Another Banner Year for DDGS Exports

Distillers grains exports are a big story this year, particularly in China, where appetite for the coproduct is expected to only grow. Domestically, prices are high, supported in part by growing export numbers.
By Tom Bryan | November 25, 2013

We find out this month that distillers grains exports are on pace to surpass last year’s numbers and perhaps match or top the record total volume shipped out of the country in 2010. Beating last year’s export figure isn’t surprising given the drought and the lower monthly production rates that came with it. Approaching or topping the record export figures of three years ago is a different story, however. If we export 9 million metric tons of DDGS this year, it won’t be the result of just one thing, such as higher grind rates, but rather many things. In our feature, “In Demand Around the Globe,” EPM Managing Editor Holly Jessen reports that 25 percent of all U.S. distillers grains is now exported, with China taking roughly a third of the total volume—about half a billion dollars’ worth—each year. 

Jessen points out that distillers grains exports are rising despite drops in shipments to Canada and Mexico. Offsetting losses in one part of the world by increasing sales to other regions is attributable to the diversity of the overseas DDGS market. Today, buyers in 80 different countries buy the coproduct, thanks to the U.S. Grains Council and other groups that educate buyers and break down trade barriers in new and established markets.    

Traditional export destinations in Europe and elsewhere remain active and important, but the real story is China, the Pacific Rim and Southeast Asia. Buyers in Japan, South Korea, Vietnam and Thailand are importing bigger volumes of distillers grains this year. As EPM Staff Writer Chris Hanson reports in “Destination China,” a perfect storm of export inducers are responsible for Asia’s newfound demand for DDGS. In addition to buyer education, the list of drivers includes favorable export economics, the resolution of China’s antidumping case, and growing demand for protein in countries where meat consumption is increasing stepwise with household income.  

If it weren’t simply enough that distillers grains exports are on the rise, prices—both domestically and abroad—are very strong. Historically, DDGS has been priced around 85 percent the price of corn. But things have changed. In “DDGS Needle Trends North,” we learn that DDGS is now priced at par with corn or better. As Senior Editor Sue Retka Schill reports, marketers have their hands full trying to explain these high prices to U.S. livestock producers who are still getting used to the lower oil content of today’s product. The exuberance of our first two features is perhaps grounded by Retka Schill’s piece, which serves as a pragmatic reminder that DDGS still has perennial challenges that demand attention. In addition to the standby issues—composition variability and flowability—new challenges lie ahead. Surprisingly, the industry still lacks solid information about how domestic beef, dairy, swine and poultry producers use distillers grains and view changes to its composition. An industrywide survey is in the works.

Tom Bryan,