2020 corn: A story of ethanol, acres and livestock feed | TheFencePost.com
YOUR AD HERE »

2020 corn: A story of ethanol, acres and livestock feed

Record acres of corn are predicted by the USDA while ethanol plants idle with storage nearly full. Livestock feed may be the bright spot but feeders are seeing DDGs disappear.
Photo by Rachel Gabel.

Record numbers of livestock on feed to support corn demand may be the bright spot for corn as ethanol demand dwindles and the April 1 USDA planting estimate report predicted a record number of corn acres. In Nebraska, production is moving offline or slowing with plants filling existing contracts with cattle feeders for distiller’s grain.

Troy Bredenkamp, Renewable Fuels Nebraska’s executive director, said the USDA planting estimate report’s number of 97 million acres of corn, which was nearly 3 million acres higher than the pre-release estimate, left him with two raised eyebrows.

“Maybe there’s a demand stream out there I’m unaware of but if they think it’s going to be ethanol, they’re sadly mistaken unfortunately,” he said.

Nebraska is second in the nation in ethanol production with 25 plants producing 2.5 billion gallons annually. With storage nearing capacity, Bredenkamp said he anticipates in the next four to six weeks, that well over 50 percent of that production will be offline with plants either idled or cutting back on production. With record low prices hovering in the neighborhood of 85 cents per gallon, about 50 cents below break-even costs, the industry was left with little choice but to idle plants, slow production, or operate in a negative margin in order to meet contractual obligations with feeders.


Those plants that keep running will be doing so to supply distiller’s grain to their cattle feeding customers. The mutually beneficial relationship between the two in Nebraska and northeastern Colorado is one of the factors that allow Nebraska to produce low carbon ethanol supplied to the California transportation market at a premium. The ability to feed wet distiller’s grain in the area is both a benefit and a savings to the state’s ethanol plants and cattle feeders, he said. Having to dry distiller’s grain is an expense and a carbon input the state of California discounts for.

“It’s been a win-win and it will be again but this period we’re going through is just going to be painful for a while,” Bredenkamp said.

Grant Bledsoe said they received word March 1 that their loads of distiller’s grain would be decreased. Bledsoe, a Wray, Colo., cattle feeder said distiller’s grain has been his go-to natural protein for 10 years. With a 10 percent fat content, he said the energy is another perk, but the availability is a boon, especially with the high price of alternative natural proteins.

Mike Thoren, Five Rivers’ president and CEO said their yards feed both wet and dry distiller’s grains and are anticipating a return to the rations used prior to 2007 when distiller’s grains became widely available. Replacing distiller’s grain with soybean meal, canola meal, or sunflower meal ­— all also with additional transportation expenses — will likely mean an additional $7 to $10 per head in cost of gain at finished weight.

With the second highest corn acres in the post-World War II era anticipated, Purdue’s Associate Director, Center for Commercial Agriculture Michael Langemeier, anticipates more continuous corn acres in the Western Cornbelt states. The trend yield is estimated at 177 bushels per acre and according to James Mintert, director of Purdue’s Center for Commercial Agriculture, if that yield trend is met, it will mean a new yield record. If combined with planting intention numbers, it means a record large corn production year, something that will be an issue, Mintert said, if it does materialize.

Mintert said the current COVID situation is affecting the world economy and suggests a weak demand environment for corn. Ethanol demand carries the largest impact, he said, and ethanol demand is likely to remain weak until the economy recovers.

In terms of exports, Mintert said the U.S. Department of Agriculture is forecasting a reduction of 16 percent but year to date sales and commitments are actually at 28 percent, a figure he said may be where exports remain in the coming months.

“Given what’s going on in the world economy right now, the odds of catching up are essentially zero,” he said. “That’s a key point going forward. It’s going to be extremely difficult to catch up and we just don’t think it’ll happen.”

Feed, he said, is a bright spot. The U.S. has record meat production thus far this year to support feed demand. Mentert said that even with animal on feed numbers, feed efficiency is higher than in previous years, notably 2004 or 2005, causing the numbers to look differently to reflect the additional efficiency.

Troy Schneider, a Cope, Colo., farmer and Colorado Corn Administrative committee president, said the USDA’s planting estimate number is huge, especially compared to 89 million acres in 2019 when so many acres went unplanted due to severe weather. He agrees that livestock use is promising for corn with 37 percent of the 2019 crop going to livestock use, even higher if DDG is factored into the equation for an additional 10 to 12 percent.

“Cheap gasoline not only hurts our neighbors who work in the oilfield and gas production, but it’s hurting ethanol production and, in turn, it’s hammering us here on the farm,” Schneider said.

Schneider said he anticipates in Colorado with the number of ethanol plants and that it is a corn deficit state, the state will see a widening of the basis. This, he said, will certainly be true in South Dakota where the corn producers are heavily dependent upon ethanol plants.

Because they’re able to store an entire year’s crop on the farm, Schneider said his planting decisions will not likely change but, for the first time in about seven years, they have a small amount of corn forward contracted going into planting. Just as in the case of ethanol, as storage is used, the corn with nowhere to go could become a problem. ❖

— Gabel is an assistant editor and reporter for The Fence Post. She can be reached at rgabel@thefencepost.com or (970) 768-0024.




Start a dialogue, stay on topic and be civil.
If you don't follow the rules, your comment may be deleted.

User Legend: iconModerator iconTrusted User