, New York and
California are not included in the averages.

*The spot prices gathered by DTN are only intended to reflect general market trends and may vary. Please contact individual plant or merchandiser for exact prices.

If you would be willing to take a weekly phone call and have your distiller grains spot prices listed in this feature, please contact Cheryl Anderson at (308) 224-1527 or (800) 369-7875, or e-mail cheryl.anderson@dtn.com.

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VALUE OF DDG VS. CORN & SOYBEAN MEAL
Settlement Price: Quote Date Bushel Short Ton
Corn 9/10/2015 $3.6175 $129.20
Soybean Meal 9/10/2015 $311.40
DDG Weekly Average Spot Price $128.00
DDG Value Relative to: 9/11 9/4 8/28
Corn 99.07% 105.48% 103.92%
Soybean Meal 41.10% 41.39% 41.81%
Cost Per Unit of Protein:
DDG $5.12 $5.24 $5.40
Soybean Meal $6.56 $6.66 $6.80
Notes:
Corn and soybean prices taken from DTN Market Quotes. DDG
price represents the average spot price from Midwest
companies collected on Thursday afternoons. Soybean meal
cost per unit of protein is cost per ton divided by 47.5.
DDG cost per unit of protein is cost per ton divided by 25.

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USDA MARKET NEWS/DISTILLER GRAINS PRICES

USDA WEEKLY DISTILLERS GRAINS SUMMARY (Sep 4, 2015)

Dried Modified Wet
FOB PLANT PRICES PER TON
Iowa 125.00-150.00 47.00-70.00 38.00-52.00
Minnesota 127.00-140.00 60.00 34.00-40.00
Nebraska 130.00-145.00 60.00-70.00 44.50-47.00
South Dakota 120.00-126.50 60.00-64.50 42.00-46.00
Wisconsin 130.00-160.00 57.00-75.00 NQ
Eastern Corn Belt 135.00-155.00 43.00-67.00 NQ
Kansas 135.00-163.00 NQ 48.00-60.00
Northern Missouri 150.00-160.00 NQ 41.00-45.00
DELIVERED PRICES PER TON
CIF NOLA 160.00-165.00
Pacific Northwest 177.00
California 170.00-180.00
Texas Border (metric ton) 190.00-210.00
Lethbridge AB 140.00
Chicago 145.00-155.00

Dried Distillers Grain: 10% Moisture

Modified Wet Distillers: 50-55% Moisture

Wet Distillers Grains: 65-70% Moisture

CALIFORNIA WHOLESALE FEEDSTUFF PRICES (Tue Sep 8, 2015)

Distillers Dry Grains

  Rail to California Points        188.00-195.00    up 5.00-unch
  FOB Truck to California Points   175.00-197.00    dn 5.00-unch

PACIFIC NORTHWEST WEEKLY FEEDSTUFFS (Tue Sep 8, 2015)

Offers for Distillers Dried Grains delivered in

September by rail to feed mills in the Pacific Northwest were 2.00 to 7.00 lower from 173.00-183.00. Offers for distillers dried grains trans-loaded onto trucks and delivered to Willamette Valley dairies were 2.00 to 7.00 lower from 191.00-198.00.

*All prices quoted per ton unless otherwise noted.

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NASS/USDA MONTHLY CO-PRODUCTS PRODUCTION

Dry and Wet Mill, Co-products and Products Produced - United States

May 2015 - July 2015

Sep 1, 2015

Highlights:

Dry mill co-product production of distillers dried grains with solubles (DDGS) was 2.00 million tons during July 2015, up 1 percent from June 2015 and up 6 percent from May 2015. Distillers wet grains (DWG) 65 percent or more moisture was 1.14 million tons in July 2015, up slightly from June 2015 but down 7 percent from May 2015.

Wet mill corn gluten feed production was 333.8 thousand tons during July 2015, up 4 percent from June 2015 but down 5 percent from May 2015. Wet corn gluten feed 40 to 60 percent moisture was 315.1 thousand tons in July 2015, up 3 percent from June 2015 but down 3 percent from May 2015.

Co-products and Products May 2015 Jun 2015 Jul 2015
Dry Mill tons
Condensed distillers solubles (CDS-syrup) 148,637 145,244 149,927
Corn oil 118,281 120,582 125,497
Distillers dried grains (DDG) 418,448 407,259 450,829
Distillers dried grains with solubles (DDGS) 1,892,983 1,976,508 2,000,851
Modified distillers wet grains (DWG) <65% moisture 1,228,598 1,136,491 1,137,600
Modified distillers wet grains (DWG) 40-64% moisture 417,888 367,092 350,460
Wet Mill
Corn germ meal 69,135 63,188 68,528
Corn gluten feed 350,141 321,209 333,828
Corn gluten meal 97,295 92,237 97,130
Corn oil 53,208 51,281 53,364
Wet corn gluten feed 40-60% moisture 325,292 306,354 315,090

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RFA WEEKLY U.S. LIVESTOCK FEED PRODUCTION

CO-PRODUCT OUTPUTS (metric tons)
Week Ending Distillers Grains Corn Gluten Feed Corn Gluten Meal Total Feed Corn Oil (lbs.)
8/14/15 95363 9859 1826 107047 5677126
8/21/15 94078 9726 1801 105605 5600647
8/28/15 93683 9685 1793 105161 5577115
9/04/15 94671 9787 1812 106270 5635945

*Information from 2010 Weekly U.S. Fuel Ethanol/Livestock Feed Production report (http://www.ethanolrfa.org/…)

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DDG LINKS/RESOURCES

Organizations

*Distillers Grains Technology Council

http://www.distillersgrains.org

*National Corn Growers Association Corn Distillers Grains Brochure

http://ncga.com/…

*Iowa Corn

http://www.iowacorn.org/…

Nebraska Corn Board

http://www.nebraskacorn.org/…

*Renewable Fuels Association - Ethanol Co-Products

http://www.ethanolrfa.org/…

*American Coalition for Ethanol

http://www.ethanol.org/…

*U.S. Grains Council

http://www.grains.org/…

*South Dakota Corn Utilization Council

http://www.drieddistillersgrains.com

Government Sites

*Iowa Department of Agriculture and Land Stewardship/Office of Renewable Fuels & Coproducts

http://www.distillersgrains.com

University Sites

*University of Minnesota - Distillers Grains By-Products in Livestock

and Poultry Feed

http://www.ddgs.umn.edu

*University of Illinois - Illinois Livestock Integrated Focus Team Distillers Grains site

http://ilift.traill.uiuc.edu/…

*University of Nebraska - Beef Cattle Production By-Product Feeds site

http://beef.unl.edu/…

*University of Nebraska Extension

http://ianrpubs.unl.edu/…

*Iowa Beef Center - Iowa State University

http://www.iowabeefcenter.org/…

*University of Missouri - Byproducts Resource Page

http://agebb.missouri.edu/…

*South Dakota State University - Dairy Science Department - Dairy cattle research

http://dairysci.sdstate.edu/…

(select "Distillers Grains" from the topic menu)

*Purdue University Renewable Energy Web Site

http://www.extension.purdue.edu/…

(select "Biofuels Co-Products from the menu)

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DDG CONFERENCES

*Distillers Grains Technology Council Inc.'s 19th Annual Distillers Grains Symposium

The Distillers Grains Technology Council will hold its 19th Annual Distillers Grains Symposium on May 13-14, 2015 at the Sheraton Crown Center at Kansas City, Missouri. For information, contact the DGTC office at (515) 294-4019 or (800) 759-3448, or check the DGTC website (http://www.distillersgrains.org).

(If you are sponsoring or know of any event, conference or workshop on distillers grains, and would like to list it in the DTN Weekly Distillers Grains Update, please contact Cheryl Anderson (see contact info below).

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We welcome any comments/suggestions for this feature. Please let us know what information is valuable to you that we could include in the Distillers Grains Weekly Update. Please feel free to contact Cheryl Anderson at (402) 364-2183, or e-mail cheryl.anderson@dtn.com.

(AG)