Robert Pore's Ag Blog

AMARILLO – Like it or not, ethanol is coming, and beef producers must be prepared to weather the transitional phase and capitalize on the potentials in the future, said officials of the Texas Cooperative Extension Service.

"The short run is going to be tough, but in the long run, things will work out," said Dr. Steve Amosson, Texas Cooperative Extension economist.

Feed prices are being driven up by predictions of 3 billion gallons of ethanol production capacity coming online in the next year. Ethanol would require almost an 8-million acre increase in corn acreage, which equates to an additional 1.1 billion bushels of corn, Amosson said.

"I feel the corn prices will range from $3 to $4.25 per bushel on the board for the next couple of years, and the differential between corn and sorghum will narrow," he said.

Competition for acreage will increase, forcing other feed sources and crop prices higher.

In the short run, fed cattle prices will remain relatively unchanged, and feeder cattle and calf prices may continue to soften, Amosson said. A rule of thumb, he said, is calf prices will drop $1.50 per hundredweight for every 10 cent rise in corn prices.

This is going to reduce the predicted expansion phase of the cattle cycle, he said. But in three to four years that reduction will have cattle producers seeing record prices.

"Cattlemen also have a potential to gain market share relative to the swine and poultry industries because cattle can be fed the distiller's grain by-products, where the other industries can't," Amosson said.

"We just have to learn to feed those DDG's (dried distiller's grain)," he said.

Dr. Jim MacDonald, Texas Agricultural Experiment Station beef cattle nutritionist, agreed, saying "You don't have to like it, but you had better learn how to feed it."

And that, MacDonald said, is his job – helping the cattle producers learn how to feed the byproduct.

While ethanol had its share of unfriendly comments during the two-day symposium, MacDonald said, "We're going to get there, we just have to manage the transition.

"A lot of concern has come with ethanol in this area," he said. "But we are better off with the plants here than not because we're not the only game in town."

Dried distiller's grains from the Midwest are being shipped into the export market, he said. So the fact that the Panhandle will produce 600 million gallons of ethanol per year soon, resulting in 1.5 million tons of distiller's grains, will help keep prices reasonable.

When corn is processed for ethanol, it breaks down to one-third ethanol, one-third carbon dioxide and one-third byproduct or distiller's grain, MacDonald said.

These distiller's grains still have all the nutrient profile of corn, only the starch has been removed, he said. It has 40 to 45 percent fiber and 25 to 30 percent crude protein.

"It's going to be a cheaper protein source in the future and if used as a forage supplement, it can be used for both protein and energy supplementation," MacDonald said.

Labels: Ag news