AMES, Iowa – While Iowa farmers have reported their local ethanol plants running low on dried distillers grains, coupled with other high feed costs the last couple of years, current availability is likely fluctuating by ethanol plant, according to an Iowa State University agricultural economist.

“Several plants have looked to lower costs on distillers grains production by marketing more modified or wet distillers grains, saving the drying costs, while still capturing most of the value,” said Chad Hart, Iowa State University professor of agricultural economics.

“The plants that have been successful in doing that are reducing their dried distillers grains production, leaving those producers who can only handle dried distillers grains with limited availability,” he added. “Or, to put it another way, the feed is there, but it is in a different form that may fit some producers better than others.”

Currently, U.S. ethanol plants can produce more than 35 million tons of distillers grains per year, said Kurt Rosentrater, Iowa State associate professor of agricultural engineering.

“About 55 percent of this is dry, while the remaining 45 percent is in wet form (distillers wet grains or modified distillers wet grains),” he said. “Plants will normally produce distillers grains 24/7 for most of the year, although there will be periodic downtime for maintenance, cleaning and sanitation.”

During the COVID-19 lockdown (April/May 2020), he said over half the plants were closed, which really reduced the availability of distillers grains.

“At the moment, plants in Iowa and the U.S. are mostly operating,” he said. “It should be noted that extreme weather conditions (last) December did lead to some plants temporarily closing or reducing operations, which has led to about 5 percent less distillers production, compared to previous months.”

Don Burns, commodity specialist at Absolute Energy, LLC, in St. Ansgar, Iowa, said dried distillers grains supplies are relative to corn supplies in areas where the corn crop was shorter.

“So are the dried distillers grains,” he added. “Iowa is moving dried distillers grains into the southwest and western markets, filling the feed needs of those markets.”

Tasha Bunting, Illinois Farm Bureau associate director of commodities and livestock programs, said, “The Illinois Farm Bureau has not heard much about dried distillers grains access in Illinois, but feed prices remain high. Unfortunately, there is not an indication that there will be relief for these high prices anytime soon.”

On expectations for 2023, Hart agreed with Bunting: “We should expect feed prices to remain high through the first half to two-thirds of the year, as crop and feed supplies will be tight.”

Katherine Balk, vice president of human resources at Homeland Energy Solutions, LLC, in Lawler, Iowa, said, “Current pricing is average for dried distillers grains, and we expect this to continue through the balance of this crop year.”

Burns said the relationship of dried distillers grains prices relative to other feed cost depends on the basis level plants are paying for corn. “Corn basis levels west of I-35 out to the Dakotas are running 50 cents higher than normal, so feed prices will remain higher in that trade area,” he said.

Rosentrater said, “Unfortunately, there are many things happening internationally that are leading to higher feed prices, and increased uncertainties for both 2023, and beyond: trade disruptions in Ukraine are still ongoing; trade challenges with China may become more complicated due to balloons; and now we have the devastation in Turkey and Syria.

“International events have a huge impact on the flow of food and grain products around the world,” he added. “These ripple all the way back to Iowa and will impact ingredient availabilities and prices. One good item of note is that interest rates appear to be ticking downward, but time will tell if that continues.”

However, Hart said, “If the crop production estimates are close to right this fall (with corn topping 15 billion bushels, and soybeans approaching 4.8 billion bushels), then feed costs should fall with the harvest, offering livestock producers a reprieve from the higher feed costs of the past couple of years.”

As for the outlook beyond 2023, Balk said, “The demands for proteins continue to increase as people across the world improve their diets, which, in turn, depends on the animals they eat, and their diets.”

Burns said, “With the increased demand for vegetable oil, more soybean plants are expanding and being built, putting more soybean meal into the marketplace, which will lower the cost of high protein meals and feeds as those plants come on stream.”

Hart said those lower feed costs would extend into 2024: “Beyond that, the feed outlook depends on weather patterns (influencing crop and feed supplies), and the likely expansion of the cattle herd, impacting feed demand; the faster the cattle herd expands, the more likely feed costs increase.”

Michael Langemeier, Purdue University professor of agricultural economics and associate director of the Center for Commercial Agriculture, said, “The current level of dried distillers grains prices can largely be attributed to relatively high corn and soybean meal prices.”

He said he expects feed costs for hog finishing to drop by the end of the year.

“There is of course a wide band around these estimates,” he said. “Any supply problems with this year’s crop would leave feed costs at today’s levels. If current futures prices hold, 2024 feed costs would be approximately 10 percent lower than this year’s feed costs.”