Domestic Fuel

The U.S. Grains Council recently held workshops in Guangzhou and Qingdao to promote the ethanol co-product distillers grains (DDGS) in China.

“The day-long sessions were designed to provide an exchange of comprehensive DDGS market information, including discussions and analysis of the value of U.S. DDGS,” said Alvaro Cordero, USGC manager of DDGS.

Cordero says they had 200 to 250 people, including buyers and USGC member companies. “This created a good opportunity for buyers and sellers to make connections,” he said.

The conferences, organized in cooperation with FoodChina Company, included presentations on DDGS use in swine, poultry and dairy rations, in addition to quality control, DDGS supply and demand, and pricing.

The United States continues to export a good volume of DDGS to China, despite an anti-dumping case initiated by the Chinese government last winter. U.S. shipments in the January-to-September period were down 49 percent from the previous year but still totaled almost one million metric tons, making China the number two export market for distillers grains.

Get out your 2012 calendars and mark the date for just under a year from now to attend the next global event to help increase exports of ethanol co-products for livestock feed.

Once again, the U.S. Grains Council (USGC) and the Renewable Fuels Association (RFA) are teaming up for the Export Exchange 2012, an international trade conference focused on the export of U.S. coarse grains and co-products, including distiller’s dried grains with solubles (DDGS) and corn gluten. The last such event was held last year about this time in Chicago.

“Export Exchange 2010 was a huge success,” said Wendell Shauman, USGC chairman. “People from all around the world gathered in one central location to make deals and get information regarding these vital commodities. Business contacts made during the conference are still being used today.”

Export Exchange 2012 will be held Oct. 22-24 at the Minneapolis Marriott City Center. Additional information will be posted at www.exportexchange.org as it develops.

The U.S. Grains Council (USGC) is helping U.S. companies register as interested parties to China’s anti-dumping investigation against imports of U.S. origin distiller’s dried grains with solubles (DDGS), an ethanol by-product.

The first step in the investigation involves helping DDGS producers register as interested parties, a process that must be completed no later than Jan. 17 in Beijing (which is Jan. 16 in the United States) and is further complicated by the need to translate all registrations into Chinese. Nearly 70 companies have already registered with USGC.

Registering as an interested party is an important step, since registered parties can qualify for lower, negotiated tariffs if there is a finding in the investigation. In contrast, unregistered companies could face the highest tariffs of all. Once the registration process is complete, Chinese authorities will begin a fact-finding process that will include investigations of specific company practices. To reach a final ruling against the U.S. trade, China must show evidence that DDGS has been dumped in the Chinese market at prices below what other buyers pay and that Chinese interests have been injured by the dumping. Provisional tariffs on DDGS could begin as early as June 2011. China is expected to make a decision on its findings by Dec. 28, 2011, though that deadline can be extended by six months if needed.

U.S. shipments of DDGS to China skyrocketed from almost nothing three years ago to more than 2 million metric tons in 2010 and may reach as much as 3-5 million tons in 2011.

Three years ago there were virtually no dried distillers grains (DDGS) going to China. Last year there were more than 1.5 million metric tons of DDGS exported to the country and some estimate that the number could be as high as 3 million metric tons at the close of this year.

So, although the U.S. Grains Council (USGC) felt that this was the normal progression in trade in a market that is growing exponentially, it didn’t completely come as a surprise when the China’s Ministry of Commerce has launched an anti-dumping probe into the ethanol co-product DDGS. This according to Rebecca Bratter, the USGC director of trade development during a press call to give an update on the status of the situation, which was brought to you on DomesticFuel when the story first broke.

The case was initiated on December 28, 2010 and will take at least a year before a decision is made. In the meantime, the interested parties were only given 20 days to register their interest in the case.

“We understand the consequences. We know what’s at stake for registering or not registering,” said Bratter during the call. “We know this is just the first step in what will be a long process which will include both an injury investigation and on a separate track, a dumping investigation.”

Bratter continued to say that they would be communicating an industry response back to the Chinese government that could be as soon as today.

“We consider China a very important market, a very strategic market and we place a very high level of importance on our trade relationship with China,” Bratter stressed.

During the investigation, the Chinese government has the authority to impose higher duties on the exports. Today, there is a 5 percent duty on DDGS but this could climb as high as 50 percent or higher, which would have a major negative impact on trade.

During the course of the investigation, Bratter said, “The Grains Council intends to operate as normal in China.”

The announcement this week out of Beijing that China’s Ministry of Commerce has launched an anti-dumping probe into the ethanol co-product distillers dried grains (DDGS) from the US came as a surprise to the U.S. Grains Council (USGC).

“The U.S. Grains Council has a 25 year history of market development and capacity building programs in China and values the U.S./China market and trade relationship,” said USGC President and CEO Tom Dorr in a statement today. “China’s investigation of U.S. DDGS imports is surprising and could be disruptive to trade. China’s unusual market and supply volatility over the last two years has resulted in new global trade flows. As trade flows change, it should perhaps not be surprising there would be an adjustment period in response to unprecedented demand.”

It was only a few weeks ago that U.S. corn growers were in China on a USGC-sponsored trade mission to promote both corn and DDGS for livestock feed in that country. According to a post about the mission on the USGC blog The Grain Board, “Many of the feed companies that the delegation met with are increasing their DDGS use in their livestock feed rations. They stated they would continue to import, dependent on price. DDGS is easily imported into China, yet it is a feed ingredient that requires a “per plant registration” which is difficult to deal with at the port.”

China is the number one market for DDGS and is expected to import nearly three million metric tons this year, up more than 500 percent compared to a year ago. It is estimated that China produces about 3.5 million tons of DDGS domestically each year.

According to a statement from the Chinese Ministry, they initially plan to look for any evidence of dumping of DDGS, both with and without solubles, between July 2009 and June 2010, but may go back as far as 2007. The investigation is expected to take 12 to 18 months to complete.

Swine and poultry producers are using the ethanol co-product distillers dried grains with solubles (DDGS) as feed for good reasons.

Dr. Phillip Smith, a nutritionist with Tyson Foods, spoke at the recent Export Exchange event sponsored by the Renewable Fuels Association (RFA) and the U.S. Grains Council about the value of DDGS in the poultry sector.

“It’s a very good ingredient for us,” said Dr. Smith. “We’ve used it successfully and the reason we would use a co-product like that is to save money in the diet. It gives us a good cost value, nutrient value, it flows and handles and the birds perform well on it.” He says it can be use as much as 15 percent of the diet for birds, or even more in breeder diets.

He recommended to international buyers who were at the Export Exchange that they try DDGS and work with it. “If it saves money, there’s that incentive, that risk is worth taking,” he said.

Listen to or download an interview with Dr. Phillip Smith here: Phillip Smith Interview

South Dakota State University Extension swine specialist Dr. Robert Thaler talked about the use of DDGS in hogs and how it helps supply phosphorus in the diet. “Phosphorus supplementation to the diet is very expensive,” he said. “The cool thing is that the phosphorus in DDGS is highly available. So, if you’re replacing dical or monocal with phosphorus coming from DDGS, you’re going to have less phosphorus in the manure, it will probably be cheaper and plus, you’re going to have less environmental problems.”

Dr. Thaler says exporters want quality assurances when it comes to DDGS and they are also wondering how high they can go including DDGS in the diet. “A lot of them are at 5-10 percent inclusion rate in swine diets. Here in the United States, on the growth/finish side, we’re probably 20-30,” he explained. “We just have to get them to realize that there’s nothing magical we’re doing to make that 20-30 percent work.”

Listen to Dr. Thaler’s interview here: Robert Thaler Interview

Ethanol producers who attended the recent Export Exchange event sponsored by the Renewable Fuels Association (RFA) and the U.S. Grains Council know how important it is to promote increased exports of the ethanol co-product distillers dried grains with solubles (DDGS).

“For every three bushels of corn that comes in, you get a bushel of DDG out, and what we sell that DDG for helps us to create a revenue stream so we can buy more corn,” said Walt Wendland with Golden Grain Energy of Mason, Iowa who serves as secretary on the RFA board.

2010 exports of DDGs are expected to exceed last year’s record 5.65 million tons. “One of the surprising things is that the amount of distillers grains that we’re going to be exporting for the first time is going to exceed the amount of soybean meal,” Wendland says. “We’re recognized now as being a very reliable supplier of DDG around the world.”

Listen to or download an interview with Walt Wendland here: Walt Wendland Interview

The Export Exchange included nearly 500 attendees from 33 countries and the proceedings were translated into 7 languages. Ray Defenbaugh of Big River Resources West Burlington ethanol plant in Iowa says he has been coming to the event since it was started by USGC a few years ago. “It’s just an opportunity for networking and there’s a huge demand in other countries for DDGs,” said Defenbaugh. “If you come here and go away without having met somebody that could help you in transportation or sales from another country, than you’ve not really tried very hard.”

Defenbaugh is chairman of the DDG committee for RFA and is very pleased with the efforts they are making to increase exports of the ethanol co-product.

Listen to or download an interview with Defenbaugh here: Ray Defenbaugh Interview

Export Exchange 2010 Photo Album

This edition of “The Ethanol Report” features comments from participants in last week’s Export Exchange held in Chicago to promote exports of the ethanol co-product distillers dried grains with solubles (DDGS). About 500 buyers and sellers of DDGs from the United States and over 30 countries took part in the two day event.

We hear from event sponsors Renewable Fuels Association (RA) President and CEO Bob Dinneen and U.S. Grains Council (USGC) CEO and president Tom Dorr, as well as Rick Tolman with the National Corn Growers Association, ethanol producers Ray Defenbaugh and Walter Wendland, and South Dakota extension swine specialist Dr. Robert Thaler. We have lots more still to post from that event, but this report provides a nice taste of how it went.

Listen to or download the Ethanol Report here: DDGS Ethanol Report

Corn production for this year was cut by four percent in the latest forecast out this morning from USDA, a bigger drop than expected by the industry. Corn production is now forecast at 12.7 billion bushels, down 3 percent from last year’s record production of 13.1 billion bushels. Yields are now expected to average 155.8 bushels per acre, down 6.7 bushels from the previous month and 8.9 bushels below last year’s record of 164.7 bushels.

The latest supply-demand numbers reflecting the new forecast show a decrease in stocks, increase in feed use, decrease in exports, but use of corn for ethanol remains the same at 4.7 billion bushels.

In response to the report, the president of the National Corn Growers Association (NCGA) said U.S. corn farmers will still be able to meet all demands for food, feed, fuel and exports.

“We have had many reports of lower yields and, at the same time, are hearing stories of higher-than expected yields in some areas,” said NCGA President Bart Schott of North Dakota. “This may not be a record year, but we’re bringing in the corn and meeting all needs, even for our export markets.”

The report came out today as the Renewable Fuels Association (RFA) and the U.S. Grains Council (USGC) were wrapping up a seminar in Chicago promoting exports of the ethanol by-product distiller’s dried grains with solubles (DDGS). USGC President and CEO Tom Dorr was not very concerned about the new numbers. “I’ve been a farmer most of my life and the thing that I know is that farmers, more often than not, swim in surpluses, they love dealing with shortfalls and they’ll produce our way out of this very quickly,” Dorr said.

Listen to or download an interview with Dorr reacting to the report today: Tom Dorr Interview

The politics of U.S. Energy Policy was the luncheon topic at the Export Exchange 2010 DDGS conference. Our presenter was Sara Wyant, President, Agri-Pulse Communications. Her company is a diversified communications firm with offices in Washington, D.C., Little Rock, Arkansas, and Camdenton, Missouri. As a veteran farm policy reporter, she is well recognized on Capitol Hill as well as with farm and commodity associations across the country.

I thought you might be interested to hear what she has to say in light of the fact that we’re getting close to some very important mid term elections that could have a major impact on future farm and energy policy. You can listen to Sara’s remarks here: Sara Wyant Remarks

Export Exchange 2010 Photo Album

The President/CEO of the Renewable Fuels Association addressed the Export Exchange 2010 today and highlighted the importance of U.S. ethanol policy and expansion into foreign markets which is critical for the DDGS industry. You can read his full remarks here as well as listen to them below.

In his remarks, Dinneen said, “As a nation, failure to continue the growth of our domestic ethanol industry will not only limit our ability to reduce our dependence on foreign oil, but constrain our ability to provide a high quality livestock feed to our domestic livestock industry and world trade partners. Make no mistake, the success of the distillers grains market is directly tied the fate of American ethanol production.”

Dinneen drew parallels between the markets for fuel ethanol and for distillers grains underscoring the need for expanded trading relationships. “You have heard talk of the ethanol blend wall that limits the amount of ethanol that can be used. In much of the same manner, we are rapidly approaching a feed wall in the U.S. Due to current limits in dietary rations, the livestock feed market will likely be saturated with distillers grains when the industry is producing between 35 and 45 million metric tons. As we spoke about before, we are rapidly approaching the lower end of the “feed wall” estimates.”

You can listen to Bob’s speech here: Bob Dinneen Speech

Export Exchange 2010 Photo Album

One of the attendees I spoke with this morning at the Export Exchange 2010 conference is the President/CEO of the National Corn Growers Association, Rick Tolman.

I asked Rick what he thought about the conference and its importance to the industry. Rick says it’s critically important and that the DDGS export market is one of the bright spots in the industry. He also says that like with any new product there has been a lot of wait and see from potential buyers and users.

You can listen to the interview with Rick here: Rick Tolman Interview

Export Exchange 2010 Photo Album

There is a trade show element to the Export Exchange 2010 here in Chicago. Here’s out sponsor, Renewable Fuels Association, doing some business on a break in sessions. RFA is our sponsor for coverage of this event.

We really do have a very large and diverse crowd attending the conference this year. There are at least 7 translators working to provide international guests with simultaneous audio of the general session presentations. Registered attendees will have a chance to go online and access the presentations afterward too.

Export Exchange 2010 Photo Album

Our keynote speaker at the Export Exchange 2010 is Dr. Robert L. Thompson, Professor Emeritus from the University of Illinois at Urbana-Champaign where he held the Gardner Endowed Chair in Agricultural Policy. He is a Senior Fellow of the Chicago Council on Global Affairs and serves on the USDA-USTR Agricultural Policy Advisory Committee for Trade and the International Food and Agricultural Trade Policy Council.

Dr. Thompson started off his presentation talking about demand dynamics looking to the future. He presented some amazing numbers when it comes to population growth. Between now and 2050 there will be 2.6 billion more people. That’s twice the population of China and most of that growth will come in low income countries. There are a lot of statistics in his presentation that you will find very interesting.

You can listen to Dr. Thompson’s presentation here: Dr. Robert Thompson Presentation

Export Exchange 2010 Photo Album

This morning the Export Exchange 2010 program got started in earnest with opening remarks from Tom Dorr, USGC President/CEO. He says we have nearly 500 attendees from 33 countries. The proceedings will be translated into 7 languages.

Tom says that the opportunity to trade across borders helps to improve lives. That opportunity needs to be done in a transparent way to ensure food security. This Export Exchange is a forum to show that that food security is possible due to the use of new technologies and trade as a means to provide proper nutrition and safe food and economic opportunity for all.

You can listen to Tom’s remarks here: Tom Dorr Remarks

Export Exchange 2010 Photo Album