DDG Use vs. Corn and Soybean Meal Feed Inclusion Rates

Dec 01, 2011 at 08:03 AM CST
Grain trading has moved into its typical pre-holiday mode with outside market action being the primary driver of prices. There really will not be any fundamental news of significance until the key January 12 government reports are furnished. On that day USDA will release the monthly supply-demand report, the final crop production figures for 2011, the first estimate of 2012 U.S. winter wheat seedings, and the quarterly grain stocks report as of December 1. The stocks report has become quite notorious, especially for corn, for which the actual numbers have varied widely from trade estimates in recent years. One problem is that it is increasingly difficult to track corn and, more specifically, exactly ascertain how much corn and other feed animals are consuming. The situation has become even more complicated over the past few years with the large amount of distillers' grains (DDGs) that are now being utilized in feed rations. This graphic shows the amount of energy-related feeds per grain-consuming animal unit (GCAU) and also the amount of total oilseed meals per high-protein-consuming animal units (HPCAU). The energy-related feeds are all the feed grains that are fed, including corn, sorghum, barley, and oats, with the quantity of wheat fed also included. The oilseed meals fed are mainly soybean meal but also include canola meal, cottonseed meal, linseed meal, peanut meal, and sunflower meal. One obvious shortcoming that has complicated this situation is the GCAU and HPCAU indices are based on the dry-weight quantity of feed consumed by the average milk cow during the marketing years 1969/70 to 1971/72, an archaic model, to be sure. Regardless, prior to 2005, the GCAU chart was highly influenced by the price of corn, with bumper crop years leading to a spike in feed/GCAU numbers while a short crop had the opposite effect. The upward trend in oilseed meal/HGCAU is attributable to the sharp increase in poultry numbers over the past 20 years, with birds consuming a large amount of protein meals relative to swine, beef, or dairy cattle. We feel that the sharp decline in energy feed/GCAU and the less pronounced decline in the oilseed meal/HPCAU ratios are the result of the spurt in prices for both corn and soybean meal and the increased amount of byproducts being fed, especially DDGs. In fact, a recent report from USDA discusses the substitution of DDGs for corn and soybean meal. Though it varies by species, USDA estimated that over the past five years, 1 metric ton of DDGs substituted for about 1.22 metric tons of corn and soybean meal. Substitution for corn accounted for about 103% of the DDGs fed and substitution for soybean meal accounted for about 19% of the DDGs fed. View Original Post

Dec 01, 2011 at 08:03 AM CST

Grain trading has moved into its typical pre-holiday mode with outside market action being the primary driver of prices. There really will not be any fundamental news of significance until the key January 12 government reports are furnished. On that day USDA will release the monthly supply-demand report, the final crop production figures for 2011, the first estimate of 2012 U.S. winter wheat seedings, and the quarterly grain stocks report as of December 1. The stocks report has become quite notorious, especially for corn, for which the actual numbers have varied widely from trade estimates in recent years. One problem is that it is increasingly difficult to track corn and, more specifically, exactly ascertain how much corn and other feed animals are consuming. The situation has become even more complicated over the past few years with the large amount of distillers' grains (DDGs) that are now being utilized in feed rations. This graphic shows the amount of energy-related feeds per grain-consuming animal unit (GCAU) and also the amount of total oilseed meals per high-protein-consuming animal units (HPCAU). The energy-related feeds are all the feed grains that are fed, including corn, sorghum, barley, and oats, with the quantity of wheat fed also included. The oilseed meals fed are mainly soybean meal but also include canola meal, cottonseed meal, linseed meal, peanut meal, and sunflower meal. One obvious shortcoming that has complicated this situation is the GCAU and HPCAU indices are based on the dry-weight quantity of feed consumed by the average milk cow during the marketing years 1969/70 to 1971/72, an archaic model, to be sure. Regardless, prior to 2005, the GCAU chart was highly influenced by the price of corn, with bumper crop years leading to a spike in feed/GCAU numbers while a short crop had the opposite effect. The upward trend in oilseed meal/HGCAU is attributable to the sharp increase in poultry numbers over the past 20 years, with birds consuming a large amount of protein meals relative to swine, beef, or dairy cattle. We feel that the sharp decline in energy feed/GCAU and the less pronounced decline in the oilseed meal/HPCAU ratios are the result of the spurt in prices for both corn and soybean meal and the increased amount of byproducts being fed, especially DDGs. In fact, a recent report from USDA discusses the substitution of DDGs for corn and soybean meal. Though it varies by species, USDA estimated that over the past five years, 1 metric ton of DDGs substituted for about 1.22 metric tons of corn and soybean meal. Substitution for corn accounted for about 103% of the DDGs fed and substitution for soybean meal accounted for about 19% of the DDGs fed. View Original Post