Many of the international teams visiting the United States last week for the 2014 Export Exchange also participated in tours before and after the event to see ethanol plants and farms across the Midwest.
Badger State Ethanol in Wisconsin had the honor of hosting a team of buyers from the Kingdoms of Saudi Arabia and Jordan. The KSA/Jordan team included companies representing the major dairy and poultry companies and major importers of feed grains in both countries and have been buyers of DDGS in the last couple of years.
Held every other year by the U.S. Grains Council (USGC) and the Renewable Fuels Association (RFA), Export Exchange brings together more than 200 international buyers with U.S. sellers of corn, sorghum, barley, distiller’s dried grains with solubles (DDGS), corn gluten meal and corn gluten feed. Over the course of three days of events and the pre- and post-tours, these individuals not only do business directly but also make connections to facilitate future sales.
“This year’s Export Exchange was a resounding success,” said RFA president Bob Dinneen, pictured here with USGC president Tom Sleight. “In addition to new business agreements, it is my hope that attendees from all across the world will return home with a better understanding of international grain markets, domestic supply and demand of DDGS and coarse grains, and the current political landscape.”
The 2014 Export Exchange is continuing today in Seattle, Washington with representatives from more than 50 different countries in attendance to learn more about DDGS, the distillers feed product produced by U.S. ethanol plants.
The Renewable Fuels Association (RFA) is co-sponsor of the event with the U.S. Grains Council and RFA president and CEO Bob Dinneen says it’s because we produce a lot of distillers feed. “Our plants, if they were a single country, would be the fourth largest producer of corn equivalent feed, behind only the U.S., China and Brazil,” said Dinneen, who spoke at the event yesterday on agricultural policies and politics. Interview with RFA CEO Bob Dinneen at 2014 Export Exchange
RFA Senior Vice President Geoff Cooper spoke at the event on the supply and demand outlook for DDGS.
“We have ample supplies of distillers grains coming from the U.S. ethanol industry but the demand picture is somewhat murky,” said Cooper. “That murkiness has to do with trade barriers and interruptions in the global trade of distillers grains that we’re seeing.”
Cooper says the U.S. is expected to produce 36-37 million metric tons of DDGS in the current marketing year, but one of the biggest trade disruptions in the market is being created by China’s demand that shipments of distillers grains must be certified to be free of the MIR162 biotech corn trait. “That kind of certification is not possible,” said Cooper. “So, we expect exports to China to be significantly curtailed or even halted until this situation is resolved.”
Last year, half of the U.S. distillers grains exports went to China, but Cooper says there are other countries increasing imports. “We are seeing continued growth of distillers grains exports to other parts of Asia outside of China,” he said, adding that Mexico is increasing imports and countries such as Egypt and Turkey are also growing markets. Interview with RFA Senior VP Geoff Cooper at 2014 Export Exchange
Coming up October 20-22 is the 2014 Export Exchange sponsored by the Renewable Fuels Association (RFA) and the U.S. Grains Council (USGC) to bring international coarse grain buyers and U.S. suppliers together, with a particular focus on the ethanol co-product distillers dried grains with solubles – better known as DDGS or distillers feed.
This edition of the Ethanol Report features comments from RFA president and CEO Bob Dinneen, USGC president and CEO Tom Sleight, and industry relations director Lyndsey Erb-Sharkey.
Registration 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.
Export Exchange 2014 is heading to Seattle, Washington and will take place on October 20-22, 2014 at the Sheraton Seattle Hotel. The event is sponsored by the Renewable Fuels Association (RFA) and the U.S. Grains Council (USGC). Held every two years the Export Exchange is a premier international trade conference focused on the export of U.S. coarse grains and co-products. Last year’s event attracted buying teams from 33 countries, including all of the top U.S. international markets.
In 2014, approximately 150 foreign buyers of U.S. coarse grains and co-products are expected in Seattle, on hand to meet and build relationships with more than 300 domestic suppliers in attendance. There will also be more than two days of educational sessions and networking opportunities.
“Export Exchange 2012 exceeded all expectations,” said USGC Chairman Julius Schaaf, “and many of our foreign guests have already expressed their intent to return in 2014. Buyers will converge in Seattle next October, ready to make contacts and do business. U.S. grains sellers and ethanol producers can expect to rub shoulders with more than 80 percent of the world’s top buyers at Export Exchange. Key stakeholders will surely benefit from attending. We’re really looking forward to this event.”
Export Exchange focuses on bringing international buyers of U.S. coarse grains and distiller’s dried grains with solubles together with U.S. producers and agribusiness professionals. Attendees will also have the opportunity to participate in pre- and post-conference missions to view the U.S. production and export complex and learn more about the capacity, reliability and quality of the United States as a long-term supplier.
“There is an increased global demand for DDGS (distiller’s dried grains with solubles) and Export Exchange connects the dots by bringing interested buyers and sellers together to help grow the international market,” added Bob Dinneen, President and CEO of RFA.
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.
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?
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.
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.”
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.
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?
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.”
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.”
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,”
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.”
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
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.”
“The Export Exchange is a fabulous opportunity for customers to get together with suppliers internationally,” says RFA president and CEO Bob Dinneen. “We’ll have more than 300 countries represented. There will be users of distillers dried grains from China to Europe to South America. Just about every ethanol producer – or I should say DDGS producer – will be in attendance.”
RFA VP of Research and Analysis Geoff Cooper says about 25% of the distillers grains that have been produced by U.S. ethanol plants in the last several years has been exported. “Last year we shipped distillers grains to more than 50 countries, so it’s really become a huge component of the global feed market,” he said, noting that if the supply of distillers grains was a nation’s corn crop, it would rank as the fourth largest in the world behind the U.S., Brazil and China.
While DDGS output has decreased this year as ethanol production has slowed down as a result of the drought, Cooper says we are still seeing very strong demand for distillers grains because it is priced lower than corn but provides more nutrition and energy value for livestock and poultry.
Domestic Fuel reporter Jamie Johansen will be covering the event and she interviewed both Dinneen and Cooper for a preview. Listen to or download those back to back interviews here: Export Exchange Preview