In Panama, Members Can Take Command of the Export Future

Beyond seeing the transformation of the Panama Canal or hearing the latest developments in key export markets, the U.S. Grains Council’s February meeting offers attendees an exceptional opportunity to put their mark on Council programs.

This meeting will reflect the unique conjunction between external changes like the Canal expansion and internal changes like the Council’s new strategic plan.
“We’ve long been building demand, but we are realizing that the pipeline of grain trade is constricted by government policies all over the world,” commented Ron Gray, USGC treasurer and an Illinois corn grower who worked on the strategic plan.

“We want to develop an approach to removing those barriers, not only on a regional level but also country by country,” he said. “That means gaining a deeper understanding of current trade restrictions and identifying, pursuing and maximizing opportunities to open these markets.”

Much of this development will take place in the Advisory Team (A-Team) meetings where Council members work directly with the Council’s professional staff to consider alternatives and tactics – an effort that ultimately drives the Council’s Unified Export Strategy (UES).

“A-Team meetings are critical,” said Tom Sleight, USGC vice president of operations and membership. “This year, as we look at adapting the UES not just to new market challenges but to an updated Council strategic approach, the stakes are higher than usual. This really is about taking command of our export future.”

He urged as many members as possible to participate: “This is no time to sit on the sidelines. If you have ideas about how our exports should develop, you need to share them in Panama.”

In fact, meeting materials will be available soon so members can review information that will highlight this meeting’s focus and direction. For more information about this meeting, go to www.grains.org.    
Export Competition Updates: Ukraine, Kazakhstan, South Africa
Ukraine exported just over 2 million metric tons of grain in December, of which about 1.6 million metric tons (63 million bushels) was corn, according to U.S. Grains Council sources. The leading corn importers were Egypt, 252,000 tons; Spain, 350,000 tons; and Iran, 160,000 tons. Egypt, Tunisia and Spain took most of Ukraine’s wheat shipments.

Ukraine’s winter crops are reported to be in poor condition due to the dry fall and winter, which could mean a smaller 2012 harvest despite an increase in planted acres. If that happens and Ukraine sees a return of moisture, it could mean even larger plantings of corn this spring, according to Cary Sifferath, USGC regional director.

Kazakhstan reportedly increased its area planted to grains by one-third last year and had a very good crop, increasing wheat output by 4 million tons. Although Kazakhstan’s lack of access to export markets poses a challenge, the country will only consume 7 million tons of its 21 million tons of grain production. Exports typically go to Russia, by train to Black Sea ports, or across the Caspian Sea to Turkey, but Russian and Ukrainian ports are already overcrowded with their own shipments.

Some Kazakh officials say it will take a year or two to work off the supply, and Kazakh farmers are being told to grow whatever they like as long as it is not wheat.
South Africa is now importing some corn as a result of over-extending its export commitments for both yellow and white corn. Domestic prices have risen higher than competing world prices, and yellow corn shipments, outside of neighboring Sub-Saharan countries, have stopped.

South Africa continues to ship white corn to Mexico, however, because of contract obligations established last summer. Mexico has received just under 1 million tons of white corn (39 million bushels) in South Africa’s current crop year.
Low-oil DDGS Becoming Increasingly Available
Ethanol plants in the United States, which also produce the feed ingredient distiller’s dried grains with solubles (DDGS), continue to upgrade equipment to extract non-food grade corn oil during the ethanol production process.

While regular DDGS may contain 10-15 percent oil, the low-oil variety contains much less and has different characteristics and feeding values than regular DDGS.
Of the roughly 200 corn dry mills that produce ethanol, about 90 have oil extraction capabilities, and 105 plants will by this summer.

“On a production basis, about 40 percent of U.S. DDGS produced today is low-oil, and 58 percent will be low-oil by this summer,” said Randy Ives of Gavilon, LLC, and U.S. Grains Council Value-Added Advisory Team Leader.

Ives explained that low-oil DDGS has higher crude protein and higher levels of amino acids. The concentrated amino acid profile is positive for monogastric animals like poultry and swine, while dairy animals may be able to utilize more product thanks to the lower level of fat in low-oil DDGS.

While its appearance is the same as regular DDGS, the dried, low-oil product has improved flowability.

The Council noted research is underway to help quantify the characteristics of low-oil DDGS. Results will become available later in 2012.

While buyers and sellers often add the protein and fat numbers together as part of a sales contract, that may need to change going forward.

“This makes asking questions and communicating important,” Ives said. “What we really need to do is go back to requesting specific protein and fat levels and then build in a discount schedule to make up for slight differences in the final shipment.”

Low-oil DDGS is a great product that has different values for different buyers, depending on the end use, Ives commented. “It’s important for buyers to ask questions and hold suppliers accountable,” he added.

Why extract oil?

Just five years ago, few ethanol plants had the ability to extract non-food grade corn oil because the equipment was expensive, and the oil had little value. Now, however, the value of non-food grade corn oil has increased, and plants can extract the oil more efficiently due to improved emulsifiers and centrifuge technology, lowering the payback on oil extraction equipment to as little as six months.

For example, an ethanol plant using 16 million bushels of corn to produce 40 million gallons of ethanol can also produce 135,000 tons of low-oil DDGS and 8 to 12 million pounds of oil.

“With such a positive return, the adoption rate has been incredible,” Ives said.

Quelle: USGC