US feed market reaches DGS saturation point
The ethanol industry’s trade group in the US, the Renewable Fuels Association, warned last week that as with the ethanol “blend wall” blocking an expansion of US ethanol production, producers are also facing a saturation of their market for distillers grain.
The market has grown from just a few million metric tonnes a year to more than 33 million metric tons in 2010/11.
RFA President and CEO Bob Dinneen warned that “we are rapidly approaching the lower end of the ‘feed wall’ estimates”.
Speaking to the Export Exchange in Chicago, Dinneen stressed the need for expanded trading relationships.
Part of ethanol business turnover
He said: “As distillers grains grow in importance to the financial health of ethanol producers and the quality of the product continues to improve, finding new markets is vital.”
The RFA states that in the 2010/11 year, US dry mill ethanol producers are forecast to produce 33.5 million tonnes of distillers grains with a value of about $4.5 billion.
The US-market can absorb about 24 million tonnes and the remaining 9 million tonnes (27%) need to be exported.
Tax credits ending
The trade association’s warning about the importance of the distillers grain market to ethanol industry came as it faces the end of blenders’ tax credits for ethanol at the end of 2010.
Dineen stressed that the ethanol industry had to work with grain producers to help expand feed markets around the world.
“Ethanol production is fuel and feed, it is not either/or – and the success of one has a great impact on the viability of the other. Together is the only way we can secure market growth for both,” he said.
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