Start Date

30-11-2006 12:00 AM

Description

Rapid growth of ethanol production continues to generate many questions related to future analysis, shifts in existing businesses and policy development. In Iowa, new dry-grind ethanol processing plant construction is announced frequently, financed by either local or remote investor groups. New dry-grind ethanol plants are also being added to existing wet milling operations. As these markets develop, there will be innovation in contracts, price discovery and market information. There will also be changes to supplier interaction and service aspects as well. One of the growing concerns is the balance of corn supplies between new ethanol demand and existing feed/export demand. The logistics of more or less uniform constant use over the year are also a departure from the shipping-based export chain. Access to approximately one billion bushels of "mobile storage" in trains, barges, export elevators and river elevators is essentially cut off by the need to retain effectively the entire crop within the state, most often very near where it was produced. Processing uses require sufficient local storage to provide a steady flow through the year. Distillers grains, co-products of dry-grind ethanol production, are rapidly increasing, putting strain on marketing infrastructure and transportation. Depending on the size of local markets for wet distillers grains, plant managers decide how much of the distillers grains to dry, an important decision in terms of operating costs. Expansion of dairy and beef production is encouraged to use a large portion of distillers grains, and inclusion of distillers dried grains (DDG) in swine, poultry feed, pet food and human foods is being studied. As production of DDG increases to rival soybean meal production, shifts in prices and substitutions will occur.

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Nov 30th, 12:00 AM

Sourcing Corn for Ethanol: Effects of Increased Local Processing

Rapid growth of ethanol production continues to generate many questions related to future analysis, shifts in existing businesses and policy development. In Iowa, new dry-grind ethanol processing plant construction is announced frequently, financed by either local or remote investor groups. New dry-grind ethanol plants are also being added to existing wet milling operations. As these markets develop, there will be innovation in contracts, price discovery and market information. There will also be changes to supplier interaction and service aspects as well. One of the growing concerns is the balance of corn supplies between new ethanol demand and existing feed/export demand. The logistics of more or less uniform constant use over the year are also a departure from the shipping-based export chain. Access to approximately one billion bushels of "mobile storage" in trains, barges, export elevators and river elevators is essentially cut off by the need to retain effectively the entire crop within the state, most often very near where it was produced. Processing uses require sufficient local storage to provide a steady flow through the year. Distillers grains, co-products of dry-grind ethanol production, are rapidly increasing, putting strain on marketing infrastructure and transportation. Depending on the size of local markets for wet distillers grains, plant managers decide how much of the distillers grains to dry, an important decision in terms of operating costs. Expansion of dairy and beef production is encouraged to use a large portion of distillers grains, and inclusion of distillers dried grains (DDG) in swine, poultry feed, pet food and human foods is being studied. As production of DDG increases to rival soybean meal production, shifts in prices and substitutions will occur.

 

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