USA: Explaining fluctuations in prices of distiller’s grains

Distiller’s dried grains (DDGs) are a co-product of dry-milled ethanol production. U.S. ethanol plants have the capacity to produce more than 17 billion gallons of ethanol and 35 million tons of DDG (Ag MRC). DDGs from corn contain, on average, 30 percent protein, 10 percent fat, and 7 percent fiber. Approximately 18 pounds of DDGs (10 percent moisture content) are produced from one bushel of corn. Because their protein content is higher than that of corn, DDGs can be substituted for corn and soybean meal in livestock diets. More information pertaining to the substitution of DDG for corn and soybean meal in the U.S. can be found in Hoffman and Baker (2011). Given the substitutability of DDGs for corn and soybean meal; we would expect DDG prices to be significantly related to these feedstuffs. To help explain fluctuations in DDG prices, this article examines the relationship between DDG prices, and corn and soybean meal prices. Price data used below were obtained from monthly ...