It was a great year for crop production in Peoria County. Most soybeans seem to be averaging between 50 and 60 bushels per acre, and corn is over 200 bushels per acre. The Illinois Ag Statistics Service will have the final yield tallies for all of the counties in Illinois this winter. Last year, only one county in the state averaged more than 200 bushels per acre, and that was Woodford County, which averaged 204 bushels. Peoria averaged 188 bushels, Tazewell averaged 191 and Stark came in with a 194 bushel average in 2007. I would expect to see several “2”s in front of the corn averages for counties in the Peoria area in 2008.
We needed another large corn crop to continue feeding the ethanol industry. After last year’s record-breaking 13-billion-bushel corn crop in the U.S., farmers considerably scaled back on acres planted to corn this past spring, dropping nearly 10 million acres. Farmers went back to planting more soybeans as prices received for soybeans rose considerably and corn input costs climbed.
The U.S. Grains Council’s International Distillers Grains Conference was held in Indianapolis earlier this fall. It was announced that ethanol production increased in 2008 by nearly three billion gallons to 9.3 billion gallons. Informa Economics projects that ethanol production will reach 11.9 billion gallons in 2009. It seems like just yesterday the ethanol industry was only squeezing one billion gallons of ethanol out of the nation’s corn supply.
Along with gas prices, ethanol prices have also decreased. They seem to follow in step with the petroleum industry since they are competing in the same market. Will lower ethanol prices hurt ethanol manufacturers? Although they are receiving a lower price for ethanol, a major input cost has decreased significantly. Corn, the primary ingredient of ethanol, has seen its price cut in half since the summer highs.
There is another big factor that is helping the ethanol industry, a factor that seems to get little attention when efficiency is factored into the ethanol production process. DDGSs, or Dried Distillers Grain with Solubles, are a huge co-product in ethanol production. With each 56-pound bushel of corn, 2.8 gallons of ethanol is made, along with 15 pounds of DDGSs.
As a result of the growth in the U.S. ethanol industry, there were nearly 23 million tons of DDGSs produced for the 2007-08 marketing year. That is nearly a 50-percent increase from the prior year. There may be an additional 50-percent gain of DDGSs in the current marketing year, which began October 1st.
At the Grains Council conference, USGC President Ken Bobbie stated that DDGSs were made a priority in 2006, and since then, DDGS exports have exceeded two million metric tons. (A metric ton is approximately 2,200 pounds.)
Where are DDGSs being exported? Mexico currently holds the number-one spot, as our neighbors to the south imported 708,000 metric tons in 2007, and nearly 700,000 metric tons during the first eight months of 2008. Canada follows in second place, importing 317,000 tons last year. Poultry is Mexico’s strongest sector in demand for DDGSs. They import approximately one million metric tons for their chicken industry, followed by beef, dairy and the swine industry. iBi