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07-19-2012 09:16 AM
The talk on discussion board is shut down of ethanol will reduce corn demand . I have question if ethanol is shut down what is going to replace distillers grain soldinto the feed market are we going to get net reduction as large as we think. The ethanol has become big supplier of feed in the world. I wonder if ethanol is simple target To blame for severe drought that we have little r es er ve margin to carry us over for a year. We continue have national policies with crp land still out of produnction and ever vigilant wetland rules regulation that have slowed or prevented additional production to occur. Also national grazing rules have also r educed the number of cattle being able. To be produced. These policies have effectEd long term production and will in the future but probably has lowered the amount of. Reserves we have in the market.
07-19-2012 10:32 AM
I agree, that closing ethanol plants may not free up all the corn people think. This is my working understanding as of today, and would welcome a correction. I understand some 5 billion bushel of corn go to ethanol plants. If that 5 billion bushels does not go to ethanol plants, the feed side of the equation would need some 3.5 - 4 billion bushels of corn and some 200 million bushels of soybeans to make up the short fall from the ddgs no longer available. So I am willing to agree that would place an additional 1.0 - 1.5 billion bushels of corn on the market, but would further tighten the soybean/soybean meal balance sheet by 200 million bushels...................... Also where is the extra 10% of the gasoline going to come from?............ So corn drops $.50 (?) a bushel,............... Meal goes up $50 (?) a ton............. And gasoline goes up $.50 (?) per gallon.........What has changed???
07-19-2012 11:39 AM
One thing, that many people who do not deal with cattle, is the nutrient density of DDGs.
Going by memory, here, I think a bushel of corn yields somewhere in the neighborhood of 30# of DDGs, in round numbers. However, the DDGs have nearly double the nutrient density of corn (nutrients not counting energy). So, instead of feeding 100# of corn, you can feed 50# of DDGs, plus some ground straw or cornstalks, with maybe a little molasses & mineral, and get pretty much the same result. Drop the DDGs, and you lose nutrient density, which is most easily made up with soybean meal, (or more corn, or wheat, or some other grain).
To get to the point, unless the cattlemen are willing to give up some amount of performance/efficiency, they will have to replace DDGs with something else, most likely grain of some kind. So, saying that if you stop using a billion bushels of corn for ethanol will suddenly free up a billion bushels of corn, is not exactly accurate.
07-19-2012 12:56 PM
Roughly 1/3 is given back after corn is converted to ethanol. Therefore, roughly 1.65 billion bushels is given back when using 5 billion for ethanol. One must also keep in mind that the drought is affecting a lot more than just crops. The grasslands are burning up which in turn means guys are liquidating massive quantities of cattle right now. There will be significantly less cattle to feed grain to in the next year not only because of high grain prices but also because of little to no grass and little to no hay. The only thing left to crucify the cattle industry would be a rough winter. I read an article a couple of days ago where swine operations are staring at 13-15 months of losses. I'm sure there will be a pullback there as well. The dairy industry was in liquidation mode before grain prices started soaring.
In terms of soybeans, I didn't feed soymeal as a protein source to cattle before distillers so why would one start now? This will have more to do with the swine industry. The doctors have been telling us for years to cut back on meats. I'm sure when we feel the real price discovery from this that a lot of people will do just that.
07-19-2012 01:28 PM
Thank you Gored...
I appreciate you bringing knowledge to the discussion. I am absolutely amazed how many folks do not have a basic understanding of what is actually produced from a bushel of corn made into ethanol at a dry mill facility.
07-19-2012 01:49 PM
The USDA cow kill report doesn't appear to show culling yet.
SJ_LS714 St. Joseph, MO Thu Jul 19, 2012 USDA Market News Service Cow Slaughter Under Federal Inspection By Region and U.S. Total -------------------------------------------------------------------------------- Week ending-07/07/2012 Week ending-07/09/2011 -------------------------------------------------------------- Dairy All Dairy All Region 1/ cows cows cows cows -------------------------------------------------------------------------------- head 1 - - - 100 2 500 500 600 700 3 7,600 9,600 6,300 7,900 4 1,900 9,500 2,300 10,800 5 13,500 26,400 13,000 23,000 6 5,200 19,700 2,900 23,900 7 (D) (D) (D) (D) 8 (D) (D) (D) (D) 9 11,800 16,200 12,100 15,500 10 3,000 4,000 2,100 3,200 U.S. 2/ 44,800 100,800 41,100 100,800 -------------------------------------------------------------------------------- - Represents zero. (D) Withheld to avoid disclosing data for individual operations. 1/ States included in regions are as follows 1- CT, ME, NH, VT, MA & RI; 2- NY & NJ; 3- DE-MD, PA, WV & VA; 4- AL, FL, GA, KY, MS, NC, SC & TN; 5- IL, IN, MI, MN, OH & WI; 6- AR, LA, NM, OK & TX; 7- IA, KS, MO & NE; 8- CO, MT, ND, SD, UT & WY; 9- AZ, CA, HI & NV; 10- AK, ID, OR & WA. 2/ Totals may not add due to rounding. A region may not be published due to confidentiality, but is included in totals. Source: USDA Market News Service, St Joseph, MO (816)-676-7000 e-mail: firstname.lastname@example.org www.ams.usda.gov/mnreports/sj_ls714.txt www.ams.usda.gov/lsmarketnews
07-19-2012 04:25 PM
Gored, I was referring to the guys who feed ground cornstalks, or ground straw to cattle, supplementing it with DDGs. These people don't have enough hay to get through on a 'normal' year, no telling what they intend to do this winter, especially if grass runs short, and they have to bring cows home early. They will have no choice, but to feed poor quality forages, ground and mixed with some sort of supplement. If there are no DDGs, it will have to be grain of some kind.
A lot of people around here, got on the bandwagon, of using DDGs, mixed with ground cornstalks, to replace some of the hay the cattle eat (not sure how much, maybe 1/3 of it or so, based on nothing but my best guess). They then plowed up hay ground, and planted corn & beans, assuming they'd have the DDGs to mix with it. Without the DDGs, they will have that much less corn to sell.
07-20-2012 12:09 AM
There must be a lot of spoiled cows out there. Locally, cow/calf guys like myself graze cornstalks in the winter after the cows have been taken off of grass. I can't understand why anyone would bale and grind cornstalks when cows are a natural grazer. Then, in the spring just about calving time we put them out to rye pasture. The last time my cows saw a bale of anything was four or five years ago when it snowed early and never melted. Other than what my cows graze, the only supplement they receive is salt and mineral.
If you're talking about feedlots and feedlot rations, then you might be onto something. However, corn silage has pretty decent protein. Given the amount of abandoned acres I keep reading about, I'd venture to guess there will be a tremendous amount of corn silage put up this year. Our worst drought on record here locally was in 2002. Feedlots were running over with failed dryland corn silage. It wasn't that long ago we lived without distillers, and the World will not end if we have to live without them again. JBS has a large feedlot out around Yuma, CO. They have never fed distillers. The feeding industry will survive without distillers. There will be plenty of failed dryland corn baled as well. We may very well not have great quantities of alfalfa, but there will be plenty of hay around considering almost everyone and their dog baled wheat straw this year.
07-20-2012 05:06 AM
Right where I am, most cow/calf guys do like you, but North a ways, in the Sandhills, there are maybe 30 cows for every acre of available corn stalks, and many, if not most ranchers have to buy at least some of their winter feed, and they buy what will winter their cows the cheapest. With hay being high the last couple years, a lot of straw, cornstalks, and DDGs have found their way into rations.
Feedlots have been doing the straw, stalks, and DDGs thing for a while now. To keep a steer gaining the way they want them to, they almost 'need' a certain amount of concentrated ration. They can sub a certain amount of DDGs mixed with a little filler, for grain. Without the DDGs, they will need more grain. That is pretty much just a fact of modern feedlots. Pretty much gone, are the little farmer/feeders that would raise thier own cattle, and their own feed, and just feed out their own calf crop. Now a days, the feedlot is like a factory, with pens that get emptied, cleaned, and filled on a business schedule.
To the silage, there are guys around here, starting to do silage, but the nitrates are so high in many cases, they are having to mix in some from irrigated corn, with the dryland corn, to get it down to safe levels. Farmers are really balking at letting someone chop up $8 cash corn, just to salvage a little feed value off of the dryland corn, that is covered by insurance. Now, the guys with their own corn, and their own cows will do this, but the pure row crop guys don't seem to want to, and the pure cow guys, don't want to pay for the irrigated silage (or more specifically, pay the price the row crop guys are asking for it) to blend it down to safe levels. They seem instead, to be stockpiling DDGs, and buying wheat straw, to overwinter.
Our local ethanol plant has been out of DDGs since about mid to late May, meaning that all they make, is already contracted by the cattlemen doing this. I don't think you could buy a truckload today, for any price, it all has been sold for a while now.