United States 

Department 

of Agriculture 

www.ers.usda.gov 

 A Report from the Economic Research Service

Market Issues and Prospects 

for U.S. Distillers’ Grains 

Supply, Use, and Price Relationships

Abstract

Growth in corn dry-mill ethanol production has surged in the past several years, simultaneously creating a coproduct—distillers’ grains (DDGS). Many in the U.S. feed 

industry were concerned about the size of this new feed source and whether it could 

be used entirely by the feed industry, but they also worried about the price discovery 

process for the product. The authors of this report provide a transparent methodology 

to estimate U.S. supply and consumption of DDGS. Potential domestic and export use 

of U.S. DDGS exceeds current production and is likely to exceed future production as 

ethanol production continues to grow. The authors identify the DDGS price discovery 

process along with the price relationships of distillers’ grains, corn, and soybean meal. 

Keywords 

Distillers’ dried grains with solubles (DDGS), dry-mill ethanol production, wet-mill 

ethanol production, feed use, exports, potential DDGS feed consumption, distillers’ 

grain price discovery, and distillers’ grain price relationships.

Acknowledgments 

The authors gratefully acknowledge the input and review comments of Paul Westcott, Kenneth Mathews, Janet Perry, Greg Pompelli, and Molly Garber of USDA’s 

Economic Research Service (ERS); Jerry Norton of USDA’s World Agricultural 

Outlook Board; Marina Denicoff of USDA’s Agricultural Marketing Service; Peter 

Riley of USDA’s Farm Service Agency; Seth Meyer of the University of Missouri at 

Columbia; Robert Wisner of Iowa State University at Ames; and Charles Staff of the 

Distillers Grain Technology Council at Louisville, Kentucky. Editorial guidance was 

provided by Angela Anderson of ERS. 

Linwood Hoffman, lhoffman@ers.usda.gov

Allen Baker, albaker@ers.usda.gov

FDS-10k-01

December 2010

Contents

Approved by USDA’s 

World Agricultural 

Outlook Board

Introduction.............................. 2

Estimating U.S. Distillers’ 

Grain Supply and Use ......... 4

Total Supply of U.S. Distillers’ 

Grains Accelerates Over 

the Past 4 Years................... 6

Consumption of Distillers’ 

Grains Increases, Export 

Share Expands.................. 14

Potential U.S. Feed 

Consumption Exceeds 

Future Supply of DDGS..... 17

Price Discovery, Risk 

Management, and Price 

Relationships..................... 19

Summary and 

Conclusions....................... 26

References ............................ 28

Appendix................................ 33
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Growth in U.S. ethanol production seems certain for the near- to mid-term, 

stimulated, in part, by longer run energy prices and the 2005 and 2007 

Energy Acts.1 In 2005/06, 4.5 billion gallons of ethanol were produced. 

By 2008/09, production more than doubled to 10.2 billion gallons, with a 

corresponding increase in distillers’ grains (DDGS),2 a coproduct of ethanol 

production that can be used as a livestock feed.3 Prices for corn, a feedstock 

for both ethanol and livestock feed, and other feed-related products have 

risen, causing concern for the financial viability of livestock and poultry 

producers. The use of distillers’ grains continues to expand and partially 

replace corn and soybean meal in the U.S. feed market. DDGS can supply 

both energy and protein in livestock and poultry rations, but use may be 

limited due to nutritional or price considerations. Prices of DDGS relative 

to alternative feed ingredients would need to adjust to reflect its nutrient 

content. As the industry expands, producers may wonder about the price relationships between DDGS, corn, and soybean meal. 

Distillers’ grains have long been substituted for corn and soybean meal, but 

as the market expands, questions remain over the substitution rate of DDGS 

for energy (corn) and protein (soybean meal) in livestock and poultry rations. 

As the market expands, industry analysts may be concerned about:

•	The relative balance between supply and disappearance, regardless of 

increased DDGS feeding familiarity by feeders and the improvement of 

DDGS product quality (Cooper, 2006); 

•	The supply of U.S. DDGS exceeding feed-use potential; 

•	The potential use of DDGS for domestic or export purposes; and 

•	Current or future U.S. production of DDGS exceeding potential uses. 

The growth in this new feed market reinforces the need for a transparent 

methodology to estimate supply and consumption for the U.S. distillers’ 

grain market. Currently, production estimates are made by the U.S. Census 

Bureau (U.S. Department of Commerce (a)), the Renewable Fuels Association (Ethanol Industry Outlook for 2008, 2009, and 2010), and other 

research organizations. The U.S. Census Bureau began providing estimates 

of distillers’ grain production in early 2007. These production estimates were 

considered incomplete by many Government and industry analysts. Other 

production estimates lack transparency and comparability. So, until the U.S. 

Census Bureau estimates are more complete and reflect ethanol production 

data, a transparent estimation method would serve both the Government 

and the industry, offering estimates for the production and consumption of 

distillers’ grains. Data on ethanol coproduct feed use (distillers’ grains, corn 

gluten feed, and corn gluten meal) will be valuable for those conducting 

analytical analyses of the U.S. feed sector (e.g., Ferris, 2006). 

1 In addition to Government policies and longer run energy prices, 

the growth rate of the ethanol market 

depends, in part, on feedstock costs, 

changes in technology, and changes in 

Government incentives.

2 The term “distillers’ grains” refers 

to coproducts generated by dry-mill 

ethanol plants, including distillers’ wet 

grains (DWG), distillers’ dried grains 

(DDG), distillers’ wet grains with solubles (DWGS), distillers’ dried grains 

with solubles (DDGS), and condensed 

distillers’ solubles (CDS). Unless otherwise specified for the remainder of 

this report, the term distillers’ grains 

will mean distillers’ dried grains with 

solubles (DDGS).

3 Ethanol production numbers are expressed in terms of corn’s SeptemberAugust marketing year (U.S. Energy 

Information Administration, 2010).

Introduction
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This report details the development of the U.S. distillers’ grains market and 

provides a transparent methodology (see “Appendix: Estimation of U.S. 

Distillers’ Grains Supply and Use”) to estimate supply and use of distillers’ 

grains. The authors of this study examined price discovery and risk management of distillers’ grains along with the price relationships of DDGS, corn, 

and soybean meal. 
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The surge in ethanol production over the last several years has been paralleled by a surge in the production of distillers’ grains. Currently, consistent data do not exist to measure this rapidly growing segment of the feed 

industry. We offer a methodology that produces a transparent source of 

information to gauge the supply and use of distillers’ grains (table 1). For 

production, we estimated the amount of corn used by beverage distilleries 

and the resulting amount of distillers’ grains produced from this process. 

We also estimated the amount of corn used by dry-mill ethanol plants and 

the resulting distillers’ grains. We then added imports of distillers’ grains 

based on trade data from the U.S. Department of Commerce (b) and from the 

Economic Research Service’s Feed Grains Database (2010). By combining 

these components, we estimated the total supply of distillers’ grains. From 

this supply, we subtracted exports based on trade data from the same two 

sources to arrive at feed and residual use. Details of this estimation procedure 

can be found in the appendix. 

Estimating U.S. Distillers’ Grain 

Supply and Use
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Table 1Supply and disappearance of corn-based distillers' grains (DDGS) 

Column 1 Column 2 Column 3 Column 4 Column 5

Supply Disappearance

Production Imports Total Feed and residual Exports Total

Distillers’ spent grains Brewers’ and Brewers’ and

Marketing Distillers’ spent grains from dry mill plants distillers’ dregs distillers’ dregsyear from beverage distilleries producing ethanol1 Total and wastes2,3 and wastes2,3

Percent Percent Percent Percent Percent Percent

Million of total Million of total Million of total Million of total Million Million of total Million of total Million

metric tons production metric tons production metric tons supply metric tons supply metric tons metric tons disappearance metric tons disappearance metric tons

1992/93 0.8 40 1.2 60 2.0 97 0.1 3 2.1 2.1 100 0.0 0 2.1

1993/94 0.6 27 1.6 73 2.2 96 0.1 4 2.3 2.1 92 0.2 8 2.3

1994/95 0.5 35 1.0 65 1.5 94 0.1 6 1.6 0.9 55 0.7 45 1.6

1995/96 0.8 77 0.2 23 1.0 93 0.1 7 1.1 0.5 41 0.6 59 1.1

1996/97 0.8 64 0.5 36 1.3 91 0.1 9 1.4 0.8 53 0.7 47 1.4

1997/98 0.9 52 0.8 48 1.6 94 0.1 6 1.7 1.1 65 0.6 35 1.7

1998/99 0.8 47 1.0 53 1.8 93 0.1 7 1.9 1.2 62 0.7 38 1.9

1999/00 0.9 51 0.9 49 1.7 92 0.1 8 1.9 1.1 59 0.8 41 1.9

2000/01 0.9 36 1.6 64 2.5 95 0.1 5 2.6 1.8 70 0.8 30 2.6

2001/02 0.9 31 2.0 69 2.9 96 0.1 4 3.0 2.1 72 0.9 28 3.0

2002/03 0.9 17 4.3 83 5.2 98 0.1 2 5.3 4.6 86 0.8 14 5.3

2003/04 0.9 13 6.1 87 7.0 99 0.1 1 7.1 6.4 90 0.7 10 7.1

2004/05 0.9 11 7.3 89 8.2 99 0.1 1 8.3 7.4 88 1.0 12 8.3

2005/06 0.9 9 9.5 91 10.4 99 0.1 1 10.5 9.3 88 1.2 12 10.5

2006/07 0.9 7 13.2 93 14.1 99 0.2 1 14.3 12.5 88 1.8 12 14.3

2007/08 0.9 4 20.5 96 21.4 100 0.1 0 21.5 17.6 82 3.9 18 21.5

2008/09 0.9 3 25.6 97 26.5 99 0.3 1 26.8 21.8 81 5.0 19 26.8

2009/104 0.9 3 32.0 97 32.9 99 0.4 1 33.3 25.0 75 8.3 25 33.3

2010/114 0.9 3 33.2 97 34.1 99 0.5 1 34.6 25.9 75 8.7 25 34.6

1Does not account for noncorn spent grains. 2Assumes brewers’ spent grains are minor. 3May contain noncorn brewers’ and distillers’ dregs and wastes.4Estimates are from the September 10, 2010 World Agricultural Supply and Demand Estimates and Feed Grains Database. 

Source: Distillers’ spent grains from beverage distilleries are from U.S. Department of the Treasury, Alcohol and Tobacco Tax and Trade Bureau; monthly statistical reports, 1992-2010, http://www.ttb.gov/statistics/alcohol_stats.shtml#alcoholfuel; distillers’ spent grains from dry-mill ethanol plants are from table 3 of this report (corn used for dry-mill ethanol plants multiplied times 17.5 pounds of distillers’ grains per bushel of corn processed for 1992/93 through 2006/07 and 17.4 pounds of distillers’ grains per bushel of corn processed for 2007/08 through 2010/11); imports and exports are taken from USDA, Economic Research Service, Feed Grains Database or U.S. Department of Commerce (b).
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The estimated supply of U.S. distillers’ grains is expected to total 33.3 

million metric tons for 2009/10, more than four times that in 2003/04 (see 

table 1) (see also, “Appendix: Estimation of U.S. Distillers’ Grains Supply 

and Use” for an explanation of the methodology that provided these estimates.) Most distillers’ grains come from dry-mill fuel ethanol production 

and a lesser amount comes from dry-mill beverage distilleries. Imports are a 

minor segment of the market.4 Most distillers’ grains are derived from corn 

with smaller amounts coming from sorghum and wheat. Changes in dry-mill 

ethanol technology may further alter the composition of distillers’ grains. 

Growth in distillers’ grain production will continue to follow corn use for 

ethanol production, but both are expected to slow compared with the rapid 

expansion over the past several years (USDA, February 2010). 

Long History of Using DDGS as a Livestock Feed 

Distillers’ grains, a byproduct of dry-mill beverage and ethanol fuel production, have long been fed to livestock. In the late 19th century, the alcoholic 

beverage distilling industry pioneered the act of recovering nutrients from 

grains that had undergone fermentation (Schingoethe, 2004). Distillers’ 

grains are the spent coproducts of the fermentation and distillation process. 

These distillers’ grains were recognized as an excellent feed for dairy cattle.5

Ethyl alcohol was critical for the manufacture of munitions during World War 

II, and the beverage industry (dry-mills) met most of this demand (Weiss et 

al., 2007). Since then, several factors have contributed to the expansion of 

U.S. ethanol fuel production from both wet- and dry-mill processing plants:

•	The world oil crisis in the 1970s; 

•	State and Federal subsidies for ethanol production; 

•	Clean air legislation in the early 1990s; 

•	Ethanol’s use as an octane enhancer;

•	The replacement of methyl tertiary butyl ether (MTBE); and

•	Rising energy costs and mandates for biofuel use in the Energy Acts of 

2005 and 2007. 

Corn Is Main Feedstock for Ethanol Production 

Corn is the primary grain used in wet- and dry-mill ethanol plants 

(accounting for about 98 percent of all ethanol feedstocks) because its starch 

content is highly fermentable. Some ethanol plants use sorghum or a blend 

of corn with barley, wheat, or sorghum. Other plants may use excess whey, 

beverage, or sugar wastes as a feedstock. The decision to use a particular 

feedstock depends upon the geographical location, costs, and availability of 

other feedstocks relative to corn. In the future, biomass from other sources 

(e.g., grasses, wood pulp, or crop residue) may contribute more feedstock for 

ethanol production (Coyle, 2010). 

4 Most of these imports originated 

in Canada and their feedstock is unknown, perhaps consisting of wheat, 

barley, or corn. Since the quantity is 

small, the concern over the feedstock 

is less important.

5 Brewers’ grains, a byproduct of beer 

manufacturing, also has a long history 

of use in the livestock feed market. 

Currently, the quantities of these beermanufacturing byproducts are dwarfed 

in comparison with the quantity of 

distillers’ spent grains being produced. 

Most of the brewers’ grains are reportedly fed in the wet form to nearby 

livestock feeders (Ash, p. 91). 

Total Supply of U.S. Distillers’ Grains 

Accelerates Over the Past 4 Years
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Different Feed Coproducts 

from Wet Versus Dry Processes 

Grain-based fuel ethanol production results from two main processes—wet 

and dry corn milling. Although ethanol production changes corn’s feed value 

by removing most of the starch content, the remaining ethanol coproduct

retains the following nutrients: protein, minerals, fat, fiber, and vitamins. 

Because ethanol production processes differ, the coproducts also differ. For 

example, wet corn mills produce corn gluten feed and corn gluten meal. 

Dry corn mills produce distillers’ spent grains. More recently, fractionation 

technologies used by some plants has begun to change the composition of 

distillers’ spent grains from the dry-mill process.6 

Wet milling—The wet-milling process removes the maximum amount 

of starch from the kernel by first adding water to the grain and allowing 

it to steep so the starch can be removed, along with the corn bran, corn 

gluten meal (protein), germ, and soluble components. Since this process 

separates the germ (from which corn oil is extracted), corn oil is one 

coproduct produced from the wet-milling process regardless of other products produced, including starch, high fructose corn syrup (HFCS), glucose/

dextrose, and/or ethanol. Feed byproducts from the wet process include corn 

gluten feed, corn gluten meal, and corn germ meal.7, 8 These coproducts 

can be fed to livestock in either wet or dry form. Corn gluten feed usually 

consists of corn bran, steeping liquid, and germ meal. One bushel of corn 

processed by a wet mill yields about 12.9 pounds of corn gluten feed and 3.1 

pounds of corn gluten meal (Watson, 1977), plus carbon dioxide, and about 

2.7 gallons of ethanol (Rendleman and Shapouri, 2007). The protein content 

of corn gluten feed is usually about 21 percent (as fed), while corn gluten 

meal’s protein content is around 60 percent (as fed).9 We estimate that 475.1 

million bushels of corn were used by corn wet mills to produce fuel ethanol 

during 2009/10 (table 2) (see also, “Appendix: Estimation of U.S. Distillers’ 

Grains Supply and Use” for an explanation of the methodology that provided 

these estimates). 

Dry milling—The dry milling process (mash distillation) cleans and grinds 

the grain to reduce the particle size; usually the entire corn kernel is used 

in fermentation. Corn is about two-thirds starch, which is converted into 

ethanol and carbon dioxide during the distillation and fermentation process. 

The remaining third consists of distillers’ grains. A bushel of corn processed 

into ethanol by dry mills produces approximately 17.5 pounds of distillers’ 

spent grains, carbon dioxide, and 2.7 gallons of ethanol. The nutrient content 

(protein, fat, minerals, and vitamins) of the spent grains increases by three 

times because prior to fermentation these nutrients represented only about a 

third of corn’s dry matter.10

While there are several different forms of distillers’ coproducts from drymill ethanol plants, most of the distillers’ spent grains are dried and sold as 

distillers’ dried grains with solubles (DDGS). The liquid removed from the 

mash is called thin stillage. Some of the thin stillage can be directed back 

to the cooking and distillation process to reduce the amount of fresh water 

required by the cooking and distillation process, and the remainder can be 

sold directly as high-moisture cattle feed or dehydrated to produce condensed 

distiller’s solubles (CDS). The residual solids (coarse grains fraction) are 

6 These fractionation technologies 

will be explained later in this report. 

See p.12, “Composition of Distillers’ 

Grains is Beginning to Change.”

7 Currently, USDA reports (Feed 

Grains Database, yearbook table 29) 

quantities of corn gluten feed and corn 

gluten meal that are produced when 

making starch, high fructose corn 

syrup, and dextrose. Estimates of corn 

gluten feed and corn gluten meal that 

are produced from wet-mill ethanol 

production were unavailable and thus 

not included in the quantities reported 

in table 29. Consequently, the quantity 

of wet-mill feed coproducts is underreported. New estimates of corn gluten 

feed and corn gluten meal produced 

from corn wet mills are made to 

account for this under-reporting and 

provided later in this report. 

8 For more information on the wet 

corn milling process and the feed 

coproducts produced, see Corn Wet 

Milled Feed Products, pp. 6-11, 

http://www.corn.org/wp-content/uploads/2009/12/Feed2006.pdf, (Corn 

Refiners Association, 2006); How 

Ethanol Is Made at http://www.ethanolrfa.org/resource/made/ (Renewable 

Fuels Association, 2010); or Feed 

Co-Products of the Corn Wet Milling Process at http://www.extension.

iastate.edu/Bioeconomy/Livestock/ 

(Weigle et al., 2004).

9 “As fed” or “as is basis” means that 

there is no adjustment for moisture 

content in comparison with dry matter 

basis where adjustments are made for 

moisture content. 

10 For more information on the dry 

mill process and the feed coproducts 

produced, see How Ethanol Is Made

at http://www.ethanolrfa.org/resource/

made/ (Renewable Fuels Association, 

2010) or Feed Co-Products of the Dry 

Corn Milling Process at http://www.

extension.iastate.edu/Bioeconomy/

Livestock/ (Weigel et al., 2004). 
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Table 2Estimation of U.S. corn use for wet-mill ethanol production 

Column 1 Column 2 Column 3 Column 4 Column 5 Column 6 Column 7 Column 8

Corn oil production Corn use Corn used to produce various wet-mill products

Total1 Adjusted for for wet-mill corn High fructose Glucose/ Sum of 

Crop year dry mill products2 oil production3 corn syrup dextrose Starch three products Ethanol

------------Thousand pounds------------ ------------------------------------------------------------------------------Million bushels---------------------------------------------------------

1992/93 1,866,203 1,834,478 1,118.6 414.8 214.3 217.6 846.7 271.91993/94 1,906,233 1,873,827 1,142.6 441.0 219.2 224.9 885.1 257.51994/95 2,201,751 2,164,321 1,319.7 458.6 224.5 230.4 913.6 406.11995/96 2,155,459 2,118,816 1,292.0 472.9 227.3 226.1 926.3 365.71996/97 2,223,434 2,185,636 1,332.7 492.3 232.9 238.3 963.4 369.31997/98 2,328,157 2,288,578 1,395.5 528.0 236.5 248.1 1,012.6 382.91998/99 2,366,952 2,326,714 1,418.7 544.0 226.3 242.5 1,012.8 405.91999/00 2,491,224 2,448,873 1,493.2 551.9 229.3 253.4 1,034.6 458.62000/01 2,406,507 2,365,596 1,442.4 536.2 226.7 250.0 1,012.9 429.52001/02 2,453,609 2,411,898 1,470.7 542.2 226.5 248.8 1,017.5 453.12002/03 2,460,883 2,419,048 1,475.0 532.2 231.0 258.2 1,021.4 453.62003/04 2,399,561 2,358,768 1,438.3 529.8 238.3 273.3 1,041.4 396.92004/05 2,407,167 2,366,245 1,442.8 525.1 234.5 282.0 1,041.6 401.22005/06 2,462,773 2,420,906 1,476.2 545.0 245.1 280.4 1,070.5 405.72006/07 2,559,870 2,511,232 1,531.2 535.3 259.4 276.9 1,071.6 459.62007/08 2,508,917 2,458,739 1,499.2 522.8 256.0 264.7 1,043.5 455.72008/09 2,409,981 2,355,756 1,436.4 489.1 245.0 234.1 968.2 468.22009/104 2,500,000 2,443,750 1,490.1 515.0 255.0 245.0 1,015.0 475.1

2010/114 2,575,000 2,517,063 1,534.8 525.0 260.0 250.0 1,035.0 499.8

1Historical corn oil production data from the U.S. Department of Commerce (a), Census Bureau, Fats and Oils: Oilseed Crushings Circular, M311J, table 2, and from Corn Oil,

http://www.census.gov/manufacturing/cir/historical_data/m311j/index.html Adjusted to corn crop year, September-August. 

2Corn oil projections for 1992/93-2005/06 are reduced by 1.7 percent to account for dry-mill corn oil production. Reductions for 06/07 = 1.9 percent; 07/08 = 2.0 percent; 08/09 = 2.25 

percent; 09/10 = 2.25 percent; and 10/11 = 2.25 percent to account for fractionation oil removal.

3Assumes corn oil yield of 1.64 pounds/bushel.4Corn oil projections from the September 13, 2010, Oil Crops Outlook; wet-mill products, excluding ethanol, from the September 14, 2010, Feed Grains Outlook, p. 15. 

Source: USDA, Economic Research Service calculations based on data from U.S. Department of Commerce (a), Census Bureau, Fats and Oils: Oilseed Crushings Circular ; Economic Research Service Oil Crops Outlook.
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referred to as wet distillers’ grains and can be used as cattle feed or dried to 

produce dried distillers’ grains (DDG). CDS can be used as cattle feed or 

blended with distillers’ grains to produce DDGS. Distillers’ grains with solubles are sold wet (WDGS; 30 to 35 percent dry matter), modified (MDGS; 

45 to 50 percent dry matter), or dried (DDGS; 88 to 90 percent dry matter). 

Distillers’ grains can be fed either wet or dry. Approximately 36 percent of 

the distillers’ grains with solubles fed in the United States are wet and 64 

percent are dry (Renewable Fuels Association, Ethanol Industry Outlook, 

2009). The authors of this report will focus specifically on DDGS and convert 

all distillers’ grains into an equivalent DDGS weight.

Supplies of Ethanol Coproducts Rapidly Expanding

Most of the expansion in ethanol fuel production has come from dry-mill 

plants with little additional capacity expansion from wet mills. Wet mills are 

more expensive to build, more versatile in the products they can produce, 

yield slightly less ethanol per bushel, and offer more valuable coproducts. 

Wet mills used to account for most of the U.S. ethanol production, but new 

construction has shifted to dry mills, partly because dry mills are less costly 

to build. For 2009/10, we estimate that 11 percent of U.S. fuel ethanol was 

produced in wet mills with the remaining 89 percent produced in dry mills, 

compared with 2001/02 when wet mills produced 64 percent and dry mills 36 

percent of total ethanol production (table 3). 

Table 3

Estimation of corn use for dry-mill ethanol production

Column 1 Column 2 Column 3

Total corn use Corn use for wet- Corn use for

for fuel ethanol mill ethanol dry-mill ethanol Percent used by mill type

Crop year production1 production2 production2 Wet mills Dry mills Total 

---------------------Million bushels-------------------- ------------------- Percent -----------------

1992/93 425.5 271.9 153.6 63.9 36.1 100

1993/94 458.3 257.5 200.7 56.2 43.8 100

1994/95 532.8 406.1 126.6 76.2 23.8 100

1995/96 395.7 365.7 30.0 92.4 7.6 100

1996/97 428.7 369.3 59.4 86.1 13.9 100

1997/98 481.1 382.9 98.2 79.6 20.4 100

1998/99 525.8 405.9 119.9 77.2 22.8 100

1999/00 565.8 458.6 107.1 81.1 18.9 100

2000/01 627.6 429.5 198.1 68.4 31.6 100

2001/02 705.9 453.1 252.8 64.2 35.8 100

2002/03 995.5 453.6 541.9 45.6 54.4 100

2003/04 1,167.5 396.9 770.7 34.0 66.0 100

2004/05 1,323.1 401.2 921.8 30.3 69.7 100

2005/06 1,602.8 405.7 1,197.1 25.3 74.7 100

2006/07 2,119.0 459.6 1,659.4 21.7 78.3 100

2007/08 3,049.0 455.7 2,593.3 14.9 85.1 100

2008/09 3,709.0 468.2 3,240.8 12.6 87.4 100

2009/103 4,535.0 475.1 4,059.9 10.5 89.5 100

2010/113 4,700.0 499.8 4,200.2 10.6 89.4 100

1Based on USDA, Economic Research Service, Feed Grains Database. 2Based on table 2 of this report. 3Corn use for ethanol production 

from September 10, 2010, World Agricultural Supply and Demand Estimates.

Source: USDA, Economic Research Service, Feed Grains Database; table 2 of this report. 
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Production of distillers’ grains, a feed coproduct from corn dry-mill ethanol 

production, surpassed feed coproducts from the wet-milling process (namely 

corn gluten feed and corn gluten meal) in marketing year 2006/07 (table 4).11

Between 1992/93 and 2001/02, exports accounted for most of corn gluten 

feed’s disappearance, but export’s recent share of corn gluten feed has 

declined. This decline in corn gluten feed was due to the European Union’s 

Common Agricultural Policy (CAP) reform and from the adoption of genetically modified corn in the United States. For example, cereal prices declined 

when CAP reform stimulated consumption of domestic feed. EU reforms 

also reduced the EU cow herd, which reduced the need for feed. Furthermore, 

U.S. corn gluten feed and its derivation from genetically modified corn may 

have precluded its use in EU feed rations.12 This biotechnology concern may 

be present regardless of whether U.S. corn wet mills used only EU-approved 

corn varieties, due to fear of contamination of unapproved varieties. Tables 

5 and 6 provide estimates of U.S. corn gluten feed and meal supply and 

disappearance. 

As the production of corn-based ethanol increases, DDGS output increases 

because of the fixed proportions of ethanol and coproduct yield from corn 

bushels processed. For example, when dry-mill fuel ethanol production began 

to accelerate between 2002/03 and 2009/10 and dry-mill corn use rose from 

an estimated 0.5 to 4.1 billion bushels (see table 3), production of DDGS rose 

from an estimated 4.3 to 32.0 mmt (million metric tons) (see table 1).

11 The production estimates for corn 

gluten feed and corn gluten meal 

reflected in table 4 compute the 

total produced from making HFCS, 

glucose/dextrose, starch, and ethanol. 

Existing ERS estimates from table 29 

compute corn gluten feed and corn 

gluten meal from only the production of HFCS, glucose/dextrose, and 

starch (USDA, ERS, Feed Grains 

Database, yearbook table 29, 2010).

12 Similar concerns can be expressed 

about the U.S. DDGS market and may 

account for much of the decline in 

U.S. sales of DDGS to Europe, a topic 

addressed later in this report.

Table 4

Estimates of feed coproducts from corn wet- and dry-mill related production processes 

Corn wet-mill production Corn dry-mill production 

HFCS,

Glucose/dextrose, Beverage Fuel

and starch Ethanol Total ethanol ethanol Total

Corn gluten: Corn gluten: Corn gluten: Grand Distillers’ grains produced from

Crop year Feed Meal Feed Meal Feed Meal total beverage and fuel production

------------------------------------------------------------------ Million metric tons ----------------------------------------------------------------

1992/93 5.0 1.2 1.6 0.4 6.5 1.6 8.1 0.8 1.2 2.0

1993/94 5.2 1.2 1.5 0.4 6.7 1.6 8.3 0.6 1.6 2.2

1994/95 5.3 1.3 2.4 0.6 7.7 1.9 9.6 0.5 1.0 1.5

1995/96 5.4 1.3 2.1 0.5 7.6 1.8 9.4 0.8 0.2 1.0

1996/97 5.6 1.4 2.2 0.5 7.8 1.9 9.7 0.8 0.5 1.3

1997/98 5.9 1.4 2.2 0.5 8.2 2.0 10.1 0.9 0.8 1.6

1998/99 5.9 1.4 2.4 0.6 8.3 2.0 10.3 0.8 1.0 1.8

1999/00 6.1 1.5 2.7 0.6 8.7 2.1 10.8 0.9 0.9 1.7

2000/01 5.9 1.4 2.5 0.6 8.4 2.0 10.5 0.9 1.6 2.5

2001/02 6.0 1.4 2.7 0.6 8.6 2.1 10.7 0.9 2.0 2.9

2002/03 6.0 1.4 2.7 0.6 8.6 2.1 10.7 0.9 4.3 5.2

2003/04 6.1 1.5 2.3 0.6 8.4 2.0 10.4 0.9 6.1 7.0

2004/05 6.1 1.5 2.3 0.6 8.4 2.0 10.5 0.9 7.3 8.2

2005/06 6.3 1.5 2.4 0.6 8.6 2.1 10.7 0.9 9.5 10.4

2006/07 6.3 1.5 2.7 0.6 9.0 2.2 11.1 0.9 13.2 14.1

2007/08 6.1 1.5 2.7 0.6 8.8 2.1 10.9 0.9 20.5 21.4

2008/09 5.7 1.4 2.7 0.7 8.4 2.0 10.4 0.9 25.6 26.5

2009/101 5.9 1.4 2.8 0.7 8.7 2.1 10.8 0.9 32.0 32.9

2010/111 6.1 1.5 2.9 0.7 9.0 2.2 11.1 0.9 33.2 34.1

HFCS=High fructose corn syrup.

1Based on September 10, 2010, World Agricultural Supply and Demand Estimates.

Source: Data for corn dry-mill plants from table 1 of this report; data for corn wet-mill plants from table 2 of this report. 
11

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Table 5

Supply and disappearance of corn gluten feed 

Supply Disappearance

Marketing year Production Imports Total Feed and residual Exports Total 

Million Percent Million Percent Million Million Percent Million Percent Million

metric of total metric of total metric metric of total metric of total metric 

tons supply tons supply tons tons disappearance tons disappearance tons

1992/93 6.5 98.4 0.11 1.6 6.7 0.9 14.0 5.7 86.0 6.7

1993/94 6.7 98.6 0.10 1.4 6.8 1.1 16.6 5.7 83.4 6.8

1994/95 7.7 98.9 0.08 1.1 7.8 1.6 20.3 6.2 79.7 7.8

1995/96 7.6 98.8 0.10 1.2 7.7 2.2 28.3 5.5 71.7 7.7

1996/97 7.8 98.8 0.10 1.2 7.9 2.7 33.8 5.2 66.2 7.9

1997/98 8.2 99.1 0.07 0.9 8.2 3.3 39.9 4.9 60.1 8.2

1998/99 8.3 99.8 0.02 0.2 8.3 3.3 40.2 5.0 59.8 8.3

1999/00 8.7 99.8 0.02 0.2 8.8 3.6 41.2 5.1 58.8 8.8

2000/01 8.4 99.8 0.02 0.2 8.5 3.8 45.1 4.6 54.9 8.5

2001/02 8.6 99.8 0.02 0.2 8.6 4.1 47.0 4.6 53.0 8.6

2002/03 8.6 99.6 0.03 0.4 8.7 4.9 56.6 3.8 43.4 8.7

2003/04 8.4 99.5 0.05 0.5 8.5 4.9 58.4 3.5 41.6 8.5

2004/05 8.4 99.6 0.03 0.4 8.5 5.7 67.1 2.8 32.9 8.5

2005/06 8.6 99.6 0.03 0.4 8.7 6.0 68.7 2.7 31.3 8.7

2006/07 9.0 99.7 0.03 0.3 9.0 7.4 81.9 1.6 18.1 9.0

2007/08 8.8 99.4 0.05 0.6 8.8 7.4 83.6 1.4 16.4 8.8

2008/09 8.4 99.4 0.05 0.6 8.5 7.6 89.4 0.9 10.6 8.5

2009/10 8.7 99.4 0.05 0.6 8.8 7.9 89.7 0.9 10.3 8.8

2010/11 9.0 99.4 0.05 0.6 9.1 8.2 90.1 0.9 9.9 9.1

Source: Production numbers are from table 4 of this report; import and export data from U.S. Department of Commerce (b), Census Bureau, 

http://www.usatradeonline.gov/. 

Table 6

Supply and disappearance of corn gluten meal 

Supply Disappearance

Marketing year Production Imports Total Feed and residual Exports Total 

Million Percent Million Percent Million Million Percent Million Percent Million

metric of total metric of total metric metric of total metric of total metric 

tons supply tons supply tons tons disappearance tons disappearance tons

1992/93 1.6 99.7 0.00 0.3 1.6 1.0 64.5 0.6 35.5 1.6

1993/94 1.6 99.6 0.01 0.4 1.6 0.9 54.4 0.7 45.6 1.6

1994/95 1.9 99.5 0.01 0.5 1.9 1.2 66.2 0.6 33.8 1.9

1995/96 1.8 99.2 0.01 0.8 1.8 1.1 57.9 0.8 42.1 1.8

1996/97 1.9 99.3 0.01 0.7 1.9 1.1 58.8 0.8 41.2 1.9

1997/98 2.0 99.4 0.01 0.6 2.0 1.2 61.1 0.8 38.9 2.0

1998/99 2.0 99.4 0.01 0.6 2.0 1.4 67.8 0.6 32.2 2.0

1999/00 2.1 99.4 0.01 0.6 2.1 1.4 67.1 0.7 32.9 2.1

2000/01 2.0 99.5 0.01 0.5 2.0 1.2 61.2 0.8 38.8 2.0

2001/02 2.1 99.3 0.01 0.7 2.1 1.3 60.7 0.8 39.3 2.1

2002/03 2.1 99.3 0.01 0.7 2.1 1.3 61.0 0.8 39.0 2.1

2003/04 2.0 99.4 0.01 0.6 2.0 1.1 55.6 0.9 44.4 2.0

2004/05 2.0 99.5 0.01 0.5 2.0 1.2 57.7 0.9 42.3 2.0

2005/06 2.1 99.4 0.01 0.6 2.1 1.2 56.8 0.9 43.2 2.1

2006/07 2.2 99.5 0.01 0.5 2.2 1.2 54.3 1.0 45.7 2.2

2007/08 2.1 99.4 0.01 0.6 2.1 1.0 48.2 1.1 51.8 2.1

2008/09 2.0 99.6 0.01 0.4 2.0 1.3 65.5 0.7 34.5 2.0

2009/10 2.1 99.5 0.01 0.5 2.1 1.4 66.8 0.7 33.2 2.1

2010/11 2.2 99.5 0.01 0.5 2.2 1.5 68.3 0.7 31.7 2.2

Source: Production numbers are from table 4 of this report; import and export data from U.S. Department of Commerce (b), Census Bureau, 

http://www.usatradeonline.gov/.
12

Market Issues and Prospects for U.S. Distillers’ Grains: Supply, Use, and Price Relationships / FDS-10k-01

Economic Research Service/USDA

Composition of Distillers’ Grains 

Is Beginning to Change

In addition to the switch from wet to dry milling, new technologies and 

production processes are changing the composition of distillers’ grains. When 

the ethanol boom started in the mid-2000s, essentially all additional capacity 

expansion came from dry-mill ethanol plants. These plants required less 

capital to build, and investors at the time were interested primarily in ethanol 

since its margins were more attractive (Randleman and Shapouri, 2007). 

Consequently, fewer investors were interested in the potential coproduct 

revenue stream. With time, however, ethanol margins tightened and ethanol 

plant operators looked for additional revenue from their coproducts by 

improving the quality and consistency of DDGS. Potential coproducts 

include carbon dioxide and, more recently, corn oil.13 As processors extract 

as much value from the corn as possible, future spent grains from ethanol 

production could be used as an alternative feedstock for cellulosic ethanol, 

fuel for the distillation process or electricity generation, or with anaerobic 

digestion, assuming profitability supports this feedstock selection. 

Presently, there are two dry-mill fractionation processes that can alter the 

composition of distillers’ grains. The first process can be and has been added 

to the front end of dry-mill ethanol plants.14 This process can be a wet or 

dry process and can produce bran, germ (whole or defatted germ meal), and 

various combinations of these prefermentation byproducts. For example, 

adding germ to the bran produces “high fat hominy.” Separation of the germ 

(fat-rich portion of the corn kernel) and the high fiber bran from the endosperm prior to fermentation results in stillage that is lower in fiber, fat, and 

phosphorus and higher in protein than traditional distillers’ grains (Onetti and 

Schwab, 2008). The starch content of these prefermentation byproducts also 

varies significantly, depending on the effectiveness of the different milling 

processes in separating the endosperm from the other kernel components 

prior to fermentation. 

The second fractionation process, commonly called back-end, is a less costly 

endeavor than the front-end process and is rapidly gaining more widespread 

usage in the ethanol industry. The back-end process extracts corn oil from 

either stillage or CDS. Generally, the oil content found in DDGS is about 

11.2 percent and can be reduced by a third to 7.5 percent. A more expensive 

technology, however, can remove from two-thirds to three-quarters of the oil, 

resulting in 3.7 percent to 2.8 percent oil content. 

Generally, many of these new corn coproducts are higher in crude protein and 

crude fiber than “regular” DDGS and lower in crude fat. Although the amino 

acid concentration may increase somewhat in many of these high-protein 

coproducts, the protein quality (amino acid balance) is still poor relative to 

the requirements of monogastric animals.15 Additionally, the reduced fat and 

increased fiber content of these new coproducts may provide lower energy 

value for swine and poultry (Shurson and Alghandi, 2008). Thus, the feeding 

and economic value of these “reduced fat” DDGS may be lower for swine 

and poultry, compared with “regular” DDGS. The nutrient composition of 

these coproducts, however, would likely have greater value in ruminant diets 

because the amino acid balance of corn protein is not as critical for ruminants 

13 Some plants already capture the carbon dioxide and others have started. 

One challenge for the industry is finding a market for the carbon dioxide 

collected (Rendleman and Shapouri, 

2007).

14 Currently, there are only two or 

three plants using front-end fractionation due to costs and complications 

from production and marketing multiple coproducts (Staff, 2010).

15 A monogastric organism has a 

simple single-chambered stomach, 

whereas ruminants have a complex 

four-chambered stomach. Examples 

of monogastric animals include pigs, 

dogs, and cats. Poultry also have a 

monogastric digestive system.
13

Market Issues and Prospects for U.S. Distillers’ Grains: Supply, Use, and Price Relationships / FDS-10k-01

Economic Research Service/USDA

as it is for swine and poultry. The increased amount of readily digestible fiber 

can provide a good source of energy, and the lower fat content may allow 

higher dietary inclusion rates for lactating dairy cows, avoiding milk-fat 

depression concerns. Until further evidence is provided, animal nutritionists have cautioned feeders about these new coproducts since the number 

of published studies evaluating them in livestock and poultry diets has been 

limited (Shurson and Alghamdi, 2008). 

Growth of U.S. Distillers’ Grains Supply 

Expected to Moderate 

The U.S. Department of Agriculture projects that 5.0 billion bushels of corn 

will be used in fuel ethanol production in 2019/20 (USDA, February 2010), 

up from the 4.5 billion bushels projected for 2009/10 (USDA, September 

2010). Slower annual growth for corn-based ethanol is projected, following 

the rapid expansion seen in recent years.16 Consequently, the supply of 

distillers’ grains is estimated to rise from about 33.3 mmt in 2009/10 to about 

38.6 mmt in 2019/20.17, 18 Whether this projected production estimate represents a saturation of the feed market will be discussed later. 

16 Smaller gains for corn-based ethanol 

are projected over the next 10 years and 

reflect only moderate growth in overall 

gasoline consumption in the United 

States, limited potential for further 

market penetration of ethanol into the 

E10 (10-percent ethanol blend) market 

(the blend wall), and the small size of the 

E85 (85-percent ethanol blend) market. 

In the latter years of the projections, 

production of fuel ethanol accounts for 

34-35 percent of total corn use, and 

corn-based ethanol production exceeds 9 

percent of annual gasoline consumption.

17 Assumes 1 mmt of DDGS comes 

from beverage distilleries, 0.5 mmt is 

imported and ((5.025 billion bushels x 

93 percent dry-mill grind) x 17.5 pounds 

of DDGS per bushel of corn processed) 

/ 2204.622 pounds per metric ton = 38.6 

mmt supply. 

18 If we assume that 15 billion gallons of 

corn-based ethanol will be produced in 

2019/20, corn use for this dry-mill fuel 

ethanol could total 5.17 billion bushels 

(2.7 gallons ethanol per bushel of corn 

and 93 percent of ethanol produced from 

dry-mill plants), which would produce 

about 41.0 mmt plus 1 mmt from beverage distilleries, and .5 mmt from imports 

= about 42.5 mmt supply. 
14

Market Issues and Prospects for U.S. Distillers’ Grains: Supply, Use, and Price Relationships / FDS-10k-01

Economic Research Service/USDA

The estimated disappearance of U.S. distillers’ grains is expected to total 

33.3 mmt for 2009/10, more than doubling since 2006/07 (see table 1). U.S. 

feed and residual use accounts for the largest share of consumption of U.S. 

distillers’ grains. Domestic feeders have been rapidly adopting this product to 

take advantage of its nutrient and cost advantages. Despite the many issues of 

product quality, consistency, handling, and feed safety, DDGS provide good 

value per unit of energy and protein. Despite increased feeding of DDGS by 

domestic feeders, the rate of growth for exports exceeds the rate of growth in 

domestic use. Between marketing years 2003/04 and 2009/10, the domestic 

use share has dropped by 15 percentage points, with an offsetting increase in 

export share of U.S. distillers’ grains disappearance. 

Export share is increasing as foreign feeders adopt DDGS as a cheaper 

alternative to corn and U.S. trade groups work to alleviate concerns over 

product quality, consistency, and safety (Voegele, 2009).19, 20 While the European Union had been the largest importer of U.S. distillers’ grains through 

2005/06, CAP reform and biotechnology regulations have significantly 

reduced the quantity of U.S. exports to the EU market.21 Since then, Mexico 

has become the largest importer of U.S. distillers’ grains, followed by Canada 

and Asian countries (table 7) (Fox, 2008 and 2009; Paulson, 2008). The 

potential for increased exports to China appears promising (Fabiosa et al., 

2009). For the 2009/10 marketing year, DDGS exports to China have been 

expanding and China could become the largest importer of U.S. distillers’ 

grains. The imported Chinese DDGS price, relative to domestic Chinese corn 

prices or imported corn prices, appears to be the primary driver of DDGS 

imports into China for marketing year 2009/10. The availability of shipping 

containers, providing a “backhaul” opportunity, has facilitated the movement 

of this product relative to shipping in larger bulk ocean vessels. 

Future consumption growth of DDGS is expected to moderate with a 

declining domestic share and rising export share (USDA, February 2010). 

The domestic share of the projected supply could range from 70 to 75 

percent, with the export share ranging from 25 to 30 percent, compared 

with the 2009/10 estimated domestic share of 75 percent and export share 

of 25 percent. 

19 The U.S. Grains Council supports 

an active research/demonstration 

program of the benefits of feeding 

distillers’ grains and reports success in 

many of its demonstration countries. 

Furthermore, they estimate a potential 

20 mmt of DDGS exports from the 

United States, indicating significant 

growth potential.

20 Despite some insurance companies insisting that DDGS be treated 

as hazardous cargo, DDGS exports 

have grown rapidly in the past several 

years. As a result of DDGS’ status 

as hazardous cargo, there have been 

some shipping disruptions and higher 

transport costs for DDGS exports. The 

U.S. Grains Council was instrumental 

in coordinating an industry effort to 

define DDGS as nonhazardous cargo. 

These efforts, in cooperation with 

the U.S. Coast Guard led to a U.S. 

proposal that was submitted to the 

International Maritime Organization 

(IMO). A subcommittee of the IMO 

approved the U.S. proposal to classify 

DDGS as nonhazardous cargo, but the 

proposal must be ratified by the IMO’s 

Maritime Safety Committee. Industry 

experts expect this to occur during the 

committee’s December 2010 meeting 

(U.S. Grains Council, 2010).

21 Although the EU could increase its 

imports of DDGS with the approval 

of three types of genetically enhanced 

corn for food, feed, import, and 

processing as of October 30, 2009, 

this potential could be replaced with 

DDGS from fuel ethanol plants being 

built in Great Britain, Europe, and 

Africa (U.S. Grains Council, 2009).

Consumption of Distillers’ Grains 

Increases, Export Share Expands 
15

Market Issues and Prospects for U.S. Distillers’ Grains: Supply, Use, and Price Relationships / FDS-10k-01

Economic Research Service/USDA

Table 7Exports of U.S. brewers' or distillers' dregs and waste, by crop year 

Crop year

Area Importing country 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00

------------------------------------------------------------------Metric tons------------------------------------------------------------------- 

North America Canada 16,002 14,675 16,121 11,483 16,747 14,248 18,522 13,605

Mexico 20,239 40,823 26,714 4,326 8,433 11,932 17,682 28,822

 Total 36,241 55,498 42,835 15,809 25,180 26,180 36,204 42,427

Caribbean Cuba

Asia Japan 219 1,246 1,544 20 5,014 877 1,466

China-Taiwan 2,285 70 42 492 57 80

South Korea 485 1,857 14,400

China-Mainland 497 57

Philippines 

Indonesia 254

Malaysia 46

Vietnam 

Thailand 62

 Total 3,035 3,854 1,544 14,490 99 5,506 934 1,608

Middle East and Turkey 

North Africa Israel 9,096 28,269 2,786

Egypt

Morocco

 Total 9,096 28,269 2,786

European Union Denmark 447 2,968 35,664 72,584 137,720 120,627 139,877 115,719

United Kingdom 9,432 7,014 58,570 59,638 119,327 86,588 86,584 87,489

Ireland 36,645 64,454 179,295 166,471 156,027 146,708 218,828 241,743

Netherlands 8,648 9,824 65,928 30,122 45,377 15,495 27,777 2,929 

France 3,836 6,994 71,907 43,952 36,203 31,990 35,864 24,447

Germany 2,565 4,337 973 29,847

Spain 6,636 6,257 104,436 73,163 36,902 52,890 78,110 72,311

Portugal 19,983 20,352 113,669 117,549 85,221 90,160 79,833 97,122

Italy 750 55,259 19,533 28,857 24,680 16,064 12,746

 Total 88,192 118,613 684,728 587,349 645,634 570,111 682,937 684,353

Subtotal 127,468 177,965 738,203 645,917 670,913 601,797 720,075 731,174

Other countries 714 1,404 2,519 317 748 3,002 43 44,668

Total 128,182 179,369 740,722 646,234 671,661 604,799 720,118 775,842

continued 
16

Market Issues and Prospects for U.S. Distillers’ Grains: Supply, Use, and Price Relationships / FDS-10k-01

Economic Research Service/USDA

Table 7Exports of U.S. brewers' or distillers' dregs and waste, by crop year, continued

Crop year

Area Importing country 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09

------------------------------------------------------------------------------ Metric tons------------------------------------------------------------------------------ 

North America Canada 26,325 26,864 32,931 46,689 116,633 113,895 190,373 683,361 704,451

Mexico 41,105 27,895 41,325 59,374 92,500 280,602 607,848 1,000,936 1,387,153

 Total 67,430 54,759 74,256 106,063 209,133 394,497 798,221 1,684,297 2,091,604Caribbean Cuba 10,043 40,646 112,489 146,468

Asia Japan 26 40 15 288 29,039 78,523 151,243 210,517

China-Taiwan 3,732 29,227 73,126 126,272 172,530 181,393

South Korea 14 50 106 2,111 11,497 87,730 175,515 279,622

China-Mainland 18 42 54 1,150 4,593 97,936

Philippines 51 377 5,374 49,210 67,349 95,896 127,618

Indonesia 3,160 36,744 45,860 63,790 90,624 182,712

Malaysia 7,097 24,614 33,682 32,141 53,687 47,009

Vietnam 633 13,093 12,645 47,993 101,332 183,966

Thailand 61 10 5,102 26,290 50,561 130,354 270,488

 Total 26 105 144 15,157 116,607 281,349 555,509 975,774 1,581,261Middle East and Turkey 216 416 17,600 403,128 380,176

North Africa Israel 6,032 6,348 45,694 8,607 40,256 167,379 176,982

Egypt 31,308 67,843

Morocco 20,254 37,318 68,705 74,450

 Total 6,032 6,348 45,910 29,277 95,174 670,520 699,451

European Union Denmark 140,497 130,287 88,856 20,539 117 660

United Kingdom 64,962 117,434 141,287 194,731 116,935 152,087 79,894 16,960 6,229

Ireland 270,936 258,611 285,093 203,316 204,195 186,897 66,377 79,605 95,816

Netherlands 30,326 10,295 15,943 35,109 54,344 9,014 18,690 18,846

France 5,659 3,000 1,121Germany 31,442 30,920 580 5,144 26,213 9,749Spain 30,699 85,310 37,380 61,184 90,836 68,455 26,267 49,698 14,999

Portugal 76,896 67,498 61,315 58,547 68,848 50,038 8,054Italy 22,032 384

 Total 651,417 725,387 630,454 578,570 561,488 477,361 199,942 165,493 117,044

Subtotal 718,873 780,251 710,886 706,138 933,138 1,192,527 1,689,492 3,608,573 4,635,828Other countries 63,628 75,640 41,350 31,727 34,250 36,808 90,386 312,090 325,170

Total 782,501 855,891 752,236 737,865 967,388 1,229,335 1,779,878 3,920,663 4,960,998

Source: U.S. Department of Commerce (b), Bureau of the Census. http://www.usatrade online.gov/.
17

Market Issues and Prospects for U.S. Distillers’ Grains: Supply, Use, and Price Relationships / FDS-10k-01

Economic Research Service/USDA

Industry experts were concerned that the rapid acceleration of ethanol 

production could cause the supply of distillers’ grains to exceed its potential 

use in the feed market. If this is the case, the feed market and other potential 

uses of DDGS, such as boiler fuel or soil amendments, could be affected. The 

authors of this report project that the future U.S. DDGS supply will be 38.6 

mmt in 2019/20 based on USDA’s Baseline Projections (USDA, February 

2010). Selected estimates of current potential U.S. DDGS feed consumption range from 35.2 to 55.3 mmt (Dhuyvetter et al., 2005; Berger and Good, 

2007; Dooley, 2008; Fox, 2008) (table 8). Thus, projected DDGS supplies 

do not appear to exceed the estimated average potential of 46.7 mmt for the 

domestic feed market. 

Furthermore, potential exports of DDGS range from 20 mmt to 52 mmt. The 

U.S. Grains Council reports that the export market shows current potential 

use at 20 mmt (Keefe, 2008). Another estimate for potential export consumption comes in at 52 mmt. For example, Fox (2008) estimated 12 mmt for 

large international markets and Paulson (2008) estimated 40 mmt for small 

international markets. So, there appears to be sufficient use potential in both 

the U.S. and export feed market to consume the U.S. distillers’ grain supply, 

assuming DDGS prices remain favorable for feeding. 

Potential U.S. Feed Consumption 

Exceeds Future Supply of DDGS 

Table 8

Estimates of potential annual DDGS consumption, by livestock class

Dhuyvetter et al. Berger and Good Dooley Fox Average of

2000-2004 average1 20071 20081 20081 all estimates

Thousand Thousand Thousand Thousand Thousand

metric tons Percent metric tons Percent metric tons Percent metric tons Percent metric tons Percent

Beef cattle 29,446 63.1 38,709 70.0 34,524 69.1 20,774 59.1 30,863 65.4

 Beef cows 9,803 21.0 10,859 19.7 5,703 11.4 4,807 13.7 7,793 16.4

 Cattle on feed 12,261 26.3 15,450 28.0 16,591 33.2 12,761 36.3 14,266 30.9

 Other cattle 7,381 15.8 12,400 22.4 12,230 24.5 3,206 9.1 8,804 18.0

Dairy cattle 6,276 13.5 6,779 12.3 5,347 10.7 7,693 21.9 6,524 14.6

 Dairy cows 6,276 13.5 6,779 12.3 5,347 10.7 7,693 21.9 6,524 14.6

Swine 3,663 7.9 3,824 6.9 3,842 7.7 3,677 10.5 3,752 8.2

 Breeding swine 1,037 2.2 1,031 1.9 973 1.9 642 1.8 921 2.0

 Market swine 2,626 5.6 2,793 5.1 2,869 5.7 3,035 8.6 2,831 6.3

Poultry 7,245 15.5 5,950 10.8 6,215 12.4 3,014 8.6 5,606 11.8

 Broilers 4,486 9.6 4,263 7.7 3,709 7.4 1,809 5.1 3,567 7.5

 Layers 1,818 3.9 1,686 3.1 1,644 3.3 683 1.9 1,458 3.0

 Pullets 161 0.3 104 0.2 133 0.1

 Turkeys 780 1.7 757 1.5 522 1.5 686 1.2

 Total 46,630 100.0 55,261 100.0 49,929 100.0 35,158 100.0 46,744 100.0

Note: Totals may not add due to rounding.

1 Calendar year.

Source: Dhuyvetter et al., 2005; Berger and Good, 2007; Dooley, 2008; Fox 2008.
18

Market Issues and Prospects for U.S. Distillers’ Grains: Supply, Use, and Price Relationships / FDS-10k-01

Economic Research Service/USDA

Both domestic and export consumption estimates are derived from a fairly 

uniform method. Daily intake (as fed) per species is established and multiplied by the DDGS typical inclusion rate, multiplied by days fed per year, 

multiplied by the annual head (based on whether it is an annual inventory 

number or annual number produced) of selected beef cattle, dairy cattle, 

swine, and poultry. Summing for each type of livestock provides an estimation of the potential DDGS consumption level for the particular country in 

question. If any of these variables differ, then potential consumption estimates will also differ. For example, if inventory numbers rise or decline, the 

industry could generally expect potential DDGS consumption to respond 

accordingly. Estimates of daily intake and inclusion rates also differ by study, 

which accounts for some of the variance in potential consumption estimates. 

Also, some of the studies use a multi-year average estimate of livestock 

inventories, while others may use inventories from a specific year.

Potential consumption estimates derived from each of the referenced studies 

assume that DDGS were priced competitively and would enter the livestock/

poultry ration. There may be times when feed use of DDGS is curtailed or 

discontinued because of unfavorable prices for DDGS relative to competing 

ration ingredients. Also, there may be times when livestock/poultry producers 

switch from a typical inclusion rate of DDGS to a maximum inclusion rate 

because of more favorable DDGS prices relative to competing ingredient 

prices. Thus, changing the prices for livestock/poultry ration’s competing 

ingredients could impact the estimated feed potential of DDGS. 

In addition to market prices, the adoption of new ethanol/DDGS production 

technologies can influence the relationship between DDGS supply and its 

potential use. As the composition of DDGS (such as the removal of a portion 

of the oil) changes, then the use of DDGS for different types of livestock 

might change. 
19

Market Issues and Prospects for U.S. Distillers’ Grains: Supply, Use, and Price Relationships / FDS-10k-01

Economic Research Service/USDA

The surge in ethanol production creates a question about the relationships 

between DDGS, corn, and soybean meal prices and how they may change.22 

Many grain prices are simultaneously determined by a futures market price 

and the cash market. Nearly half of the respondents to a recent survey stated 

that a distillers’ grain futures contract would be an important risk management tool (Stroade et al., 2010).23 A futures market for DDGS, however, did 

not exist until very recently.24 We used a basic approach to analyze the price 

relationships among DDGS, corn, and soybean meal, indicating other areas 

of potential research as the market for DDGS develops. 

Price Discovery and Risk Management 

Very little scholarly research has been conducted on price discovery for 

the DDGS market. Stroade et al. attempted to address some of the price 

discovery and risk management questions for DDGS. Their survey results 

indicated that ethanol plants establish DDGS transaction prices based on corn 

futures prices (87 percent of respondents), soybean meal prices (43 percent of 

respondents), other sources (23 percent of the respondents), USDA published 

DDGS prices (16 percent of respondents), and no external sources (3 percent 

of the respondents). Slightly more than 40 percent of the respondents used 

multiple sources of information to price their DDGS. 

The survey asked two questions about DDGS price risk management. The 

first question asked about the methods used to manage price risk management. A majority of the respondents used a price risk management method 

(64 percent of the respondents), while 36 percent stated they did nothing to 

manage price risk for DDGS. The second question asked about the methods 

used to manage DDGS price risk. For those using a price risk management 

method, corn futures prices (45 percent of the respondents) and forward 

contracts (40 percent of the respondents) were the price risk methods most 

reported. About 20 percent of the respondents used both corn futures and 

forward contracts. Only one respondent reported using soybean meal futures. 

Schroeder (2009) found that DDGS prices are not effectively cross hedged 

based on traditional corn or soybean meal futures prices. Furthermore, Schroeder states that since there is no effective cross-hedging potential between 

DDGS prices and corn or soybean meal futures prices, a futures market 

for DDGS should be investigated. The corn distillers’ dried grain futures 

contract, which began on April 26, 2010, is expected to bring much needed 

price discovery tools and price transparency to the market, but will also serve 

as a risk management tool for ethanol plants and livestock/poultry feeders. 

Actual trading of the contract over time will determine its success. 

22 Initially, a useable price series was 

a problem, but a Central Illinois (later 

referred to as Eastern Corn Belt) price 

series was found and used (USDA, 

Corn Belt Weekly Feedstuffs, 2010). 

These data are available for every 

Tuesday from May 1995 to the present. Later, USDA’s Agricultural Marketing Service began providing weekly DDGS prices for different markets, 

such as Iowa, Wisconsin, Minnesota, 

Missouri, and Nebraska. USDA’s 

Agricultural Marketing Service 

also began providing ethanol plant 

reports that covered the price of corn, 

distillers’ grains (DDGS, MDGS, and 

WDGS), and ethanol (USDA, AMS, 

Bioenergy Market News report, 2010; 

USDA, “National Weekly Distillers’ Grain Summary,” 2010; USDA, 

“National Weekly Ethanol Summay,” 

2010) Corn and soybean meal prices 

for Central Illinois were obtained from 

USDA, ERS, Feed Grains Database.

23 Information presented in the price 

discovery and price risk management 

sections are based on a 2010 survey by 

Stroade, Martin, Conrad, and Schroeder of ethanol plants listed by the 

Renewable Fuels Association. 

24 On February 16, 2010, the CME 

Group announced a new futures 

contract for DDGS. Trading began on 

April 26, 2010 and contract specification information can be found at http://

www.cmegroup.com.

Price Discovery, Risk Management, 

and Price Relationships 
20

Market Issues and Prospects for U.S. Distillers’ Grains: Supply, Use, and Price Relationships / FDS-10k-01

Economic Research Service/USDA

DDGS Price Relationship with Corn and Soybean Meal

Monthly DDGS prices (dry matter basis) for Central Illinois (fig. 1) ran at 

a premium to the corn price, with an average ratio of 1.09 for May 1995 

to August 2006 (fig. 2). Beginning with marketing year 2006/07, however, 

monthly DDGS prices have averaged less than corn prices. The price ratio 

averaged 0.89 for September 2006 to August 2010 and ranged between 0.70 

to 1.02. Thus, DDGS prices are falling into a range where they become more 

competitive as a feed source for many livestock and poultry rations.25 The 

general decline in DDGS prices relative to corn (May 1995 to August 2006 

compared with September 2006 to July 2010) is due, in part, to increased 

DDGS production. The increased seasonality within the marketing year 

also may be influencing the monthly price ratio. DDGS prices are higher in 

the winter months when pasture is not available, and then prices decline in 

the spring and summer as more pasture and forage become available. This 

is particularly interesting considering that there is an increase in DDGS 

consumption by beef cattle.

Monthly price ratios of DDGS to soybean meal (dry matter basis) averaged 0.49 for May 1995 to August 2006, compared with 0.44 for September 

2006 to August 2010 (fig. 2). These price ratios are consistent with DDGS’ 

status as a medium-protein feed, but the slight decline in the DDGS/soybean 

meal price ratio relative to DDGS/corn price ratio reflects DDGS’ increased 

production and lower price. The increased DDGS supply, accompanied by 

a lower price, leads to a lower DDGS price relative to corn (usually less 

than corn). DDGS also substitutes for soybean meal, which may reduce the 

25 Figure 2 highlights the fact that the 

first time period is much longer than 

the more recent period characterized 

by the surge in distillers’ grain production. Thus, a degree of caution should 

be used while interpreting these differences. 

0

50

100

150

200

250

300

350

400

May-1995 Sep-95 JanMaySep-96 JanMaySep-97 JanMaySep-98 JanMaySep-99 JanMaySep-00 JanMaySep-01 JanMaySep-02 JanMaySep-03 JanMaySep-04 JanMaySep-05 JanMaySep-06 JanMaySep-07 JanMaySep-08 JanMaySep-09 JanMay

450

Dollars per ton

Figure 1

Monthly prices: Soybean, DDGS, and corn, May 1995-August 2010

Central Illinois/Eastern Cornbelt DDGS

Central Illinois corn

Central Illinois soybean meal

Note: Monthly prices for September-August marketing year.

Source: USDA, Corn Belt Weekly Feedstuffs; Missouri Department of Agriculture News Service, St. Joseph, Missouri, 

http://ams.usda.gov/mnreports/sj_gr225.txt; USDA, Economic Research Service, Feed Grains Database. 

Monthly prices
21

Market Issues and Prospects for U.S. Distillers’ Grains: Supply, Use, and Price Relationships / FDS-10k-01

Economic Research Service/USDA

demand and price for soybean meal, but a sharper drop in the price of DDGS 

is reflected in a decline of the DDGS/soybean meal price ratio. 

A simple model of DDGS prices was estimated using two major feed components that are replaced by DDGS—corn (energy) and soybean meal (protein). 

Corn and soybean meal prices accounted for 98 percent of the variation in 

DDGS prices and thus are major determinants of the DDGS price (see equation 1 in box, “Major Determinants for the Price of DDGS are Corn and 

Soybean Meal Prices,” p. 23). But the real issue is whether these relationships have changed with the surge in dry-mill ethanol production. We can 

now model how these relationships held with the surge in dry-mill ethanol 

production. As seen in equation 2 compared with equation 1, DDGS are 

increasingly used as an energy feed and, as a result, soybean meal prices may 

be starting to lose some of their impact on DDGS prices, as the coefficient 

value for soybean meal declined to less than half that reported in equation 1. 

The statistical significance of soybean meal prices as an explanatory variable 

for DDGS prices also declined slightly. An increase in cattle feeding, and, 

thus an increase in the seasonality of DDGS prices, may also contribute to 

the decline in the coefficient value for soybean meal prices. Further analysis 

should explore the effects of seasonality on this price relationship. 

As reported earlier, DDGS are viewed as a mid-protein feed ingredient, but 

they are also rich in energy. As a result of these characteristics, the price of 

DDGS usually runs above competing medium protein feeds, such as corn 

gluten feed, hominy feed, and wheat middlings (fig. 3).

0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

May-1995 Sep-95 JanMaySep-96 JanMaySep-97 JanMaySep-98 JanMaySep-99 JanMaySep-00 JanMaySep-01 JanMaySep-02 JanMaySep-03 JanMaySep-04 JanMaySep-05 JanMaySep-06 JanMaySep-07 JanMaySep-08 JanMaySep-09 JanMay

Monthly price ratios

Price ratio

Figure 2

Monthly price ratios (dry matter basis): DDGS compared with corn and soybean meal, 

May 1995-August 2010

Price ratio: DDGS/corn

Price ratio: DDGS/soybean meal

Average price ratio: DDGS/soybean meal

Average price ratio: DDGS/corn

Note: Monthly prices for September-August marketing year.

Source: USDA, Corn Belt Weekly Feedstuffs; Missouri Department of Agriculture News Service, St. Joseph, Missouri, 

http://ams.usda.gov/mnreports/sj_gr225.txt; USDA, Economic Research Service, Feed Grains Database. 
22

Market Issues and Prospects for U.S. Distillers’ Grains: Supply, Use, and Price Relationships / 

Economic Research Service/USDA

Regional DDGS Price Relationships 

DDGS prices appear to be highly correlated among States and producers. The 

Pearson correlation coefficients of monthly DDGS prices among selected 

States (Central Illinois, Nebraska, Iowa, Minnesota, Kansas, and Missouri) 

for the most recent 3 marketing years (2006/07 through 2008/09) revealed 

that select State DDGS prices had a positive correlation with the coefficients 

near 0.90 or above (USDA, Corn Belt Weekly Feedstuffs).26 DDGS price 

correlation coefficients for weekly DDGS prices over the same general time 

period at selected State ethanol plants as published by USDA’s Agricultural 

Marketing Service (table 5) were also high, near 0.90 or above (USDA, 

AMS, Bioenergy Market News report). These findings suggest that DDGS 

prices across States and producers are highly correlated and move together. In 

contrast, Schroeder (2009) found that spatially separated DDGS markets do 

not have strong price relationships. His study focused, however, on the long 

term and included different markets with a time series beginning in 2001, 

when the market for DDGS was less mature. As DDGS production expands 

and DDGS are increasingly used as a substitute for corn and soybean meal 

in feed rations, prices should become more linked to corn and soybean meal 

prices. Corn and soybean meal prices are highly correlated among regions, 

with differences reflecting the cost of transportation and handling. 

Increased feeding of beef cattle on the range and in the feedlot may increase 

DDGS demand during the late fall through winter months for Kansas and 

Nebraska as the DDGS to corn price ratio was highest during those months 

for 2007/08 and 2008/09 (fig. 4).27 In the spring and summer, when pasture 

or forage is more available, DDGS prices tend to decline, exhibiting a degree 

26 In statistics, the Pearson productmoment correlation coefficient 

(referred to as PMCC and typically 

denoted by r) is a measure of the correlation (linear dependence) between 

two variables X and Y, giving a value 

between +1 and −1 inclusive. PMCC 

is widely used in the sciences as a 

measure of the strength of linear dependence between two variables.

27 Corn prices are seasonally low at 

harvest, contributing to the higher 

ratio in the fall months.

0

450

400

350

300

250

200

150

100

50

May-95

Sep-95 JanMaySep-96 JanMaySep-97 JanMaySep-98 JanMaySep-99 JanMaySep-00 JanMaySep-01 JanMaySep-02 JanMaySep-03 JanMaySep-04 JanMaySep-05 JanMaySep-06 JanMaySep-07 JanMaySep-08 JanMaySep-09 JanMay

Dollars per ton

Figure 3

Monthly prices: DDGS and competing feed ingredients, May 1995-July 2010

Corn gluten feed

Hominy feed

Wheat middlings

Cottonseed meal

Central Illinois/Eastern Cornbelt DDGS

Soybean meal

Note: Monthly prices for September-August marketing year.

Source: USDA, Corn Belt Weekly Feedstuffs; Missouri Department of Agriculture News Service, St. Joseph, Missouri, 

http://ams.usda.gov/mnreports/sj_gr225.txt; USDA, Economic Research Service, Feed Grains Database. 

Monthly prices
23

Market Issues and Prospects for U.S. Distillers’ Grains: Supply, Use, and Price Relationships / FDS-10k-01

Economic Research Service/USDA

0.60

0.70

0.80

0.90

1.00

1.10

Price ratio of DDGS

Figure 4

DDGS/corn price ratios (dry matter basis), by selected States, August 2006-July 2010

Monthly price ratios

Note: Monthly prices for September-August marketing year.

Source: USDA, Corn Belt Weekly Feedstuffs; Missouri Department of Agriculture News Service, St. Joseph, Missouri, 

http://ams.usda.gov/mnreports/sj_gr225.txt; USDA, Economic Research Service, Feed Grains Database. 

0.65

0.75

0.85

0.95

1.05

Sep-06

Nov

Jan

Mar

May

July

Sep-07

Nov

Jan

Mar

May

July

Sep-08

Nov

Jan

Mar

May

July

Sep-09

Nov

Jan

Mar

May

July

Central Illinois Nebraska Kansas Iowa Minnesota

Central Illinois DDGS price is a function of Central Illinois corn and soybean meal prices (all prices were converted to a 

dry matter basis). Using monthly prices for May 1995 through August 2006 (dollars per short ton)—a period prior to the 

surge in dry-mill ethanol production—we derived the following regression equation: 

(1) DDGSpr = 0.77 cornpr + 0.14 soymealpr Adj. R2 1 = 98 percent2 

(0.05) (0.02) 

Where DDGSpr is the Central Illinois/Eastern Corn Belt price of DDGS, cornpr is the Central Illinois price of corn, and 

soymealpr is the Central Illinois price of soybean meal. Both corn and soybean meal prices are statistically significant at 

the 1 percent level. 

Using monthly prices for September 2006 through July 2010 (dollars per short ton)—a period of increasing dry-mill 

ethanol production—we derived the following regression equation: 

(2) DDGSpr = 0.77 cornpr + 0.05 soymealpr Adj. R2 = 97 percent2

(0.05) (0.03) 

Corn price is statistically significant at the 1 percent level, but the significance of the soybean meal price is at the 5 

percent level. 

1 The coefficient of determination, R2, is the proportion of variability in a dataset (dependent variable) that is accounted for by the independent variables in the statistical model. It provides a measure of how well future outcomes are likely to be predicted by the model. 

R-squared always increases when a new variable is added to a model. Sometimes additional variables are added to a statistical model 

simply to increase the R-squared. To compensate for this tendency, the adjusted R-squared is used. The adjusted R-square is a modification of R-squared that adjusts for the number of variables in a model. Adjusted R-squared increases only if the new variable improves 

the model more than would be expected by chance (see Peter Kennedy, A Guide to Econometrics, 1992). 

2 Numbers in parentheses below coefficient values are standard errors. 

Major Determinants for the Price of DDGS are Corn and Soybean Meal Prices 
24

Market Issues and Prospects for U.S. Distillers’ Grains: Supply, Use, and Price Relationships / FDS-10k-01

Economic Research Service/USDA

of the seasonality mentioned earlier. DDGS are a new feed for many users 

and optimizing their use in rations is an ongoing effort.

Price advantages of feeding distillers’ grains (dry, modified, and wet) relative to corn are reflected in figure 5 for Illinois and figure 6 for Nebraska.28

For November 9, 2007 through September 3, 2010, weekly Illinois ethanol 

plant prices of dry, modified, and wet distillers’ grains relative to corn averaged 84, 66, and 37 percent, respectively (all dry matter comparisons) (fig. 

5). Nebraska weekly ethanol plant prices of dry, modified, and wet distillers’ 

grains (November 9, 2007 through September 3, 2010) relative to corn were 

87, 72, and 41 percent, respectively (all dry matter comparisons) (fig. 6). 

Nebraska’s price ratios were higher than for Illinois, likely due to Nebraska 

having a larger number of beef cattle relative to dairy cattle, hogs, or poultry. 

The varying moisture content of distillers’ grains could affect their potential 

in different markets in a particular State. Although WDGS had the lowest 

price of the three types of distillers’ grains for Illinois and Nebraska, transportation, handling, and storage challenges seem to favor cattle feeding over 

swine and poultry. Wet and modified distillers’ grains work best with beefcattle rations, where higher percentages of the ration are possible. 

The average DDGS prices for Illinois and Nebraska were favorable for 

feeding livestock/poultry during this time period, particularly for feeders 

located near ethanol plants. While the modified and wet distillers’ grain 

prices averaged less than the corn price, there were handling and storage 

costs associated with these higher moisture feeds that must be considered by 

28 Prices are based on those reported 

at ethanol plants. 

0

50

100

150

200

250

300

Dollars per ton

Figure 5

Weekly prices of corn and dry, modified, and wet distillers’ grains (dry matter basis): 

Illinois ethanol plant, November 9, 2007-September 3, 2010

Note: Weekly prices for September-August marketing year.

Source: USDA, Agricultural Marketing Service, Bioenergy Market News reports.

November 9, 2007

January 4, 2008

February 29, 2008

April 25, 2008

August 15, 2008

October 10, 2008

December 5, 2008

January 30, 2009

March 27, 2009

May 22, 2009

July 17, 2009

September 11, 2009

November 6, 2009

January 1, 2010

January 1, 2010

February 26, 2010

April 23, 2010

June 18, 2010

August 13, 2010

Weekly prices

Corn

DDGS

MDGS

WDGS
25

Market Issues and Prospects for U.S. Distillers’ Grains: Supply, Use, and Price Relationships / FDS-10k-01

Economic Research Service/USDA

feeders. Feeders must also consider transportation costs for each product and 

the slightly higher energy levels for WDGS in cattle rations. Despite these 

averages, there are periods when DDGS and MDGS prices are nearly equal 

to each other for Illinois and Nebraska. The difference in these prices could 

reflect the cost of drying. Schroeder (2009) suggests that if the dry, modified, 

and wet distillers’ grain markets are closely linked and efficient, the price 

differences on a dry-matter basis across these product forms would essentially equal the cost of drying. The price behavior of natural gas would have 

to be examined to see if it influenced this relationship. Also, demand factors 

may permit higher prices for DDGS than the cost of drying would suggest. 

Corn and soybean meal prices are important determinants of the DDGS 

price and may explain why some DDGS producers rely on corn and soybean 

meal futures prices to establish DDGS prices, and why some use corn and 

soybean meal futures as a risk management tool. Average DDGS prices now 

run at a discount to corn compared with an average premium prior to the 

surge in distillers’ grain production. Our statistical analysis indicates that 

soybean meal prices are losing some of their explanatory power for DDGS 

prices, suggesting that DDGS are increasingly being used as an energy feed 

and substitute for corn. Further analysis will help explain the differences and 

behaviors of corn, DDGS, MDGS, and WDGS regional price relationships 

over time. 

0

50

100

150

200

250

300

Dollars per ton

Figure 6

Weekly prices of corn and dry, modified, and wet distillers’ grains (dry matter basis): 

Nebraska ethanol plant, November 9, 2007-September 3, 2010

Note: Weekly prices for September-August marketing year.

Source: USDA, Agricultural Marketing Service, Bioenergy Market News reports.

November 9, 2007

January 4, 2008

February 29, 2008

April 25, 2008

August 15, 2008

October 10, 2008

December 5, 2008

January 30, 2009

March 27, 2009

May 22, 2009

July 17, 2009

September 11, 2009

November 6, 2009

January 1, 2010

January 1, 2010

February 26, 2010

April 23, 2010

June 18, 2010

August 13, 2010

Weekly prices

Corn

DDGS

MDGS

WDGS
26

Market Issues and Prospects for U.S. Distillers’ Grains: Supply, Use, and Price Relationships / FDS-10k-01

Economic Research Service/USDA

The authors of this report present a methodology for estimating supply and 

consumption for the U.S. distillers’ grain market, providing a transparency 

that contributes to the quality of the data, which can then be used to compare 

the supply, use, and price relationships of DDGS with other feed sources (see 

“Appendix: Estimation of U.S. Distillers’ Grains Supply and Use”). Using 

these estimates, we show the size and composition of the distillers’ grain 

market in broad terms. These estimates can then be used to develop a broader 

understanding of the DDGS and larger feed markets.

As new markets develop, buyers and sellers struggle to determine how best 

to position the product in the market and at what price. Our method of estimating DDGS supply and use was presented to develop estimates consistent 

with similar estimates for corn and soybean meal. Estimated supply of U.S. 

distillers’ grains is expected to total 33.3 mmt for 2009/10, more than double 

that for 2006/07. Most of this additional supply comes from corn dry-mill 

fuel ethanol production, with a lesser amount coming from dry-mill beverage 

ethanol distilleries. Imports account for a minor segment of the market. 

Growth in both ethanol and distillers’ grains are expected to moderate in the 

future. Changing dry-mill ethanol technology may alter the future composition of distillers’ grains and the application of DDGS in livestock feed. 

Domestic U.S. feed and residual use comprises three-fourths of U.S. 

distillers’ grain disappearance. Domestic feeders have rapidly adopted this 

product to take advantage of its nutrient and cost advantages because it 

provides good value per unit of energy and protein. This adoption occurred 

early despite many issues of product quality, consistency, handling, and feed 

safety, due to education and common industry practices. Foreign feeders 

are also beginning to discover the economic feed value of distillers’ grains, 

and the rate of export growth has surpassed that found in the domestic feed 

market. Exports represented about a fourth of U.S. distillers’ grain disappearance in 2009/10. 

The authors used the findings in this report to address questions about the 

potential size of the DDGS supply relative to its potential feed use. The 

potential for current DDGS consumption in the United States generally 

exceeds future U.S. supply estimates. Future supply of DDGS was estimated at 38.6 mmt for 2019/20 compared with an estimated current potential 

U.S. DDGS feed consumption of 35.2 to 55.3 mmt. Additionally, expected 

distillers’ grain export potential is estimated to range from 20 to 52 mmt, 

which would cover any feed use not covered by U.S. needs. 

Corn and soybean meal prices are important determinants of DDGS prices 

and may explain why some producers rely on corn and soybean meal 

futures prices to establish DDGS prices, or why some producers use corn 

and soybean meal futures as a risk management tool. Another DDGS price 

discovery and risk management tool has become available with the initiation 

of a futures contract on April 26, 2010 for distillers’ grain at the CME Group. 

Average prices of DDGS for most the past 4 marketing years (2006/07-

2009/10) are now running at a discount to corn compared with an average 

Summary and Conclusions
27

Market Issues and Prospects for U.S. Distillers’ Grains: Supply, Use, and Price Relationships / FDS-10k-01

Economic Research Service/USDA

premium prior to the surge (May 1995 through August 2006) in distillers’ 

grain production. As DDGS increasingly became an energy feed, soybean 

meal prices lost some of their connection to DDGS prices. Perhaps the 

increased seasonality of DDGS prices could contribute to the explanation 

of this trend. Corn, DDGS, MDGS, and WDGS regional price relationships 

need further analysis to better explain their differences and behaviors over 

time. 
28

Market Issues and Prospects for U.S. Distillers’ Grains: Supply, Use, and Price Relationships / FDS-10k-01

Economic Research Service/USDA

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with Solubles in Small Markets,” Using Distillers Grains in the U.S. and 

International Livestock and Poultry Industries, Iowa State University, 

Midwest Agribusiness Trade Research and Information Center at the 

Center for Agricultural and Rural Development, chapter 7, 2008, 

http://www.matric.iastate.edu/DGbook/distillers_grain_book.pdf.

Rendleman, C. Matthew, and Hosein Shapouri. New Technologies in Ethanol 

Production, Agricultural Economic Report Number 842, U.S. Department 

of Agriculture, Office of Energy Policy and New Uses, Office of the Chief 

Economist, February 2007, http://www.usda.gov/oce/reports/energy/

aer842_ethanol.pdf. 
30

Market Issues and Prospects for U.S. Distillers’ Grains: Supply, Use, and Price Relationships / FDS-10k-01

Economic Research Service/USDA

Renewable Fuels Association. Changing the Climate: Ethanol Industry 

Outlook 2008, p. 14, http://www.ethanolrfa.org/objects/pdf/outlook/

RFA_Outlook_2008.pdf.

Renewable Fuels Association. Feeding the Future, September 2008, 

http://www.ethanolrfa.org/objects/documents/1914/feed_co-products.pdf.

Renewable Fuels Association. 2009 Ethanol Industry Outlook, p. 24, 

http://www.ethanolrfa.org/objects/pdf/outlook/RFA_Outlook_2009.pdf.

Renewable Fuels Association. Corn Quality Issues and Considerations 

for Ethanol Production, November 2009, http://www.ethanolrfa.org/

Grain%20Quality.pdf.

Renewable Fuels Association. 2010 Ethanol Industry Outlook, pp. 6-7, 

http://www.ethanolrfa.org/pages/annual-industry-outlook. 

Renewable Fuels Association. How Ethanol Is Made, September 2010, 

http://www.ethanolrfa.org/pages/how-ethanol-is-made/. 

Schingoethe, David J. “Distillers Grains for Dairy Cattle,” presentation made 

at the Iowa Regional Distillers Grains Workshop, February 2004. 

Schroeder, Ted C. “Distillers Grain Prices: Spatial Relationships, Arbitrage 

Opportunities and Risk Management,” Distillers Grain Market Development & Price Risk Management, Series FS2, Kansas State University 

Agricultural Experiment Station and Cooperative Extension Service,

North American Institute for Beef Economic Research, May 2009, 

http://www.naiber.org/Publications/NAIBER/Distillers_Grain_Prices.pdf.

Shurson, Jerry, and Abdorrahman S. Alghandi. “Quality and New Technologies to Create Corn Co-Products from Ethanol Production,” Using 

Distillers Grains in the U.S. and International Livestock and Poultry 

Industries, Iowa State University, Midwest Agribusiness Trade Research 

and Information Center at the Center for Agricultural and Rural Development, chapter 10, 2008, http://www.matric.iastate.edu/DGbook/distillers_

grain_book.pdf.

Staff, Charles, Executive Director, Distillers Grain Technology Council. 

Written communication, June 7, 2010. 

Stroade, Jeri, Anikka Martin, Ann Conrad, and Ted Schroeder. “Distillers 

Grain Industry Price Discovery and Risk Management,” Distillers Grain 

Market Development & Price Risk Management, Series FS4, Kansas State 

University, Agricultural Experiment Station and Cooperative Extension 

Service, North American Institute for Beef Economic Research, January 

2010, http://www.naiber.org/Publications/NAIBER/Distillers-GrainPrice-Discovery&Risk-Management.pdf.

The ProExporter Network. PRX Grain Database, section I on ethanol, corn, 

and DDG, September 18, 2006 and October 2, 2007. 
31 

Market Issues and Prospects for U.S. Distillers’ Grains: Supply, Use, and Price Relationships / FDS-10k-01

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U.S. Department of Agriculture. Corn Belt Weekly Feedstuffs, Missouri 

Department of Agriculture News Service, St. Joseph, Missouri, 

http://www.ams.usda.gov/mnreports/sj_gr225.txt.

U.S. Department of Agriculture. “National Weekly Distillers Grains 

Summary,” Livestock and Grain Market News, Des Moines, Iowa, 

http://www.ams.usda.gov/mnreports/lswndgs.pdf.

U.S. Department of Agriculture. “National Weekly Ethanol Summary,” Livestock and Grain Market News, Des Moines, Iowa, http://www.ams.usda.

gov/mnreports/lswethanol.pdf.

U.S. Department of Agriculture, Agricultural Marketing Service. Bioenergy 

Market News reports, http://www.ams.usda.gov/AMSv1.0/ams.fetchTemplateData.do?template=TemplateN&navID=MarketNewsAndTransportati

onData&leftNav=MarketNewsAndTransportationData&page=Bioenergy.

U.S. Department of Agriculture, Economic Research Service. Feed Grains 

Database, http://www.ers.usda.gov/data/feedgrains/.

U.S. Department of Agriculture, Office of the Chief Economist, World Agricultural Outlook Board (WAOB). USDA Agricultural Projections to 2019, 

Long-Term Projections Report OCE-2010-1, February 2010, 

http://www.ers.usda.gov/publications/oce101/. 

U.S. Department of Agriculture, Office of the Chief Economist, World Agricultural Outlook Board (WAOB). World Agricultural Supply and Demand 

Estimates, WASDE-444, March 12, 2010, http://www.usda.gov/oce/

commodity/wasde/index.htm.

U.S. Department of Commerce (a), Census Bureau. Fats and Oils: Oilseed 

Crushings Circular M311J, table 2, http://www.census.gov/manufacturing/cir/historical_data/m311j/index.html.

U.S. Department of Commerce (b), Census Bureau, http:www.usatradeonline.gov/. 

U.S. Department of the Treasury, Alcohol and Tobacco Tax and Trade 

Bureau. Monthly statistical reports, 1992-2009, http://www.ttb.gov/statistics/alcohol_stats.shtml#alcoholfuel.

U.S. Energy Information Administration. Petroleum Supply Monthly, 

February 26, 2010, http://www.eia.doe.gov/pub/oil_gas/petroleum/

data_publications/petroleum_supply_monthly/historical/2010/2010_02/

psm_2010_02.html.

U.S. Grains Council. Biotech Traits Approved in EU Positive Move, November 2009, http://grains.org/news-events/ 

2015-biotech-traits-approved-in-eu-positive-move.

U.S. Grains Council. DDGS Transport Proposal to the IMO 

Approved, September 2010, http://www.grains.org.org/

global-update/2646-global-update-september-17-2010. 
32

Market Issues and Prospects for U.S. Distillers’ Grains: Supply, Use, and Price Relationships / FDS-10k-01

Economic Research Service/USDA

Voegele, Erin. “Going Global with DDGS,” Distillers Grains Quarterly, 

first quarter, 2009, http://www.ethanolproducer.com/dgq/article-print.

jsp?article_id=1280.

Watson, Stanley A. Industrial Utilization of Corn, American Society of 

Agronomy, pp. 721-63, 1977.

Weigel, Jerry C., Dan Loy, and Lee Kilmer. Feed Co-Products of the Corn 

Wet Milling Process: Featuring Corn Gluten Feed and Corn Gluten Meal, 

ExSeed Genetics and Iowa State University in cooperation with Iowa 

Corn Promotion Board, Renewable Fuels Association, and U.S. Grains 

Council, April 2004, http://www.extension.iastate.edu/Bioeconomy/

Livestock.

Weigel, Jerry C., Dan Loy, and Lee Kilmer. Feed Co-Products of the Dry 

Milling Process: Featuring Distillers’ Dried Grains, ExSeed Genetics and 

Iowa State University in cooperation with Iowa Corn Promotion Board, 

Renewable Fuels Association, and U.S. Grains Council, April 2004, 

http://www.extension.iastate.edu/Bioeconomy/Livestock.

Weiss, Bill, Maurice Eastridge, Dianne Shoemaker, and Normand St-Pierre. 

“Distillers Grains,” Ohio State University Extension Fact Sheet,

June 2007, http://ohioline.osu.edu/as-fact/pdf/distillers.pdf.

Wisner, Robert. “Understanding the Distillers Grains Supply/Usage Balance 

Sheet,” AgMRC Renewable Energy Newsletter, November/December 

2008, http://www.agmrc.org/renewable_energy/ethanol/understanding_

the_distillers_grains_supplyusage_balance_sheet.cfm.

Wisner, Robert. Estimated U.S. Dried Distillers Grains with Solubles 

(DDGS) Production and Use, Iowa State University, University Extension, 

http://www.extension.iastate.edu/agdm/crops/outlook/dgsbalancesheet.

pdf.
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The need for a transparent method to estimate the supply (production and 

imports) and disappearance (domestic feed consumption and exports) of 

distillers’ grains is apparent because of the number of undocumented estimates of production and consumption that have been made and discrepancies 

and inconsistencies among these estimates (Voegele, 2009; Food and Agricultural Policy Research Institute (FAPRI), 2009; RFA, 2008; The ProExporter 

Network, 2007). Our methodology is similar to the process used by USDA’s 

Economic Research Service to estimate supply and use for the major livestock feed sources, which distillers’ grains have rapidly become. A consistent 

methodology allows analysts to research issues with distillers’ grains, such 

as supply and disappearance (domestic and export). Our estimation method 

relies on published data, but inventories are not included in our estimate of 

supply, since there are no published data for inventories of distillers’ grains. 

Production estimates for DDGS have become available, but these estimation 

methods are less than transparent and difficult to apply generally (Wisner, 

2008; FAPRI; Deutscher, 2009; RFA, September 2008; U.S. Department of 

Commerce, Census Bureau (a)).1 U.S. Census Bureau statistics are viewed 

by Government and industry analysts as incomplete and under-report DDGS 

production based on other reports of ethanol production. For example some 

DDGS production estimates are expressed on a calendar year basis, while 

other estimates are for a crop marketing year; assumptions about conversion 

factors and product breakouts also likely vary. For example, Wisner (2008) 

estimated production and exports of distillers’ grain in 2007/08 at 25.7 and 

3.9 million short tons, respectively. FAPRI estimated production and exports 

of DDGS in 2007/08 at 22.8 and 2.4 million short tons, respectively. RFA 

reported that 14.6 mmt of DDGS were produced in calendar year 2007 (RFA, 

2008). In a later document, RFA reports estimated production of distillers’ 

grains at 19.3 million metric tons for corn marketing year 2007/08 (RFA, 

September 2008). 

Differences in estimates can occur due to assumptions on yield of distillers’ 

grains per bushel of corn turned into ethanol. Estimates range from 16.75 to 

18 pounds per bushel of corn fermented for ethanol. Some analysts assume 

that all corn used for ethanol production is credited to the dry-mill process. 

Dry mills account for an increasing share of total ethanol production, but this 

process is not used across all ethanol production. 

In May 2007, the Census Bureau began publishing information that provided 

the quantity of corn grind used to produce ethanol along with its feed coproducts of corn gluten meal, corn gluten feed, wet corn gluten feed, and corn 

germ meal (U.S. Department of Commerce, Census Bureau (a)). The corn 

and other grain grind from the dry mills, including beverage distillation, were 

provided along with the feed coproducts—distillers’ wet grain, distillers’ 

dried grain with solubles, distillers’ dried grains, distillers’ dried soluble, and 

1 The U.S. Census Bureau began 

publishing production estimates of 

distillers’ grains in May 2007, but 

this estimating procedure does not yet 

appear to capture all production based 

on other less direct methods, including the methodology examined in this 

report. The Renewable Fuels Association released a study in September 

2008 that contained a production 

estimate of DDGS, corn gluten feed, 

and corn gluten meal for 2007. 

Appendix:

Estimation of U.S. Distillers’ Grain Supply 

and Use: A Transparent Methodology to 

Estimate U.S. Distillers’ Grain Production 

and Consumption 
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Market Issues and Prospects for U.S. Distillers’ Grains: Supply, Use, and Price Relationships / FDS-10k-01

Economic Research Service/USDA

condensed distillers’ solubles. A transparent methodology to estimate the 

production of distillers’ grains allows for cross checking with the production estimates provided by the Census Bureau as well as with other industry 

or university production estimates. Census Bureau production estimates do 

not specify the moisture content of their listed coproducts. For example, 

university and USDA/AMS report moisture content of distillers’ dry grains 

with solubles at 10 to 12 percent, modified wet distillers grains with solubles 

at 50 to 55 percent moisture, and wet distillers’ grains with solubles at 65 to 

70 percent moisture. Thus, it is difficult to determine whether U.S. Census 

Bureau’s production estimates are similar to production estimates from other 

sources. Furthermore, our methodology can estimate data prior to the start of 

the Census Bureau statistics in May 2007.

Currently, the Census Bureau provides estimates for U.S. soybean meal grind 

and U.S. wheat flour grind that are used by both the Government and the 

industry. With time, the Census Bureau estimates of feedstocks used for both 

wet- and dry-mill ethanol plants and their resulting ethanol feed coproducts 

should become more reliable and useful to the distillers’ grain market to 

gauge supply and consumption. 

Meanwhile, we present a methodology that produces a transparent source of 

information on feedstocks for both wet- and dry-mill ethanol plants and their 

resulting feed coproducts that will be useful for the distillers’ grain market to 

gauge supply and consumption. We followed USDA’s methodology to estimate supply and demand for commodities: 

•	For production, we estimated the amount of corn used by beverage distilleries and the resulting amount of distillers’ grains produced from this 

production process. 

•	Next, we estimated the amount of corn used by dry-mill ethanol plants 

and the resulting distillers’ grains. 

•	Then we added imports of distillers’ grains derived from U.S. Department 

of Commerce trade data and from the Economic Research Service’s Feed 

Grains Database (USDA, ERS). 

•	By adding these components, we estimated supply of distillers’ grains. 

•	From this supply, we subtracted exports derived from U.S. Department of 

Commerce trade data and from the ERS Feed Grains Database to arrive 

at feed and residual use. 

Please note that the split for ethanol production between wet- and dry-mill 

corn ethanol plants is an estimate. Not all relevant data were available to 

make these estimates, but the estimation steps follow. For example, the corn 

oil yield per crop year should vary by crop year following actual oil yield 

variation by crop year. Since these data were unavailable, a constant estimate 

of 1.64 pounds per bushel processed was used. Furthermore, the amount 

of corn oil produced by dry mills later becomes an issue once fractionation 

began at some of the dry-mill plants. The Census Bureau report (U.S. Department of Commerce, Census Bureau (a)) may not be picking up this increase 

in oil from dry mills, so an assumption was made to account for this situation. Should actual data for estimates of fuel ethanol produced by wet mills 

become available, these data should be used instead of our estimates. 
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Estimated Supply 

Production

Distillers’ grains are produced from two sources—dry-mill beverage distilleries and dry-mill fuel ethanol producers. An estimation procedure for the

amount of distillers’ grains produced is explained below. 

Dry-mill beverage distilleries—Our goal was to estimate the amount of corn 

used by dry-mill beverage distilleries and the amount of distillers’ grains 

produced from this production process. The quantity of distillers’ grains 

produced is shown in table 1, column 1. The amount of corn used was based 

on U.S. Department of the Treasury, Alcohol and Tobacco Tax and Trade 

Bureau data. Bushels of corn used for distilled spirits were multiplied by 

17.5 pounds to arrive at the amount of distillers’ grains produced per bushel 

of corn used. As observed from table 1, this production figure has remained 

rather stable in the past few years at 0.9 mmt, but the share of total corn used 

for ethanol production has declined. 

Dry-mill fuel ethanol—We needed to estimate the amount of corn used by 

dry-mill fuel ethanol plants. Since we know the total amount of corn used for 

fuel ethanol from the monthly World Agricultural Supply and Demand Estimates (WASDE), we had to determine the amount of corn used by wet-mills 

and subtract it from the total to arrive at the amount of corn used by dry-mills 

for fuel ethanol production. The reason for this separation is that different 

coproducts result from each production method. 

Estimation methodology—The quantity of corn oil produced by wet corn 

mills must first be converted into the quantity of corn processed by wet mills. 

Corn oil is a coproduct created by wet mills, regardless of the other products produced, such as high-fructose corn syrup (HFCS), glucose/dextrose, 

starch, or ethanol. As seen in estimation step 1 (table 2, column 1), the total 

amount of corn processed by corn wet mills can be computed from total corn 

oil production minus that produced from dry mills divided by the yield of oil 

per wet-mill bushel processed. Both corn oil numbers produced at wet and 

dry mills were taken from the U.S. Department of Commerce (a), Census 

Bureau data. In the past 3 years, the corn oil amount produced by dry mills 

was increased to account for oil produced from fractionation (front-end), 

increasing this estimate from 1.9 percent for marketing year 2006/07, to 2.0 

percent for marketing year 2007/08, and to 2.25 percent for marketing years 

2008/09, 2009/10, and 2010/11.2

Next, the amount of corn used for fuel ethanol production by wet mills must 

be determined. Since we estimated total corn used by the wet-mill plants, we 

subtracted the amount of corn used for HFCS, glucose/dextrose, and starch to 

arrive at the corn available for ethanol production as shown in estimation step 

2 (table 2, columns 3-8). 

The bushels of corn used by wet mills for fuel ethanol produced from the 

total corn used by both wet and dry mills for fuel ethanol production must 

then be subtracted. Total corn used by both wet and dry corn mills for fuel 

ethanol production can be obtained from USDA’s WASDE. The difference is 

the amount of corn used by dry mills for fuel ethanol production (see table 

3). This calculation is illustrated in estimation step 3. 

2 Future adjustments must be based 

on whether corn oil continues to 

be removed from the fractionation 

(front-end) process.
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Market Issues and Prospects for U.S. Distillers’ Grains: Supply, Use, and Price Relationships / FDS-10k-01

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The final step, as seen in estimation step 4, is to multiply the amount of 

corn used by dry mills to produce ethanol by 17.5 pounds—the weight of 

distillers’ grains after the fermentation process (table 1, column 2). Common 

estimates for this weight range from 16.75 pounds to 18 pounds of DDGS per 

bushel of corn fermented for ethanol production. We used 17.5 pounds for 

the earlier years and 17.4 pounds for the later years 2007/08 through 2010/11 

because of fractionation, both front-end and back-end, and the removal of 

corn oil during the production of fuel ethanol by the dry mills.3 

Since 2002/03, most U.S. ethanol was produced from dry-mill corn ethanol 

plants. The share of corn use by dry mills continues to rise, ranging from 

about 54 percent in 2002/03 to 90 percent in 2009/10 (see table 3). 

Imports

Data on imports of distillers’ grains were obtained from the U.S. Department 

of Commerce (b) and the Economic Research Service’s Feed Grains Database. Unfortunately, distillers’ grains are part of a category called “brewers 

and distillers dregs and wastes.” Brewer’s grains are found in this category, 

but so too are noncorn distillers’ grains. Currently, most of these imports 

originate from Canada and could include noncorn feedstocks, such as barley 

or wheat. Regardless of the unknown products in this category, adjustments 

seem unwarranted since the quantity is small, ranging from 0.1 to 0.5 mmt 

(table 1, column 3). 

3 The reduction of distillers’ grain 

yield per bushel of corn processed for 

dry-mill ethanol production from 17.5 

to 17.4 is an attempt to capture the 

effects of fractionation and removal of 

oil from ethanol production process by 

dry-mill plants. Additional analysis 

will be required to derive a more precise estimate of these effects.

1. Total corn oil produced for 2009/10 was estimated at 2.50 billion pounds (table 

2, column 1) minus 2.5 percent of the total estimated to be produced by dry mills 

equaled 2.44 billion pounds of corn oil produced by wet mills (table 2, column 2) 

divided by 1.64 pounds of corn oil per wet mill bushel processed equaled 1,490.1 

million bushels of corn processed by corn wet mills (table 2, column 3). 

2. Total bushels of corn estimated to have been processed by wet-mill corn plants in 

2009/10 equaled 1,490.1 million bushels (table 2, column 3) minus corn used to produce HFCS equal to 515.0 million bushels (table 2, column 4) plus glucose/dextrose 

equaled 255.0 million bushels (table 2, column 5) plus starch equaled 245.0 million 

bushels (table 2, column 6) equaled 475.1 million bushels of corn used by wet-mill 

plants to produce fuel ethanol (table 2, column 8).

3. Total corn estimated to be used for fuel ethanol production in 2009/10 equaled 

4,535.0 million bushels (table 3, column 1) minus corn used by wet mills for fuel 

ethanol production which equaled 475.1 million bushels (table 3, column 2) equaled 

4,059.9 million bushels of corn used by dry mills for fuel ethanol production (table 

3, column 3). 

4. 4,059.9 million bushels of corn used by dry mills for ethanol production (table 3, 

column 3) multiplied by 17.4 pounds of DDGS per bushel of corn processed by drymill ethanol plants equaled 32.0 mmt produced (pounds divided by 2204.622 pounds 

per metric ton) (table 1, column 2). 

1 A corn oil yield of 1.64 pounds per bushel is used for these calculations. This yield was 

computed as follows: 15.5 percent moisture content per bushel, test weight of 56 pounds per 

bushel and a fat content per bushel of 4.3 percent of dry matter (.043 x 47.32 lbs/bu. = 2.035 

lbs. /bu.). Next, we assume that 85 percent of the oil is located in the germ and an extraction rate of 95 percent, yielding (2.035 lbs/bu. x .85x .95 = 1.64 pounds/bu.) (Corn Refiners 

Association, p. 5, 2006).

Estimation steps
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Market Issues and Prospects for U.S. Distillers’ Grains: Supply, Use, and Price Relationships / FDS-10k-01

Economic Research Service/USDA

Estimated Use

Domestic Feed and Residual Use

Residual use was computed by subtracting exports from supply (table 1, 

column 4). The quantity of U.S. distillers’ grain supply for domestic use in 

2009/10 was estimated at 25.0 mmt (table 1, column 1). Domestic feed and 

residual use accounted for 75 percent of use, but this share is declining. 

Exports—Data on exports of distillers’ grains were obtained from the USDA 

Feed Grains Database. Despite the title of this export category—brewers’ 

and distillers’ dregs and wastes—most of the product in this category comes 

from distillers’ grains. For example, U.S. production of brewers’ grains for 

1988/89 was 117,900 short tons, the last year of published data (Ash, 1992). 

If one were to assume that 18 percent of this production was still being 

exported, the portion of production exported in 1988/89, we would expect 

that 117,900 short tons x 18 percent = 21,222 short tons or 21,222 short tons 

x 0.9071 = 19,252 metric tons would be exported. Regardless of the unknown 

product in this category, adjustments seem unwarranted since the quantity is 

small. Exports of 19.3 metric tons of brewers’ grains would be considered 

high since corn consumption for beer production has declined since 1988/89. 

Exports of distillers’ grains have accelerated since 2003/04, from less than 

1.0 mmt to an estimated 8.3 mmt for 2009/10 (table 1, column 5).4 Accelerating exports are expected to reach 25 percent of total disappearance in 

2009/10, despite increasing U.S. feed and residual use of distillers’ grains. 

4 Similar calculations were made by 

Dooley in December 2008, but were 

based on RFA calendar year production numbers and calendar year 

exports.