Squeezing the Most Out of Corn

Squeezing the Most Out of Corn

U.S. farmers and processors are gearing up for another big year of corn exports — in high-value solid and liquid form.

On the liquid side is the surge in ethanol as fuel-dependent countries embrace cleaner-burning alternatives to gasoline. On the solid front is a specialized form called dried distillers grains, or DDGs, a byproduct of the ethanol-making process that is a high-demand animal feed.

It’s a virtual modern-day, international version of frontier farming in America, when inland grain farmers would haul some of their crops to regional mills to grind into flour or other products that could be more easily kept and marketed. In some ways, the DDG exports resemble those milled products.

It also harkens back to a time when mountains and distance prevented farmers from easily shipping grain to eastern consumer markets. Instead, they distilled corn into whiskey for easier shipping of compact loads.

Today, the push to make a cleaner-burning fuel for motor vehicles — or at least a fuel that’s home-grown instead of from oil imports — is giving farmers across the Midwest and other grain regions a new way to tap world markets.

In 2010, 204 U.S. ethanol plants produced 13.2 billion gallons of the low-emission fuel, which can be blended with gasoline to stretch the U.S. motor fuel supply and to burn cleaner. That’s up eightfold from the 1.8 billion gallons produced by 56 plants in 2000, according to the Renewable Fuels Association.

That’s also a lot of new business for the freight transportation system. “We send around 75 percent of our product by rail. The rest is barge and truck shipments,” said Matt Hartwig, the RFA’s communications director.

And more of it is moving abroad. The U.S. shipped a record 84 million gallons of ethanol to foreign buyers in March, bringing the total for the first three months of the year to 201 million, the RFA said. That’s about 6 percent of all U.S. ethanol production and “half the amount exported in all of 2010 and almost twice the amount exported in 2009,” it said.

Some industry estimates see ethanol exports topping 700 million gallons this year, up from 400 million in 2010.

DDG exports of 689,098 metric tons in March were 11 percent higher than in February but down 2 percent from March 2010. Still, for the first two months of 2011, those exports — 1.334 million tons — were running 14 percent ahead of a year earlier, so the March numbers put the total at more than 2 million tons.

The rate of growth is all the more astounding, considering DDG exports topped the 1 million-ton mark in a year for the first time just five years ago, in 2005.

DDGs aren’t the only feed ingredients produced by the ethanol process. It also cranks out corn gluten feed and corn gluten meal, and the various byproducts are fed to cattle, poultry, pigs and fish worldwide.

More is coming. The U.S. Department of Agriculture expects corn output for the current crop marketing year — planted in spring, harvested next fall and sold over the next year — to reach a record 13.5 billion bushels. “Corn use for ethanol is projected up 50 million bushels,” the USDA said.

The numbers can add up quickly. The U.S. Grains Council, an export-promoting industry group, said a single bushel of corn can yield about 2.8 gallons of ethanol and 17 pounds of DDGs. Put another way, one gallon of ethanol distilled from corn leaves about 7 pounds of the high-value feed grain.

DDGs often move by railcar across North America. The largest export market in March was Mexico, with Canada another major destination.

Overseas buyers often receive their DDGs in marine containers, after they are transloaded from rail hopper cars into the ocean boxes. China and South Korea were big buyers in March, along with Vietnam.

Weeks of flooding have curbed ship loadings around the Gulf of Mexico this spring, crimping exports of bulk commodities. But containerized DDGs can move out of western or eastern ports, or in the case of feed shipments, move overland to Mexico and Canada.

And how does flooding affect the liquid corn fuel? “Certainly, the flood waters have had some impact on the movement of ethanol,” Hartwig said, “but nothing that has greatly disrupted availability of the product. A great deal of investment has been made in recent years to beef up ethanol storage and distribution infrastructure so that issues like we are seeing with the floods are not too disruptive to the market.”

Contact John D. Boyd at jboyd@joc.com.