Ethanol and distillers grains could possibly switch positions as the primary product of ethanol plants, according to Dennis Conley, agricultural economics professor at the University of Nebraska-Lincoln.
Distillers grains were originally viewed as a by-product of ethanol production, although merchandisers have fought hard for the preferred status of "co-product." But with the overwhelming growth in popularity of distillers grains among both domestic and foreign export markets, it could actually become the main product of ethanol plants, according to an article by Midwest Producer (http://bit.ly/…).
With high corn prices, many ethanol plants are currently shutting down or scaling back production in order to protect themselves against dwindling profit margins. Many depend on co-products such as distillers grains, corn oil or carbon dioxide to stay afloat.
Five to seven years ago, revenue from distillers grains comprised 15% to 17% of the profits of most U.S. ethanol plants. By 2012, that figured increased to 25% or 26% of plants' revenues.
Livestock producers are increasingly turning from high-priced corn to alternative feedstuffs for their rations, creating high demand for distillers grains. Even though rising corn prices typically cause distillers grains prices to rise as well, there is still very strong demand for distillers grains.
Cheryl Anderson can be reached at Cheryl.email@example.com.
© Copyright 2013 DTN/The Progressive Farmer. All rights reserved.