Domestic Fuel

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

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

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

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

China‘s commerce ministry is ending an 18-month anti-dumping investigation into imports of the ethanol co-product distillers dried grains (DDGS), offering the opportunity to bring U.S. exports back up as it means no anti-dumping tariffs will be imposed.

China’s imports of DDGs dropped by nearly half last year compared to 2010 when they topped 2.5 million metric tons, up 385 percent over the previous year. U.S. Grains Council President and CEO Tom Dorr says U.S. exports to China have already shown an increase this year over last in anticipation of this decision. “Imported DDGS from the U.S. the first four months, January through April of 2012, are up about 84% over 2011,” Dorr said in a press conference this morning. “We think people were sensing that this may be the outcome and were willing to take the risk that there probably would not be tariffs imposed.”

Dorr gave special recognition to Ray Defenbaugh, President and CEO Big River Resources, for his help during the investigation. “One of his plants was selected for the investigation phase of the case,” said Dorr. “He was very supportive of dealing with this issue head-on which helped everyone.” The three plants originally chosen for the investigation were Big River, United Wisconsin and Golden Grain.

The livestock feed that is a co-product of ethanol production is gaining a foothold in the country that is synonymous with oil, thanks to the efforts of the U.S. Grains Council (USGC).

Saudi Arabia has always been the oil capitol of the world, but when Venezuela took the number one spot last year, the Saudis began to focus on diversifying into new revenue streams, like agriculture, and started to satisfy feed demand for dairy and livestock with the ethanol co-product distiller’s dried grains (DDGS).

The USGC launched the effort to expand market access for DDGS into Saudi Arabia through such activities as taking officials on tours of ethanol plants in the United States so they could see how the product was made. It was difficult at first to overcome the Saudis’ mistrust of ethanol as competition for petroleum, not to mention the fact that it is alcohol, which is prohibited in that country. But the Council ultimately succeeded in getting DDGS on the Saudi’s “feed ingredient subsidy list” which allows financial support for importers to aid them in bringing foreign feed ingredients to the market in order to reduce water consumption.

To gain placement on the list, the Council addressed various obstacles through an aggressive marketing campaign focused on stimulating demand and improving market access and is now introducing programming to educate traders and nutritionists about the tremendous benefits of DDGS. With 16,000 tons of U.S. DDGS already entering the Saudi market, the Council anticipates the demand to grow along as increased emphasis is placed on expanding the agricultural sector.

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