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Future demand for distiller grains likely to exceed supply

WILLMAR -- The production of distiller grains from corn-based ethanol production has quadrupled in the United States since the 2004-05 marketing year. This dramatic increase in the production of distiller grains has coincided with the rapid growth of the U.S. ethanol industry.

Initially, observers questioned the industry's ability to process and market a high-quality, storable byproduct that would have the nutritional characteristics suitable for certain types of livestock and poultry. Today, those concerns have proved to be unfounded as both domestic and foreign livestock feeders have rapidly adopted the use of distiller grains, which has at least the same energy content as corn, and a protein content somewhere between that of corn and soybean meal.

Distiller grains are now the second-largest category of processed feed used in the United States, amounting to an estimated 29.1 million metric tons during the 2010-11 marketing year.

Recent findings released by the U.S. Department of Agriculture indicate that while projections point to further growth in the production of distiller grains, for the foreseeable future, potential feed use of the product in the United States is likely to exceed its projected supply.

Linwood Hoffman and Allen Baker from USDA's Economic Research Service developed a methodology to compute actual and potential feed use of distiller grains, including U.S. supply.

Based on midrange diet inclusion rates suggested by animal nutritionists for different types of livestock and poultry, their analysis indicates that potential feed use of distiller grains could have averaged 62 million metric tons during the past five years. That's far higher than the estimated actual domestic feed consumption of 29.1 million metric tons, and a supply of 37.4 million metric tons for the 2010-11 marketing year.

With production growth of corn-based ethanol and corresponding distiller grains expected to slow in the next 10 years and with exports expected to grow, projected domestic feed use of distiller grains during the 2020-21 marketing year is only about half the projected potential feed use demand of 64 million metric tons.

As much as 25 percent of the distiller grains produced in the United States have been exported, which will likely support continued growth of the export market. The main export markets include China, Mexico and Canada.

All livestock and poultry can utilize the nutrients from distiller grains, but beef and dairy cattle can use them more readily than hogs and poultry. Technological advances are also making it possible to change the composition of distiller grains, therefore tailoring them to the nutrient needs of each type of animal.

USDA to lower insurance premiums for corn and soybean producers

The U.S. Department of Agriculture has announced that it will update the methodology used to set crop insurance premiums, leading to lower insurance premiums for many corn and soybean producers beginning with the 2012 crop year.

The rate adjustment is based on findings from an independent study and peer review process. The study is part of an ongoing effort to improve the methodology of determining premium rates for crop insurance.

According to officials from USDA's Risk Management Agency, on the average, corn farmers should see a rate reduction of about 7 percent and a 9 percent reduction for soybean farmers. However, rate reductions will vary by county.

The Risk Management Agency periodically reviews premium rates and makes necessary adjustments for actuarial soundness. The current approach makes a concerted effort to adjust premium rates in a manner that recognizes the latest technology, weather and program performance information.

Updated data pertaining to prevented planting, replant payments and quality adjustment loss experience was also used in determining the rate changes.

For further information regarding rate changes for 2012, farmers should visit with a crop insurance agent.

Minnesota's Oct. milk production down slightly

According to the Minnesota Agricultural Statistics Service, Minnesota milk production during the month of October totaled 732 million pounds, down 0.1 percent from one year ago.

Minnesota's production per cow averaged 1,555 pounds in October, down 5 pounds from last October.

The average number of milk cows on Minnesota dairy farms during October was 471,000 head, unchanged from September, but up 1,000 head from one year ago.

Milk production in the 23 major dairy states during October totaled 15.2 billion pounds, up 2.5 percent from last October. Production per cow averaged 1,787 pounds for October, up 20 pounds from October 2010.

During the first nine months of 2011, accumulated milk production in the 23 major dairy states totaled 147.6 billion pounds, up 1.6 percent from the same period one year ago.

Nov. corn, milk prices increase, soybeans drop

According to the Minnesota Agricultural Statistics Service, prices received by Minnesota corn farmers during November averaged $5.60 per bushel, up 21 cents from the October average price. A year ago, Minnesota corn prices during November averaged $4.18 per bushel.

November soybean prices averaged $11 per bushel, down 50 cents from October. Last November, soybean prices averaged $10.50 per bushel.

Minnesota milk prices during November averaged $21.30 per hundredweight, up 80 cents from October's average price. One year ago, Minnesota milk prices during November averaged $17.70 per hundredweight.

Wes Nelson is the executive director of the USDA Farm Service Agency in Kandiyohi County.