US research indicates DDGS helps maximise livestock profitability

With meat prices higher and corn and soy prices more stable, some livestock producers may be able to increase their profitability by replacing corn and soymeal with distillers' grains, according to a US study.

O'Brien said animal scientists have demonstrated the effective use of DDGS in livestock rations, as well as the limitations which vary from one specie to another. Those limits are estimated at 20% for dry DDGS for cattle, 10-15% for dairy cattle, and 10% for hogs and poultry. In the past year, 39% of the domestically used DDGS were used for dairy, 38% for beef cattle, 15% in swine rations and 7% in poultry rations.

O'Brien quoted a study by Argonne National Laboratory that one pound of DDGS can displace 1.25 pounds of corn for beef cattle; one pound of DDGS can displace 0.51 pounds of corn and 0.58 pounds of soymeal in dairy cattle; and one pound of DDGS can displace 0.95 pounds of corn and 0.095 pounds of soymeal in swine. While the nutrition may be balanced and the limits may not be exceeded, what about the cost?

Since livestock feeders will develop rations to create the most revenue over feed costs, most will try to maximise output of livestock products at an economical cost, and will continually try to balance the cost of a variety of feedstuffs. The Kansas State economist said since January 2007, per pound cost of corn and DDGS have been nearly equal, but DDGS has been priced less since July 2009. Soymeal prices per pound have been higher than corn or DDGS from early 2007 into early 2010.

Specifically, Iowa DDGS prices have been trending lower relative to both corn and bean meal for the past three years. In early 2007, DDGS were 50-60% of corn prices, and then they dropped to 17-18% in September 2009, and have risen to 31-36%. Relative to soymeal prices, DDGS has been 67% of meal prices since September 2009 and currently are at 38%. In Nebraska, wet distiller's grains were compared to corn and soymeal prices, and were much lower in price than the DDGS.

O'Brien concluded that DDGS prices in both Iowa and Kansas are less than corn or soymeal and have been since 2007, and are near the low in relationship to soymeal prices. He said that is providing an incentive to livestock producers in an effort to maximise profits.