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DDG production of corn skyrockets in Brazil and advances in the soybean meal market

Posted by Rafael Moro

The production of DDG, a by-product of corn ethanol production, will grow by more than 60% in Brazil this year, replacing part of the soy meal in the composition of animal feed, a situation that has been helping producers and consumers in a situation of scarce supply and high raw material prices.

For the National Corn Ethanol Union (Unem), the production of DDG (from English, dry grains by distillation) in Brazil will advance to around 2 million tons in 2020, compared to 1.2 million tons in 2019, as measured that more corn ethanol plants come into operation, which fits well with the demand from cattle, pork and poultry farmers who deal with high costs.

"DDG makes a substitution for soybean meal, it has a more affordable price, it is cheaper, despite having a lower level of protein ...", Unem president Guilherme Nolasco told Reuters.

"But in this moment of unbridled increase in the price of corn and soybeans, it has been an excellent alternative to production chains, especially cattle, given the historical moment of drought that the country is going through," added Nolasco, recalling that, with pastures dry, the product complements animal feed.

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In addition to being an alternative for cattle feed, which absorbs most of the DDG production in Brazil, poultry and pig farming are also replacing part of the soybean meal with the corn by-product, an indication of the potential of this raw material, which it is already used on a large scale in the United States, the largest global ethanol producer.

"The co-products of the corn ethanol plants, DDG (dry) and WDG (wet), have been gaining space in the market replacing or composing with soy bran and other sources of protein. What has stimulated this is the best cost / benefit, and the inclusion in the diet of cattle, pigs and poultry ", commented Thayná Drugowick de Andrade, zootechnician who works at Scot Consultoria.

She also said that DDG and WDG gained market share as an alternative source of protein, but they also have good levels of energy in their composition, which also interests breeders.

"These co-products have been gaining prominence due to the more attractive prices and because they are adaptable to different diets, being able to enter either as protein, replacing soybean meal or cottonseed meal, or as energy protein, replacing the grain corn itself", he added.

According to a survey by Scot Consultoria, in the second half of September the average price of a ton of soybean meal, considering Mato Grosso as a reference, was 2 thousand reais, while DDG was quoted at one thousand reais. If the price difference is large, in terms of crude protein the difference between products is smaller, with bran having 48% and DDG 32%, on average.

Thayná estimates an increase in DDG supply this year in Brazil of about 62% compared to 2019, while consumption of soy bran in the country, a competitor of the corn ethanol by-product, is expected to fall 3.2%, to 16, 7 million tons, according to data from the Brazilian Association of Vegetable Oil Industries (Abiove).

Consumption of soybean meal in Brazil will decrease despite the expectation of a 4% increase in the national production of animal feed this year, to more than 80 million tons, a figure that includes mineral salt, the executive president of the Sindamentos, Ariovaldo Zani.

"Taking into account the price that the bran has reached, and corn as well, DDG is an ingredient that fits well ...", agreed the leader of Sindorações, considering that the product complements the supply of raw materials at the time of great demand for Brazilian meat abroad, a key factor for the increase in feed production this year.


On the other hand, DDG has been very strategic to help offset the increase in raw material costs for the ethanol industry, since corn has doubled in price, but biofuel has not.

"On the contrary, ethanol is recovering, returning to the January price, and the DDG is responsible for this increase in the cost of raw materials for the ethanol industry," said the president of Unem, recalling that the pandemic affected the market of the fuel.

He mentioned that the soybean meal has risen since the beginning of the year from 1,100 to 2,200 reais per ton, based in Mato Grosso, while the DDG increased from 600 to 1,100 reais per ton, and corn went from 24 to 48 reais per bag of 60 kg.

Unem, whose associated industries are concentrated in Mato Grosso and Goiás, where they are also large consumers of feed raw material, including cattle feeders and pig and poultry farms, projects a 20% growth in DDG production for next year. , to 2.4 million tons, in the wake of an increase in corn ethanol production in the country, to 3.2 billion liters.

Although DDG production soared in 2020, most of the supply is already sold by mills by the end of the year, Nolasco said, adding that sales contracts are now being closed for delivery in 2021.

Source: Notícias Agrícolas