Domestic Fuel

The Renewable Fuels Association (RFA) just released “40 Facts About Ethanol,” an animated video review of ethanols past, present and future.

“This video proves once and for all that today’s ethanol is not your father’s ethanol. The ethanol industry has made impressive strides in the last 30 years in production volumes, foreign oil displacement, production efficiencies, co-products, job creation, and cellulose and advanced ethanol market entry. The ethanol industry has a great story to tell and this video helps us tell it with data, color and occasionally humor. Whether you think you know all there is about ethanol or you are new to the topic, this video is a must-see! It is a great primer,” said Bob Dinneen, RFA’s President and CEO.

Check out the video below or visit EthanolRFA.org.

In addition, RFA just released a newly updated mobile E85 locator app. The Flex-Fuel Station Locator application for iPhones, iPads, iPod Touch and all Android devices is free and can be found in the App Store and Android Marketplace. This new version will help users pinpoint any station in the United States offering E85.

“With more than eleven million flex-fuel vehicles in America, we wanted to make it easier, faster, and perhaps more educational and fun for drivers to find E85,” said Robert White, RFA Director of Market Development. “Americans increasingly demand more fuel choice at the pump. They want alternatives to petroleum, especially foreign petroleum. They want fuels which are domestic, renewable, and environment-enhancing. They bought FFVs for a reason and we want to keep fueling the change.”

During the recent 2012 Export Exchange a few key leaders in the international market took the stage in a panel to share their perception on United States competitiveness in grain production.

Adel Yusupov, Southeast Asia Regional Director for US Grains Council, served as the moderator for the panel.

Panelists consisted of:
Willis Wu-Yeh Cheng, Chairman, Charoen Pokphand (Taiwan)
Mousa Wakila, General Manager, National Poultry Al Ahlieh (Jordan)
Jamie Rueda, General Manager, Escala (Colombia)
Dennis Inman, Vice President & Commercial Lead, Cargill, Inc.

The panelists were asked to share their candid thoughts on how the United States ranks in grain production and what attributes are most important to them when buying grain. Prices were at the top of all their lists, but they also want reliable market research and stressed that logistics were always a concern. Other items on the list included: consistency, a strong relationship and predictability.

Listen to the International Panel’s presentation here: International Panel at Export Exchange

You can find photos from this years Export Exchange here: 2012 Export Exchange

Distiller grain production was a hot topic discussed throughout the 2012 Export Exchange. Dr. Bob Wisner, Agriculture Extension Economics at Iowa State University, shared his research on the future of DDGS and what we can expect in the coming years. He also spoke on how this years drought affected DDGS production and it’s long-term affect on our US supply.

“The biofuel industry has expanded extremely rapidly in the last six years. It has become a major feed ingredient domestically and in the international market. Here in the United States it’s marketed in several different forms. We have dried distiller grains, that are dried to 10% moisture. We have a modified distiller grain that is partially dried. We have a wet distiller grain that is especially useful in the beef feeding industry. It gives a higher feed conversion efficiency versus corn than dry distiller grains. We have quite the combination of alternative uses here in the United States that for those of you outside the US are not generally available.”

“This is the first year in the last 17 years that we have seen a significant decline in distiller grain production. That of course is being driven by the severe drought here in the United States.”

In conclusion, Dr. Wisner shared these major things that will determine the supply and demand of DDGS.

• DDGS production follows ethanol production level and corn cost.
• Prices as % of corn/sbm price higher than in the past: 105%-108% of corn this winter.
• Prices for all feeds including DDGS will be extremely sensitive to South American weather in the next 4 months.
• After the current marketing year, with a return to more normal US crop yields, DDGS supplies will likely resume a longer-term uptrend, but at a slower rate than in the last six years.
• Risk of US domestic DDGS market saturation is low.
• DDGS exports likely will be growing competitor with the domestic feed industry.
• Longer-term future production and use depends heavily on policy issues and fuel prices.
• Important emerging issue: Will oil removal from DGS impact the value by species?

Listen to Dr. Bob Wisner’s complete presentation here: Dr. Wisner at Export Exchange

You can find photos from this years Export Exchange here: 2012 Export Exchange

Grain buyers from around the world in attendance at the 2012 Export Exchange had the opportunity to embrace the US producers perspective on the 2012 crop through a producer panel during the opening general session. Key panelists were Ron Gray, Illinois farmer and Secretary/Treasurer of the US Grains Council, and John Mages, Minnesota farmer and Chairman of the Minnesota Corn Research & Promotion Council.

They shared their personal experiences overcoming the 2012 drought and assured buyers of their fight and passion to raise a consistent and quality product.

Listen to the entire Producers Panel here: Producer Panel at Export Exchange

Following the opening session I took the time to talk with Ron Gray, where he summed up the 2012 corn crop and how farming for him is more than a job, its a personal endeavor.

“For us the 2012 crop started out with all the hope of an extraordinary crop. We planted early, the crop went in very well, emergence was good. Then it didn’t rain. Beginning the second week of May through the first week of August we only had about three inches of total rainfall and because of that our corn crop was severely reduced in production. Our farm probably averaged 50 bushels an acre, which is approximately 1/3 of our normal production. The rainfall did come later and the soybean crop is a fairly good crop, but the corn crop was devastated.”

Listen to my interview with Ron here: Ron Gray Interview

Beyond simply listening to producers, international grain buyers had the opportunity to visit farms across the United States. The goal was to gain information, assess the current US corn crop, explore the availability of other grains such as sorghum and barley, and build relationships leading to future sales.

Many participants expressed a preference for buying US grains due to the consistency and quality of the grain. They also appreciate the transparency and reliability of the US marketing and delivery systems. Clearly price and availability hindered US exports this year, but buyers are looking forward to a better crop next year.

You can find photos from this years Export Exchange here: 2012 Export Exchange

To kick off the 2012 Export Exchange attendees heard from keynote speaker Carl Casale, President and CEO of CHS, Inc., on the outlook for global grains and renewable energy.

Casale started off stated that the outlook simply depends on lots of different things and we have to focus on what we do know. He left attendees with one question: Do we have a strategy to survive, or even thrive in a volatile world?

Listen to Carl’s entire presentation here: Carl Casale at Export Exchange

While interviewing him after his presentation, he discussed the long term goals for global grain production and what we should expect production wise in the next year.

“The first thing you need to do is just take a step back and look at what the global demand is going to be over the long term. We have talked about 9 billion people on the planet, that’s going to require a 50% increase in grain production. As importantly, the 9 billion people are going to eat meat so there is another 50% increase in grain production to be able to feed livestock around the world. I have not seen anything that says that that’s not probably where we are going to be in the long term.”

“If you look at the market signals, it’s telling farmers that we want more corn acres in the US coming off a bit of a short corp that we had this year. Farmers are very well capitalized. I don’t think that will be an issue interms of getting hte corn produced. I think probably the biggest physical challenge we are going to have right now is we typically apply a lot of fertilizer for corn in the fall. It was so dry this year we just didn’t have the opportunity to do it. So, that will put al lote more pressure on supply chains in the spring.”

Listen to my interview with Carl here: Carl Casale Interview

You can find photos from this years Export Exchange here: 2012 Export Exchange

The key purpose for the 2012 Export Exchange was for buyers and sellers to meet and establish important relationships. The event sponsored by the US Grain Council and Renewable Fuels Association focused on getting answers, making contacts and building business. During the conference I had the opportunity to talk with Tom Sleight, President & CEO of the US Grains Council, about what this event means for the DDGS and the worlds grain supply.

“What we’re telling customers around the world is how the US producers will be there for them. The US farmers will be there for them now and in the future. Yes, we have droughts, thats a problem we have, but for the future the US has always responded to production challenges with more acres, greater production. Our message to the international community is that the US farmer is there in the international market for keeps.”

“I think out biggest thing is being all around, having boots on the ground, representatives that are selling these grains, bringing the buyers in. That’s what we are doing today with over 200 buyers from around the world. Bringing them in, making contacts and making sales. It is a different kind of business and it takes being there and extending your influence and representing producers interest all around the world. That’s what US Grains Council is doing.”

Listen to my entire interview with Tom here: Tom Sleight at Export Exchange

The US Grains Council also announced the official approval of the Syngenta corn variety MIR 162 Agrisure Vipterra in the European Union. This opens the way for exports of US corn co-products, including DDGS and corn gluten free.

Cary Sifferath, USGC senior regional director based in Tunis, said “This approval is a great success as it opens the window of opportunity for U.S. products, including DDGS and CGF, to enter the EU market. This is especially attractive in big markets like Ireland, Spain, Portugal and the Netherlands. Their ability to import these high-protein feed ingredients is critical at a time of crop shortage in Europe and high prices. Everyone is looking for alternatives,”

You can find photos from this years Export Exchange here: 2012 Export Exchange

A highlight for the 2012 Export Exchange was Dr. Joe Glauber’s comments on the supply and demand of the United States and worlds coarse grains. Dr. Glauber is the Chief Economist for the United State Department of Agriculture. Attendees from across the world listened as he discussed the aftermath of the US drought and the goals for price moderation worldwide.

“No surprise I talked about the drought and the effect on corn and soybeans primarily. This was a global conference so wheat, as well. Clearly the drought was a the big story this summer. It certainly affected prices. As we look forward I think the key thing in terms of price moderation is the world is now turning to the South American soybean crop and we should have more information on that in the next couple months. The real issue will be what it means for spring planting here in the United States. I think given these prices we are going to see strong acreage again for corn and soybean. Hopefully we’ll see better yields and some rebuilding of stocks and some moderation of prices because the livestock side of the sector has been hit pretty hard.”

Listen to my interview with Dr. Glauber here: Joe Glauber Interview

Of particular interest to the ethanol industry, Dr. Glauber spent several minutes of his presentation discussing how the drought, corn prices and other factors have influenced ethanol production this year, as well as some insight on the blend wall and the Renewable Fuel Standard (RFS). Listen to that portion of his remarks here: Joe Glauber ethanol comments

Listen to Dr. Glauber’s entire presentation here: Joe Glauber at Export Exchange

You can find photos from this years Export Exchange here: 2012 Export Exchange

Attendees for the 2012 Export Exchange were the audience for Geoff Cooper of the Renewable Fuels Association (RFA). Cooper, who serves as RFA’s Vice President for Research and Analysis, spoke to over 500 of the worlds feed producers, marketers and buyers. He explained that distillers grains and other ethanol co-products have become a tremendously important component of the global animal feed market.

“The American ethanol industry produced nearly 39 million tons of nutrient-dense animal feed in the 2011/12 marketing year, meaning the ethanol industry has surpassed the U.S. soybean crushing industry in terms of feed production,” Cooper said. “The feed produced by the ethanol industry is nourishing beef, dairy, swine, poultry, and fish around the world. About one-quarter of the feed co-products generated last year were exported to more than 50 countries.”

Cooper also explained that the U.S. ethanol industry has responded to the historic drought of 2012 by curtailing its consumption of corn. “There is a false notion out there that the ethanol industry is somehow insulated from the effects of the drought and high corn prices because of the Renewable Fuel Standard (RFS),” Cooper said. “That simply isn’t true. As crop conditions deteriorated in July and August and corn prices increased, corn use for ethanol dropped by almost 15 percent. That means the ethanol industry reduced its corn consumption by about 600-700 million bushels on an annualized basis in less than two months’ time. Without a doubt, the ethanol industry has not been spared from the effects of the drought.”

Listen to Geoff’s comments here: Geoff Cooper Comments

You can find photos from this years Export Exchange here: 2012 Export Exchange

The general session panel was a highlight for many Monday morning at the 28th Annual International Fuel Ethanol Workshop. Tom Bryan, Vice President BBI International, served as the moderator for the group with panelists Mark Marquis, President and General Manager Marquis Energy Inc., Ray Defenbaugh, President and CEO Big River Resources, Randy Doyal, CEO Al-Corn Clean Fuels and Walt Wendland, President and CEO Golden Grain Energy.

Topics varied from the future of RFS and E15 to traits these industry leaders take to continue their success. But the theme for the event centered around how U.S. ethanol producers are achieving profitability without VEETC. These ethanal plant CEOs and general managers shared their early experiences in this new reality and outlined operational and financial strategies for staying not just on line, but in the black.

Listen to the full panel discussion here: FEW Panel Discussion

2012 Fuel Ethanol Workshop Photo Album

Right after Growth Energy launched a new website featuring a Flex Fuel Finder application, I got to chat with Tom Buis, Growth Energy CEO, and Jeff Broin, Growth Energy Board Member and CEO of POET. They each expressed the positive impact RFS has had on the ethanol industry and the importance of keeping it implemented. Along that line they discussed what tools Growth Energy has put into place to educate the general consumer about E15 and Flex Fuel pumps.

Growth Energy launched a new user-friendly interface for EthanolRetailer.com, a website that seeks to outline the benefits of ethanol and the growing availability of Flex Fuel pumps. The website launch is part of Growth Energy’s new national campaign to increase awareness of E15.

The website is a comprehensive and easy to use resource for current and prospective ethanol retailers across the company, as well as consumers. It also features a Flex Fuel Finder application, which simplifies the process of locating ethanol blend pumps. The application is accessible from both the website and as a smartphone app, making it easier for Americans to locate cheaper, cleaner fuel while on the go.

Listen my interview with Tom Buis and Jeff Broin here: Interview with Growth Energy

2012 Fuel Ethanol Workshop Photo Album

During the opening session of the 28th Annual International Fuel Ethanol Workshop, Bob Dinneen, President & CEO, Renewable Fuels Association, addressed producers. Bob highlighted the challenges facing the ethanol industry in the near future and also the importance of maximizing demands. Sporting a “Don’t Mess with the RFS,” button Bob stressed the importance of RFS and what he is doing in Washington, D.C. to keep it in place.

“There are marketplace challenges because margins are tight right now but those are temporary and this is a commodity market selling into a commodity market so that doubles the challenges today. But with the crop that is expected I think most of the people around this room are fairly optimistic that we will get through those.”

“You got to have a button, that’s what makes a campaign, but it also reflects the seriousness with which we take this. RFS has been a tremendous success. When the first Renewable Fuels Standard was enacted in 2005 we were 60% dependent on foreign oil and liquid transportation fuels and today we are 45% dependent. That is a consequence of the growth in ethanol, a result of Renewable Fuels Association and because the people in this room who produce ethanol day in and day out have been successful.”

Listen to my interview with Bob here: Interview with Bob Dinneen

Listen to Bob’s complete keynote address here: Bob Dinneen's Keynote Address

2012 Fuel Ethanol Workshop Photo Album