Grainnet

This article is taken from the Oct. 25 U.S. Grains Council Global Update Newsletter.

Scott Richman, senior vice president of Informa Economics discussed the U.S. ethanol and distillers’ dried grains (DDG) situation and outlook with nearly 600 participants from 17 different countries at the first-ever International Distillers Grains Conference in Schaumburg, IL, sponsored by the U.S. Grains Council in partnership with BBI International.

Richman said 2007 has been an interesting year for the renewable energy industry, specifically ethanol.

Despite forecasts projecting a decline in ethanol production in the next five years, Informa is predicting a dramatic increase, which intensifies export opportunities for DDG.

According to the Department of Energy, U.S. ethanol facilities produced 4,855 million gallons of ethanol in 2006.

Informa expects the 2007 volume to total 6,440 million gallons.

Next year the estimate is 9,270 million gallons and 12,360 million gallons in 2009.

In 2008, Richman predicts an excess of 62 million pounds of distillers’ grains will be available for domestic and international usage.

Richman noted that a forecast is just a prediction based on current market indicators, but said many factors come into play that dictate overall supply and demand for ethanol and its co-products.

“The future supply and demand over the long term depends a great deal on policy and regulatory issues,” said Richman.

“Will an energy bill be passed by Congress and signed by the president?

"Will it contain a renewable or alternative fuels standard in line with the senate bill?

"Along with policy, we have to identify and improve existing transportation and infrastructure issues to move forward.”

Along with a growth in overall U.S. ethanol production, Richman said over intermediate-tolong term, DDG exports will rise significantly, as production nears potential market size and ethanol facilities are built in position to export.

Richman attributes much of the current growth in DDG exports to work of USGC programs, including livestock international feeding trials and seminars.

He said the ethanol industry will have to,rely on the Council to continue developing global markets in the future.

“Further development of foreign market understanding of product usage and value and government approval and registration will be one of the long-term constraints confronting DDG export potential, but the U.S. Grains Council will be there to help educate importers and regulators,” he said.

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