More producers choosing to sell WDG

Wet distillers grains has advantages beyond economics
By Tom Bryan | October 01, 2002
According to a recent EPM survey of several U.S. dry-mill ethanol plants, a growing number of producers are selling over 25 percent of their distillers grains in the wet form, side-stepping the drying process altogether.

Certainly, a principle reason to limit distillers grains drying is energy costs, producers say, but many plants are also avoiding the use of dryers to avoid emissions and odor concerns in the wake of recent negotiations between several ethanol plants and the Environmental Pollution Control Agency's Region 5, which is having wide-sweeping effects on the industry. Facilities that produce between 20 and 40 mmgy - and those without thermal oxidizers - seem particularly inclined to seek out new markets for wet and modified distillers grains.

Depending on the season, producers such as Chippewa Valley Ethanol Co., Denco, Golden Triangle, Heartland Grain Fuels, Tri-State Ethanol and others are producing over 40 percent of their distillers in the wet or modified form, while High Plains Corporation's Colwich, Kan. plant is producing as much as 90 percent wet. Others, such as Quad County Corn Processors and Siouxland Energy & Livestock are avoiding the drying process all together.

To get a handle on this trend, EPM spoke with Tri-State Ethanol General Manager Randy Kramer, who said his plant went from producing 25 percent of its distillers wet to 50 percent wet in the month of October alone.

"The primary reason for our increase in wet distillers production is seasonal demand," Kramer said. "Our local customers are trying to fatten cattle up and we've seen a higher demand in the last two weeks specifically."

Although most producers recommend a transportation limit of 40 to 50 miles on WDG, Kramer said he has had customers take it much further than that.

"It really depends on temperature," he said. "We've had a very cold October and so it doesn't have to be moved quite as fast."

Tri-State is now using its dryer on a half-time basis, running the dryer in the day and producing WDG at night, Kramer said. It should be noted that some ethanol plants have the ability to route a percentage of distillers grains to the drying system while producing wet product at the same time. Tri-State Ethanol does not have that ability.

Steve Markham, senior commodities trader with Commodities Specialists Company (CSC), told EPM several of the plants CSC represents are marketing a significant portion of their distillers grains wet, depending on the plant's ability to sell the product in the area.

"Winnebago (Corn Plus) and Benson (CVEC) are doing a good job of it," Markham said. "The number of plants marketing wet product will grow."

Why is it happening? Markham and others say most producers are simply adjusting the spread between wet and dry distillers production depending on drying costs, which is dependent on natural gas costs.

But there are other factors as well.

"Emissions and economics are only part of it," Markham explained. "Ethanol producers are also becoming more responsive to local needs."

Markham also said interest in WDG has simply grown as well. "Last year, there were drought issues and Nebraska producers were selling 80 percent of their disitllers wet," he said. "With all the new plants in South Dakota, wet might be an option there as well."

In fact, Markham said any plant not marketing WDG today is probably just waiting to get into the wet game. "The customer base for it develops over time," he said.

Nutritional comparisons
According to most nutritionists and marketers, DDGS and WDG have similar nutrient content on a dry-matter basis, with WDG possibly having a slight performance advantage.

Typically, wet will slightly beat out dry in feed trials. The difference, most say, comes from the dryer binding up protein. In addition, palatability and feed intake may also be slightly better with WDG. n