Marketers of dried distillers grain produced by American ethanol plants will be watching closely as the crop comes off prairie fields.
With barley at near record high domestic prices in Canada — though that will be affected by new crop — there may be a market for American-sourced DDGs if the price is right.
John Lien of CHS Grain said he believes supplies of the ethanol plant byproduct will increase this year after a slight drop last year.
U.S. domestic use of DDGs was down last year, and exports were also down as Canada and Mexico re-duced their purchases. Canada is consistently the third largest market for American DDGs, but Lien said other export markets have held fairly steady.
Read Also
Land crash warning rejected
A technical analyst believes that Saskatchewan land values could be due for a correction, but land owners and FCC say supply/demand fundamentals drive land prices – not mathematical models
Canada imported 590,000 tonnes of DDGs in 2012, down 20 percent from 2011 because other feed sources were cheaper.
Lien said Canadian canola acres declined last year, as did barley acres, and he sees that as a continuing trend. Less available canola meal and barley could open doors for DDG imports.
As well, China is buying considerable amounts of Canadian barley, which could short feedlot needs. Lien said he thinks the popularity of Canadian barley will continue to grow.
Though there is often talk about U.S. ethanol plants closing, Lien said he thinks the industry has stabilized and with maturity has come a more consistent supply of ethanol and DDGs.
All plants that typically supply DDGs to Canadian markets will soon be equipped to extract more fat from the byproduct, so a lower-fat DDG product of six or seven percent will be the norm, said Lien.
It could mean reduced prices, though that will depend on availability of other energy-rich feed sources.
Randy Ives, director of ethanol services for Gavilon in Omaha, Nebraska, acknowledged that the prairie feeding industry is protein rich, and fat content is a bigger factor when buying feed.
“I still think we will be in a protein led market for at least another six months, maybe longer. We can never have enough soybeans. That seems to be the world’s issue right now,” said Ives.
As for supply, it’s all about price.
“Consistency in the supply is pretty much price driven,” he said.
“Right now the folks in Asia need more protein. That’s what has had this big pull. If I knew that I had lost 40 percent of my market share in Canada, I would think that my prices would be down, but just the opposite has happened … because someone else in the world is buying it.”
