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Higher ethanol co-product exports expected

According to Dan Keefe, U.S. Grains Council manager of international operations for distiller’s dried grains with solubles, U.S. DDGS exports are likely to recover in January, rebounding from a sluggish fourth quarter.

Freight costs had been the primary factor in causing a loss of export sales of U.S. DDGS, a co-product of U.S. ethanol production.

“What we saw occur was bulk freight costs drop substantially relative to container freight costs,” said Keefe. “Container freight is usually the most common transport mode for DDGS and lower bulk freight costs made corn cheaper on a delivered basis, causing DDGS exports to suffer.

“However, we are starting to see bulk freight costs and container freight costs getting in line with one another, minimizing the price gap making exported products using containers more attractive.”

Keefe said the Council has endorsed the use of DDGS through feeding trials, educational and promotional efforts around the world, especially in the last five years as imports of U.S. DDGS have doubled year after year.

Keefe said the Council’s recent International Distillers Grains Conference in Indianapolis, Ind., connected U.S. sellers and overseas buyers of the co-product.

Although direct sales from the 2008 conference will take several months to develop, several business relationships and negotiations have already begun including the connection of FoodChina Company with two U.S. DDGS suppliers.

Managed by Yang, Chao-Kai, FoodChina has entered into negotiations with intentions of importing approximately 5,000 metric tons of U.S. DDGS by the end of the year. “Talking with suppliers face-to-face has helped solve some headaches on specific issues directly,” said Yang. “The IDGC put our company in contact with many reliable U.S. DDGS suppliers I plan on working with in the near future.”

National Animal Industry Foundation in Taiwan has also agreed to work with U.S. DDGS suppliers in order to increase its hog and poultry productivity in a cost effective manner. Keefe reinforced that despite the high freight costs, DDGS exports in 2008 have been “phenomenal” and expects stronger sales in 2009. So far in 2008, 3.3 million metric tons of U.S. DDGS have penetrated the overseas marketplace compare to a total of 2.4 million tons in 2007.

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