Corn oil extraction examined from several angles during webinar

By Holly Jessen | November 15, 2013

During a webinar held Nov. 14 four experts talked about corn oil extraction from the viewpoint of animal nutrition, corn oil markets, its financial impact on ethanol plants and taking the technology to the next level for greater coproduct diversification.

The event, put on by Ethanol Producer Magazine, was moderated by Tim Portz, executive editor of the magazine. Giving presentations were Harold Tilstra, manager, technical support, DDGS Marketing, Purina Animal Nutrition LLC, Joseph Riley, general manager, FEC Solutions, Paula Emberland, benchmarking business analyst, Christianson and Associates PLLP, and Warren Barnes, one of four owners of Cereal Process Technologies LLC.

Tilstra kicked off the event with slides about the impact of low-oil distillers grains on animal nutrition. He went through the four primary species fed distillers grains and gave attendees a rundown of what impact corn oil extraction has on the nutritional qualities of feeding the coproduct to that animal.

Conventional distillers grains is well excepted by the dairy industry. “There is an observation that as you go to higher inclusion levels there is a corn oil relationship to reducing the milk fat that these cows produce, too much corn oil coming in tends to be a milk fat depression,” he said, adding that it also has something to do with starch interplay. As a result, some animal nutritionists limit distillers grains use for dairy cattle. Therefore, removing corn oil from distillers grains could make nutritionists more comfortable using the product for dairy.

Low-oil distillers grains does have calories removed, which means lower average daily gain for beef cattle, a problem for an animal that the focus is on feeding as much as they can eat. However, he also mentioned an interesting distillers grains study that showed wet distillers grains with soluables has about 120 percent of the energy of corn. “The good news story there is that the reduced oil distillers grain still is an economical source of energy and protein in many cases,” Tilstra said.

For swine, low-oil distillers grains definitely means less energy available. On the other hand, swine are able to digest some of the energy out of the fiber in distillers grains. Another factor is that, due to the fat content of distillers grains, feeding the coproduct in a late finishing period can cause a condition called soft pork belly, which contributes to difficulty in slicing bacon. “Reducing some of the oil could possibly give an opportunity for feeding higher levels,” he said. “The challenge we have is to make up those lost calories.”

For poultry, low-oil distillers grains means less energy and an amino acid balance that is not ideal. “What we are seeing is it is looking like it’s a lower value product for poultry and they prefer to have more of the oil,” he said.

Riley, the next speaker, said about 80 percent of ethanol plants are now extracting corn oil. Although soy is still the most predominate feedstock for biodiesel production, looking at the first seven months of this year, corn oil is gaining in popularity. “There has been a 30 percent increase in usage of corn oil in the biodiesel market to date, so there’s a lot of biodiesel plants figuring out how to use it and it’s continuing to become accepted more readily as a feedstock,” he said. Still, there’s clearly room to increase its use as a biodiesel feedstock as, overall, it only makes up 11 percent of the total feedstock mix.

Looking at data from Christianson and Associates’ ethanol plant benchmarking program, Emberland pointed out that, in 2008, coproducts made up only 16 percent of an ethanol plant’s total revenue. Today, many plants produce corn oil as one of several coproducts. “Things have changed substantially, you can see that now a quarter of the revenue coming back to the plant is based on the coproducts and only 75 percent is dependent on the ethanol netback,” she said.

The data also revealed information about the revenue ethanol plants are bringing in for the corn oil they produce. In the second quarter of 2012, leaders in the ethanol industry received $988 per ton or about 49 cents per pound for their corn oil coproduct. In later 2012 and 2013 that dropped slightly to an average price of $750 to $800 per ton, or about 40 cents a pound. Although there may be some room for that price to fall somewhat it isn’t expected to fall too far since there is plenty of room in the biodiesel market for additional corn oil use. “One of things that is fairly remarkable about this, with the onset of plants coming on, starting to produce corn oil in 2008, 2009, even thought there was all of this influx of oil into the market, you still saw the prices increase,” Emberland said. “The netbacks were still substantial for the pants and we haven’t really seen that taper off.”

The fourth and final speaker was Barnes of CPT, a corn dry fractionation technology company, which sponsored the webinar. He talked about the fact that corn oil, extracted off the back end of ethanol production, was a way of adding value to ethanol production and that biofuels are moving in the direction of diversifying coproduct streams. “From our perspective, it’s still in the right direction but short of potential,” he said.

In the early days, the ethanol industry was working to build plants and the focus was on how many gallons of ethanol a plant could produce per bushel of corn. Now, with a maturing or mature industry, the industry needs to look at its revenue per bushel of corn, which can be increased through adding multiple value-added coproducts. “I think the industry is ready for a paradigm shift,” he said.

An ethanol plant that adds dry fractionation can produce multiple coproduct streams, including a higher-quality starch stream, corn oil off the front and back end of the process, fiber for cellulosic ethanol and a higher-quality feed that is much like corn gluten feed, a demonstrated feed product produced at wet mills.

CPT has been analyzing a double biofuel model, which the company believes is the best path for the ethanol industry to take to the future. Through fractionation, an ethanol plant can produce the same amount of ethanol from de-germed de-braned corn, plus a high protein distillers grains that can be sold at a premium. The corn oil can be used to produce biodiesel at a co-located biodiesel plant. Biodiesel is sold for about $4 a gallon today, nearly twice the price that ethanol plants can get for crude corn oil, Barnes said.