AMRC Looks at Ethanol Plant Profitability Projections

Don Hofstrand, retired agriculture extension economist with the Agricultural Marketing Resource Center (AMRC) located at Iowa State University, has recently published projections for ethanol plant profitability over the next several years. When the ethanol boom really took off, Hofstrand noted that most farmers purchased shares in ethanol plants as a way to hedge against low corn prices. So AMRC began to look track the monthly profitability of ethanol plants.

hofstrandfigure5_E2C7BA3AB4D47“We track the monthly profitability by using the current ethanol prices, the current corn prices, distillers grains (DDGs) and natural gas. Each month we compute that and have a record going back to 2005 of how the profitability of those systems have changed over that period of time to give a indication of the current economic status of ethanol production and biodiesel production,” explained Hofstrand.

Today it appears that there is a saturated ethanol market that may cause an excess of corn supplies. However, Hofstrand said that over the past few years corn prices have been high taking a bite out of ethanol production profits. He finds there will be substantial uncertainly surrounding the ethanol selling price and net returns to the ethanol supply chain. This could be affected by rising corn production costs and where they will trend in the future is uncertain. He also finds that although energy prices may soften, interest rates are expected to strengthen, and with continued improvement in genetics, seed cost may continue to rise, but the rise may be offset by higher yields.

Ultimately, Hosftrand said that what is certain is that corn selling prices need to stay relatively strong in relation to historic levels to continue generating farm operator net returns from the marketplace.

Colombia has Potential as Distillers Grains Market

COLOMBIAExports of U.S.corn to Colombia have soared this year, thanks to bigger crops, lower prices, and a favorable free trade agreement. The U.S. Grains Council (USGC) also sees great potential for increasing exports of the ethanol co-product and livestock feed distillers grains (DDGS).

“We currently see about 90,000 metric tons of distillers grains moving into Colombia,” says USGC Director of Global Strategies Kurt Shultz. “We believe the market has the potential to easily exceed 700,000 tons, so there’s a lot of upward opportunity in Colombia for increased exports of distillers grains.”

Under the free trade agreement, there are no duties on distillers grains, so the Grains Council is actively working to bring technical knowledge on how to use the product to the region. “We had some feeding trials last year with the dairy industry which should good acceptance in the dairy sector,” said Shultz. Now they are looking at doing trials in swine and poultry as well.

This will likely be a topic of discussion at the 2014 Export Exchange coming up October 20-22 in Seattle. The event, co-sponsored by USGC and the Renewable Fuels Association, brings together buyers and sellers of distillers grains in an effort to expand established export markets and develop new markets. Discounted early registration for the event is available now through September 22.

Export Opportunities for Ethanol and DDGs

U.S. exports of ethanol totaled 59.9 million gallons (mg) in June, up 13% from the seven-month low in May, according to a Renewable Fuels Association (RFA) analysis of government data, and the opportunities are expanding.

ace14-geneThat was the topic for the last session at the American Coalition for Ethanol conference this week in Minneapolis and one of the speakers was Gene Griffith of Patriot Renewable Fuels in Annawan, Illinois.

“U.S. ethanol is the cheapest motor fuel in the world, it’s needed and it can be blended in any country for clean air,” said Griffith, noting that the industry will continue to grow and produce more than we need in the country. “We must develop these worldwide markets. It’s not just Brazil, it’s not just the United States, there’s a lot of countries around the world that need our DDGs and our low cost, clean burning fuel.”

Listen to Gene explain in detail here: Gene Griffith, Patriot Holdings, on ethanol exports

ace14-chsClayton Haupt with CHS Renewable Fuels Marketing discussed China import issues with distillers grains, noting that the game has changed considerably since he was asked to do this talk in June.

July 24, it was announced you have to have a government stamp that has to say (DDGS imports are) clean of all GMO traits not approved in China,” said Haupt, noting that the U.S. Grains Council responded that simply cannot be done. “You’re kind of put in an environment today that you’re probably not going into China.”

Listen to Haupt’s presentation here: Clayton Haupt, CHS Renewable Fuels Marketing

ace14-ecoenergyLastly, Chad Martin with Eco-Energy wrapped up with an overall look at export markets.

“Ethanol demand is no longer driven solely by the U.S. blender,” said Martin. “That’s obviously a good thing but it comes with some complexities in terms of import quotas, different specs, different market factors to be considered…things our industry has never really had to focus on until we started exporting both distillers grains and ethanol.” Chad Martin, Eco-Energy

27th Annual Ethanol Conference photo album

Students Present Research at Ethanol Conference

Several University of Minnesota students are giving the ethanol industry a preview of their cutting-edge research in biofuels, biochemicals and bioproducts during the 27th Annual Ethanol Conference in Minneapolis. One such student is Sahana Ramanna who is a PhD student who is working on improving the pre-treatment technologies used for biomass, specifically Aspen.

Sahana RammanaRamanna explained that one of the most difficult and energy intensive parts of converting biomass (aka cellulose) to sugar is in the initial phase. Using 3D imaging, similar to the technology used for brain scans, she and her team are able to test “pre-treatment” strategies and see how it affects the structure of the biomass.

Ultimately, Ramanna said they are looking to increase the amount of biomass that can be converted into biofuels and other biochemicals and products, thus increasing the amount of biofuels. In addition, the processes they are looking at would significantly improve the energy efficiency during this process. Next steps – refining the process for Aspen and then testing it on other forms of biomass.

Listen to Sahana Ramanna discuss her research here: Interview with Sahana Ramanna

Another student I spoke with is just beginning his PhD studies and has spent the last year working on an interesting biofuels project. Joseph Molde works in the BioTechnology Institute and he and his team are working on a process called hydrothernmal carbinization using distillers grains (DDGs), a bi-product of ethanol production.

Joseph Molde U of MWhat is really neat is the process is producing two new possible co-products: liquid carbon and biochar. The liquid carbon can be used as an organic fertilizer on fields, while the biochar can be used in various applications including biomaterials and biochemicals. Molde said that similar research has been taking place in Europe, but not much has been done with biochar here in the states.

Molde also noted that the process improves efficiency throughout the production process – just one more way the ethanol industry is working to improve its technology and environmental footprint – while also adding valuable additional co-products to an ethanol plant’s portfolio. He said they are scaling up the technology now and that he hopes to see it in commercial scale application in the next five to 10 years.

Listen to Joseph Molde discuss his research here: Interview with Joseph Molde

View the 27th Annual Ethanol Conference photo album.

USGC Calls on China to Approve Biotech Cert for DDGS

China is considering whether it will approve MIR 162, a biotech certification requirement for distiller’s dried grains with solubles (DDGS) by the Chinese import inspection authority (AQSIQ). Today, the U.S. Grains Council (USGC) is calling on China to approve the certification that would follow the point of origin. In this case, U.S. shipments from the U.S. Department of Agriculture, guaranteeing that the shipment is free of the biotech trait. Although MIR 162 is not been approved, the country has already passed a mandate against biotech traits that have caused disruptions in existing DDGS trade and making future trade more difficult.

distillers_grains_ Photo US Grains Council“China is asking for something that cannot be done. This certificate they’re asking for does not exist,” said Tom Sleight, USGC’s president and CEO. “It’s time for China to look at and approve this trait. It’s been approved for commercialization in the United States since 2010, and it’s been approved by all importing countries, including the European Union, for quite some time. We think that the lack of approval of MIR 162 is becoming an undue impediment on trade.”

The Council is working to address the new disruption to DDGS trade with the U.S. government and the U.S. ambassador to China, as well as with MAIZALL, which represents grower organizations in several major corn exporting countries. In addition, USGC staff and consultants around the world are working with other markets interested in DDGS, in part because prices have declined.

Sleight concluded, “We have some really excellent prospects that are panning out quite nicely, particularly in Mexico, Taiwan, Canada, the rest of Latin America and Korea. There’s a lot of interest in this product.”

Grains Council Working on Ethanol Exports

usgrainscouncil1The U.S. Grains Council (USGC) is working on promoting exports of U.S. ethanol through a partnership between USDA’s Foreign Agriculture Service, Growth Energy and the Renewable Fuels Association (RFA).

“We’ve been working since late March, early April to determine which markets we’re going to do market assessments in and then next year we’ll shift into market development activities,” said Ashley Kongs, USGC manager of ethanol export program. The Grains Council is planning three regional market assessment programs this year, going to Japan and Korea in September, Latin America in November, and southeast Asia in early December.

Earlier this year, USGC participated in a trade mission to China with USDA Undersecretary Michael Scuse where they were able to discuss the possibility of ethanol exports to that country. “They visited with a Chinese ethanol plant and they had meetings with the National Energy Administration in China,” said Kongs. “Currently ethanol can only be sold in six designated markets in China for blending with fuel, but the group had discussions about the possibility of expanding ethanol use nationwide.” Kongs says while there are challenges in the Chinese market, the Grains Council sees great potential for the future to open the door for U.S. ethanol exports.

USGC continues to build on its success in promoting exports of the ethanol co-product distillers grains and will be again this year joining RFA in hosting the Export Exchange, an international trade conference focused on the export of U.S. coarse grains and ethanol co-products held every two years. Early registration for the event is open until July 31 and USGC and RFA members are eligible for discounted pricing.

Export Exchange 2014 Registration Open

2014-export-exchangeRegistration is now open for Export Exchange 2014™, an international trade conference focused on the export of U.S. coarse grains and ethanol co-products.

Approximately 300 U.S. suppliers and agribusiness representatives and more than 180 international buyers are expected to attend Export Exchange 2014. The conference is being held Oct. 20-22 at the Sheraton Seattle Hotel and is co-sponsored by the U.S. Grains Council (USGC) and the Renewable Fuels Association (RFA).

“Export Exchange brings together a group of U.S. suppliers and international buyers in a unique event focused on the expansion of established export markets and the development of new markets for U.S. coarse grains, distillers dried grains with solubles (DDGS) and other ethanol co-products,” said USGC Chairman Julius Schaaf.

“Over the past decade, the U.S. ethanol industry has emerged as a major producer of high quality animal feeds like DDGS and corn gluten feed,” said Bob Dinneen, RFA president and CEO. “Export Exchange is the premier forum for connecting the producers and marketers of those co-products with customers around the world.”

Export Exchange is held every two years. The 2012 event broke records in attendance and attracted buying teams from 33 countries, including all of the top U.S. international coarse grains and ethanol co-products markets. Attendance at this year’s event is expected to set a new record, creating more opportunities for U.S. merchandisers to connect with buyers and build business.

Early registration discounts end July 31. USGC and RFA members are eligible for discounted pricing and should identify themselves as such at the time of registration.

DF Cast: Finding Ways to Increase Ethanol Blends

While the ethanol industry awaits the Environmental Protection Agency’s decision on the amount of ethanol to be blended into the nation’s fuel supply, ethanol producers are looking at other ways to make sure the green fuel increases its blend amounts.

In this edition of the Domestic Fuel Cast, we hear from Growth Energy CEO Tom Buis, Dean Drake with the consulting company the Defour Group, Scott Zaremba, president of Zarco Incorporated, and Ken Parrent, the ethanol director for the Indiana Corn Marketing Council, as they give their thoughts on how consumer demand will be a bigger driver for higher ethanol blends after attending an Indiana Corn Growers Association ethanol forum that focused on marketing mid-level ethanol blends and ran following the recent 2014 Fuel Ethanol Workshop in Indianapolis.

Domestic Fuel Cast - Increasing Ethanol Blends

You can also subscribe to the DomesticFuel Cast here.

Patriot Renewable Fuels is an Innovation Leader

Last week Patriot Renewable Fuels announced the news that the biofuels plant is making plans, and hopes to add, ICM’s Fiber Separation Technology as well as their Generation 1.5 cellulosic technology to their biorefinery facility located Annawan, Illinois. Patriot is one of the first ethanol plants in the country to adopt both technologies together. During 2014 FEW this week Gene Patriot Renewable Fuels Gene GriffithGriffith, co-founder and president of Patriot updated DomesticFuel on the project. It should be noted that this is just one of several major value-added projects Patriot has announced in less than a year making them one of, if not the most innovative ethanol plant/biorefinery in the U.S.

Griffith said they are pretty excited about the projects and after spending several months doing due-diligence on ICM’s technologies as well as other technologies, they felt that this was the right time to begin the project.

“If we get it implemented, we’ll be one of the earlier, maybe one of the earliest independent ethanol producers to this form of cellulosic ethanol, and we’re really excited about it,” said Griffith.

Griffith said being at FEW is a great networking opportunity because the the people Patriot works with are entrenched and have a lost of useful information and they are able to learn information they wouldn’t be able to generate on their own.

Last December, Patriot added another ICM platform, Select Milling Technology, and the Fiber Separation Technology builds upon this platform. “The Select Milling Technology is a separate mill that further processes the starch in the corn kernel as its ground before it goes into the fermentation process, explained Griffith. “The platforms we’re adding will be the Fiber Separation Technology which separates the fiber from the starch. Essentially, by removing the fiber from the starch, it improves our ethanol production efficiency so we get more ethanol from the corn,” explained Griffith.

Then he noted that they are able to take the fiber and do two-three things with it. One, they could add it back to the distiller’s grain (DDGs) and sell it has a high fiber form of distillers grain protein. Two, they could keep the fiber separate and sell a higher protein feed for a premium that is better for monogastric animals (such as pigs). The third option, which is what Patriot would like to do, is to ferment the fiber for additional ethanol.

Corn delivery to Patriot Renewable FuelsPresently Patriot is producing around 130 million gallons of ethanol per year and Griffith thinks they can produce another 10-12 percent ethanol production from the same kernel of corn. Griffith hopes that they can have all their permits by the end of the year and implement the two new technologies by 2015.

Griffith said many producers are doing similar things with different company’s technologies but they spent a lot of time with him learning about the technologies they implemented. He also said other producers will be watching their progress to help them decide if and when the technologies might be a good addition to their plants.

Learn more Patriot’s ethanol innovations by listening to Gene Griffith: Interview with Patriot's Gene Griffith

Check out the 2014 Fuel Ethanol Workshop photo album.

Increases In Ethanol Efficiences Will Decrease Land Use

A study done by researchers at the University of Illinois’ College of Agricultural, Consumer, and Environmental Sciences, has found that several factors will lower the need for land used to produced corn-based ethanol to as little as 11 percent of the corn acres by 2026 when adhering to the U.S. Environmental Protection Agency’s 15 billion gallon ceiling on domestic ethanol production.

The researchers note that a too common error made in reporting land used for domestic Disposition among major uses of no 2 yellow cornproduction is to measure the amount of grain shipped to ethanol manufacturers, compute the number of acres required to produce the grain and then end the analysis. However, the researchers say this is a gross oversimplification that leads to incorrectly concluding that 40 percent or more of U.S. corn acres are used for ethanol production. The real number, according to the research team is less than 25%. The reason is that most studies don’t account for the grain being used as high-value animal feed (distillers grains or DDGs).

The new study, conducted by Professors Rita H. Mumm, Peter D. Goldsmith, Kent D. Rausch and Hans H. Stein, explores the impact of technological improvements on corn grain production, ethanol production, and their interrelated effect on land use through a variety of scenarios over a 15 year period beginning in 2011, the year used to establish the base case. The researchers found that land area attributed to corn ethanol will consistently drop because plant breeding improvements and new technologies will result in significantly higher yields.

In addition, over the next decade, corn yields will improve significantly which will greatly reduce land use attributed to ethanol manufacturing. On the higher end of the spectrum, the study finds yields will increase by almost 100 bushels per acre, which represents 66 percent growth. The majority of this contribution will come from conventional breeding, with advanced breeding technology, biotechnology and agronomic improvements together contributing almost half.

“It’s no surprise to the agriculture industry that yield improvements will drive down land used for ethanol,” said Dr. Rita Mumm, coauthor of the study. “However, the mechanisms within the production complex, especially their effects on one another, were not fully understood. This work provides a clear picture on current land use and provides an approach for evaluating future land use.” Continue reading

Ethanol Groups Participate in China Trade Mission

RFANewlogoU.S. Department of Agriculture (USDA) Under Secretary for Farm and Foreign Agricultural Services Michael Scuse led a mission to promote U.S. agricultural exports in northeast China May 5-13. The mission is part of President Obama’s “Made in Rural America” export and investment initiative, designed to help rural businesses and leaders take advantage of new investment opportunities and access new customers and markets abroad.

growth-energy-logoTaking part in the mission to promote U.S. biofuels and co-product exports was Renewable Fuels Association (RFA) Director of Regulatory Affairs Kelly Davis and Jim Miller with Growth Energy.

During a press conference Tuesday to talk about the trade mission, Davis said it was her first trip to China and she was astounded by the number of cars on the roads and sees a great need for both biofuels and distillers grains for livestock feed in that country. Miller added that China provides an excellent market opportunity for the U.S. ethanol industry.

Also taking part in the trip and the press conference was Roger Johnson, president of the National Farmer’s Union. Ethanol Press Conference Opening Remarks

Group Looks to Expand Ethanol By-Product’s Market

usgrainscouncil1A group representing grain producers’ interests is looking to expand the market for a popular ethanol by-product. The U.S. Grains Council says it is looking to the south, Middle East and Southeast Asia to expand on American distiller’s dried grains with solubles (DDGS), already chalking up 9.7 million metric tons – valued at $2.9 billion – exported in 2013 to more than 45 countries.

While Mexico is the third-largest market for U.S. DDGS, its southern region remains an underserved livestock sector with growth potential for U.S. exports. According to a 2012 Council assessment, the potential exists to more than double current exports by providing technical and practical education to local cattlemen. To further this effort the Council has conducted a feeding trial in the area.

Elsewhere, the Council in August 2011 successfully achieved the inclusion of DDGS and other U.S. commodities on the Saudi Arabian import subsidy list. Inclusion on this list is essential in eliciting interest from Saudi importers of these products…

And in Southeast Asia, imports of U.S. DDGS have increased again this year, growing from 252,548 tons in January to March 2013 to 352,674 tons in the same period this year, an increase of almost 140 percent.

The council is using educational seminars and feeding trails to help educate end-users around the world.

Evolving Distillers Grains: Take the Survey

Iowa State University is looking at how the use of distillers grains have changed in the United States over the past several years. Interested growers are invited to participate in a survey currently being conducted by Iowa State University Assistant Professor Dr. Kurt Rosentrater. The survey findings will create a better overall picture of the roll distillers grains play in the livestock industry today and provide important insight into possible points of improvement in the future.

The survey is funded, ddgsin part, by the National Corn Growers Association (NCGA) Ethanol Committee as part of the team’s efforts to increase understanding of how this ethanol co-product benefits farmers, ranchers and ethanol producers alike.

“I encourage anyone who might be able to provide information on how they use distillers grains on their operation to take a few minutes and complete this survey,” said NCGA Ethanol Committee Chair Jeff Sandborn, a Michigan farmer. “As the use of distillers grains continues to grow and evolve, data gained through this survey will enable producers to improve their offerings and thus will benefit the very livestock producers that we would like to participate. Using corn to produce fuel and feed is already a win-win-win situation. Now, we want to make it that much better.”

To take the survey, click here.

New Record Distillers Grains Exports

Distillers grains exports set a new monthly record in March, while U.S. ethanol exports rebounded from the previous month, according to the latest numbers.

distillers-grainsThe Renewable Fuels Association (RFA) reports that March exports of U.S. distillers grains, which is the animal feed co-product from dry mill ethanol plants, were a record 1.16 million metric tons. March shipments were up 28% from February and topped the one million mark for just the fourth time in history. China accounted for half of the export shipments, with Mexico and South Korea taking the second and third place slots. Year-to-date, distillers grains exports as of March totaled 2.97 million metric tons, a 65% increase over the same period a year ago, putting the U.S. on pace to export a record 11.9 million metric tons this year.

At the same time, total U.S. ethanol exports, including both denatured and undenatured, were 84.0 million gallons in March, up 25% over February and just slightly below the January total of 86.2 million gallons. Canada and Brazil were top destinations in March, with both the Philippines and Nigeria re-entering the market. Meanwhile, U.S. ethanol imports totaled just 5.3 million gallons in March, making the United States a net exporter by a wide margin for the seventh straight month.

POET Nutrition’s Mike Skuodas Honored by DoD

Mike Skuodas, Director of Sales for Dakota Gold at POET Nutrition was honored with a Patriot Award in recognition of his support of team members serving in the South Dakota Guard and Reserve. The award was given by the Employer Support of the Guard and Reserve (ESCR), a Department of Defense (DoD) operational committee.

5.2.14 ESGR GroupThe Patriot Award was created by ESGR to publicly recognize individuals who provide outstanding patriotic support and cooperation to their employees, who like the citizen warriors before them, have answered their nation’s call to serve,” said Ron Mielke, South Dakota ESGR State Chair. “Supportive supervisors are critical to maintaining the strength and readiness of the nation’s Guard and Reserve units.”

Skuodas was nominated by Justin Schnieders, 114th Fighter Wing Aircraft Maintenance Squadron and Abby Roberts, 1742nd Transportation Company for being highly supportive of the Army and Air National Guard. Schnieders and Roberts currently work at POET Nutrition and nominated Skuodas for his support of their National Guard duties, including the availability of flexible schedules, time off for inspections and training time, and additional time to care for their Guard family as well as their own families at home.

“I am truly humbled to receive this award and accept this honor on behalf of everyone at POET and POET Nutrition,” said Skuodas. “Supporting the National Guard is part of the culture we embody here at POET. Abby and Justin have stepped up to serve our state and country, as have many other POET team members, and we will continue to do all we can to support them and their families.”

Don Dietrich, President of POET Nutrition, signed a Statement of Support to declare POET Nutrition’s support of service members employed by the organization.