Corn DDGS: A Feed Industry Perspective Contact Information: l Harold Tilstra, DVM l National Co-Products Technical Support l Land O Lakes Farmland Feed, LLC l Home Address: 583 110th Avenue Luverne, MN 56156 l Office Phone: 507-283-4198 l Cell Phone: 507-220-5952 l E-mail: hdtilstra@landolakes.com l Web Site: www.ddgsnutrition.com 10/8/12 Dr. Harold Tilstra 1
Disclaimer: All numbers, projections, and the like contained herein regarding costs, expenses, production results, etc., are for ILLUSTRATIVE PURPOSES ONLY. The assumptions utilized and the resulting projections may not be appropriate for a given situation. Actual results could vary significantly. Land O Lakes Farmland Feed makes no warranties, expressed or implied, regarding any such projections. 10/8/12 Dr. Harold Tilstra 2
Corn DDGS: A Feed Industry Perspective Dr. Harold Tilstra Land O Lakes Feed 10/8/12 Dr. Harold Tilstra 3
Overview l DDGS: Supply l DDGS: Use l DDGS: Value l DDGS: other factors l Summary 10/8/12 Dr. Harold Tilstra 4
DDGS Supply l Ethanol production expansion to 5 billion gallons. l DDGS supply will grow to nearly 9 mmt per year. l Increasing supply not driven by feed demand. l Biggest change to feeding animals since soybean meal. 10/8/12 Dr. Harold Tilstra 5
Ethanol Volume Forecasts (Oct.-Sep. Crop Year) 6,000,000 (Sparks Study funded by Land O Lakes, 2003) 5,000,000 4,000,000 000 Gallons 3,000,000 2,000,000 1,000,000 0 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 Demand-Based Scenario Supply-Based Scenario Supply based on 2002 CA Energy Commission survey of U.S. ethanol capacity through 2005; static after 2005. Demand based on combination of MTBE bans in 19 states & Energy Bill including Renewable Fuels Standard 10/8/12 Dr. Harold Tilstra 6
United States Ethanol Outlook Land O Lakes 2002 9 8 7 6 5 4 3 2 1 0 2001 2003 2006 2012 Corn (bil. Bu.) Ethanol (bil. Gal.) DDGS (mmt) 10/8/12 Dr. Harold Tilstra 7
Using Corn Distillers Grains in Animal Feed l How much can we use Theoretically? Good source of protein and energy for dairy and beef cattle. Good source of protein, fiber, phosphorus, and energy for swine and poultry. Formulate diet to maximize use of nutrients when economically advantageous. 10/8/12 Dr. Harold Tilstra 8
Maximum Theoretical, Potential DDGS Usage (Sparks Study funded by Land O Lakes, 2003) Million Tons 200 150 100 50 Fish - 0.4 Poultry - 3.8 Swine - 7.5 Cattle - 155 Total - 166.2 0 Tons DDGS per Year 10/8/12 Dr. Harold Tilstra 9
Using Corn Distillers Grains in Animal Feed l How much can we use Practically? High phosphorus levels can limit use in areas where soil phosphorus level management is necessary. Low lysine levels require amino-acid balancing, especially at levels of more than 10% of the diet for dairy, swine, and poultry. High vegetable oil levels can have negative effects on feed intake and carcass characteristics. 10/8/12 Dr. Harold Tilstra 10
Using Corn Distillers Grains in Animal Feed l How much can we use Practically? Physical characteristics challenges; flow-ability, micron size, pellet strength, etc. Nutrient variation results in limiting inclusion levels by nutritionist to minimize potential nutrient variation in finished rations. Geography may limit timely access to dependable amounts of quality product. Price compared to primary ingredients. Price compared to other mid-protein ingredients. 10/8/12 Dr. Harold Tilstra 11
Potential use of DDGS (Land O Lakes 2002) Potential DDGS Demand 16 14 12 10 8 6 4 2 0 Catfish Layers Broilers Swine Ruminant Total Million Tons 10/8/12 Dr. Harold Tilstra 12
Corn DDGS Value...it depends on: l Nutrient concentration l Nutrient digestibility or bio-availability Energy Amino acids Phosphorus l Physical properties of product l Species l Market price of competing ingredients 10/8/12 Dr. Harold Tilstra 13
Value of DDGS: 1. Two Nutrient Profiles DDGS (NRC) Golden DDGS ME, kcal/lb 1,282 1,452 C. Protein, % 27.7 26.9 C. Fat, % 8.4 9.7 Lysine, %.62.76 Dig. Lys., %.29.40 P, %.77.79 Av. P, %.59.63 10/8/12 Dr. Harold Tilstra 14
Value of DDGS: 2. Two Price Scenarios l Low Prices Corn = $1.93/bu Hi-Pro SBM = $163.50/ton L-Lysine.HCl = $70/ cwt No added fat l High Prices Corn = $3.05/bu Hi-Pro SBM = $320/ ton L-Lysine.HCl = $200/ cwt No added fat 10/8/12 Dr. Harold Tilstra 15
Value of DDGS: 3. Two Value Estimations NRC DDGS Golden DDGS Shadow Price (low prices) Shadow Price (high prices) Amount Used (low prices) Amount Used (high prices) Price to use 200 lb/ton (low prices) Price to use 200 lb/ton (high prices) $87.73 $92.83 $151.80 $159.00 106 lb/ton 165 lb/ton 8 lb/ton 0 lb/ton $66.45 $84.41 $123.40 $158.80 10/8/12 Dr. Harold Tilstra 16
Nutrient digestibility or bio-availability - Lysine l Research published in 2003 correlates color (in terms of lightness and yellowness) to lysine digestibility. l In turkey grower diets, DDG s with low or high (60% vs. 78%) lysine digestibility showed DDGS values of: Ingredient/price Low lysine DDGS High lysine DDGS Corn, $1.74 / bu $85.60 / ton $95.60 / ton Corn, $1.96 / bu $90.80 / ton $100.00 / ton Corn, $2.97 / bu $114.00 / ton $120.40 / ton SBM, $165 / ton $90.80 / ton $100.00 / ton SBM, $174 / ton $94.40 / ton $104.20 / ton 10/8/12 Dr. Harold Tilstra 17
Nutrient digestibility or bio-availability - Phosphorus l l In swine grow/finish diets; available phosphorus is a significant part of value. Calculated value of DDGS with high to low available phosphorus at various corn prices: Corn/SBM 90% A. Phos. 80% A. Phos. 60% A. Phos. $2/$250 $95.22 $93.64 $90.59 $2.5/$275 $112.59 $111.07 $108.14 $3/$300 $129.96 $128.50 $125.68 10/8/12 Dr. Harold Tilstra 18
Physical properties of product Sent to a happy customer Sent back from a not-so-happy customer 10/8/12 Dr. Harold Tilstra 19
Physical properties of product l l Bulk density affects freight cost Range is 31 39 pounds/cu. ft.; could be 20% less weight shipped in a rail car or container. Micron size affects mixing and handling characteristics Matching finished feed is best for mixing. Too small (talc powder) makes difficult to handle. l Pelleting Pelleted DDGS would be easier to handle for shippers. Adding DDGS to finished feed can result in poorer pellet quality and/or decreased through-put of pelleting machine. l Syrup balls Generally, not related to reduced nutrition value. If re-grinding required, adds cost, reducing value. 10/8/12 Dr. Harold Tilstra 20
DDGS Relative Value Differs Depending on Species Feed Dollars/ ton Assumptions: Corn $2.00 / bu SBM $175.00 / ton Urea $360.00 / ton Non-ruminant diets corn/sbm Ruminant diets typical diets with competing by-products. Dairy Lactation $114.24 Poultry Finisher $100.09 Layer Diet $104.66 Swine G-F Diet $96.34 Beef Feedlot $108.00 10/8/12 Dr. Harold Tilstra 21
DDGS: USDA Reported Prices vs. Theoretical Nutritional Value 250.00 (Sparks Study funded by Land O Lakes, 2003) 200.00 150.00 $/Ton 100.00 50.00 0.00 Jan-89 May-89 Sep-89 Jan-90 May-90 Sep-90 Jan-91 May-91 Sep-91 Jan-92 May-92 Sep-92 Jan-93 May-93 Sep-93 Jan-94 May-94 Sep-94 Jan-95 May-95 Sep-95 Jan-96 May-96 Sep-96 Jan-97 May-97 Sep-97 Jan-98 May-98 Sep-98 Jan-99 May-99 Sep-99 Jan-00 May-00 Sep-00 Jan-01 May-01 Sep-01 Jan-02 May-02 Sep-02 Jan-03 May-03 DDGS Reported Prices (IL Points) Iowa State 9/93: Dairy W SOLU Tjardes & Wright: Beef Kaiser: Dairy Value Grant: Dairy, w/out Solubles (Based on OH St.) Shurson: Swine, w/ Solubles 10/8/12 Dr. Harold Tilstra 22
Value of By-Products for Beef Cost DM% NEg CP% Ratio Corn per bushel $3.05 88.0 66 9.5 Hi Pro Soybean Meal per ton $320 89.0 65 53.4 25% Feed Grade Urea per ton $490 99.0 0 286 75% 100% DM Maximum Value per Ton, delivered NEg Energy Protein Total Commodity DM % Mcal/cwt CP % Value/ton Value/ton Value/ton Corn Screenings 86 52 9.5 $67 $21 $88 Corn Gluten Feed, Dry 90 63 20 $85 $47 $132 Corn Gluten Feed, Wet 40 63 20 $38 $21 $59 Cottonseed, Whole 91 72 23 $98 $54 $153 Distillers Grains, Dry 88 66 28 $87 $64 $151 Distillers Grains, Wet 30 66 30 $30 $23 $53 Distillers Syrup 30 80 30 $36 $23 $59 10/8/12 Dr. Harold Tilstra 23
Value of Using 200 lb Per Ton of Golden DDGS in Swine Feed (~63% available lysine in DDGS) Ingredient Prices $/ton Corn $ 108.89 $ 3.05 Hi-Pro Soybean Meal $ 320.00 Dicalcium Phosphate, 18.5% $ 380.00 DDGS (Golden) $ 140.00 Limestone $ 65.00 Savings from using 200 lb DDGS $ 0.17 /ton Break-Even Price for DDGS $ 141.65 /ton DDGS 10/8/12 Dr. Harold Tilstra 24
Value of Using 200 lb Per Ton of Golden DDGS in Swine Feed (~90% available lysine in DDGS) Ingredient Prices $/ton Corn $ 108.89 $ 3.05 Hi-Pro Soybean Meal $ 320.00 Dicalcium Phosphate, 18.5% $ 380.00 DDGS (Golden) $ 140.00 Limestone $ 65.00 Savings from using 200 lb DDGS $ 1.22 /ton Break-Even Price for DDGS $ 152.21 /ton DDGS 10/8/12 Dr. Harold Tilstra 25
DDGS: other factors. In poultry: l 10% DDGS in diet maintains performance of layers, broilers, and turkeys. l Can be used to produce darker yellow yolks l Can be used to produce a yellowish fat and possibly breast meat (?) 10/8/12 Dr. Harold Tilstra 26
DDGS: other factors. In swine: l 10% DDGS in diet in grow/ finish and up to 40% of sow gestation diets. l See less use in nursery and lactation diets l Many producers report a gut health benefit 10/8/12 Dr. Harold Tilstra 27
DDGS: other factors. In beef cattle: l Up to 15% DDGS in diet competes with other protein sources in value. l Over 15% DDGS in diet competes with other energy sources in value. l Reduces incidence of acidosis and associated problems. 10/8/12 Dr. Harold Tilstra 28
DDGS: other factors. In dairy cattle: l Excellent protein source l High by-pass protein. l Replaces corn & soybean meal, not forage. l Need to balance lysine. l Reduces incidence of acidosis and related problems. 10/8/12 Dr. Harold Tilstra 29
Thank You 10/8/12 Dr. Harold Tilstra 30