Market Trends of Distiller's Dried Grains with Solubles (DDGS) Feed Industry
This section covers the major market trends shaping the DDGS Feed Market according to our research experts:
Increasing Demand from Livestock
One of the prime factors determining whether DDGS is an economical animal feed ingredient is the price and the availability of alternate options, like corn and soybean meal, as DDGS is a partial replacement for those alternate options. DDGS meal is more like corn in terms of nutritional value and price. Additionally, the demand for distiller's dried grains with solubles increased in the global market due to the health benefits and improvement in feed nutrients. DDGS in compound feeds for cattle influences the growth of milk yield and the fat and protein content in it. Countries with high prices of cornmeal may act as ideal markets for DDGS.
The primary users of DDGS are the dairy and beef industries. Recently, the usage of DDGS in the swine industry began to increase dramatically and, to a lesser extent, in the poultry industry. According to the US Grains Council, adding 20-30% DDGS to a lactating cow diet results in milk production equal to or greater than when diets containing no DDGS are fed. The United States, China, and India are the largest producers of ruminant feed due to the presence of many cattle and other ruminant populations in these countries. For instance, according to USDA the population of cattle and calves in 2021 is 93.8 million which increased from 93.7 million in 2017. This showed an increase in the population, thereby increasing feed consumption. Regions with high livestock production, such as the United States, have been witnessing demand for DDGS for the last few years. Therefore, the increased supply of milk and meat due to the high populations of animals needs high feed ratios which aid the growth of the DDGS market.
North America Dominates the DDGS Market
North America continues to have the largest market for corn-based distillers' dried grains with solubles. DDGS is a co-product of the distillery industries. The majority (~98%) of the DDGS in North America comes from dry-grind plants that produce ethanol for the biofuel industry. The United States dominates the market due to the extensive biofuel production in the country. According to the US Grain council, the United States ethanol plants possess the capacity to produce more than 15 billion gallons of ethanol and 44 million metric tons of DDGS driving the parallel expansion of the DDGS market. This can be attributed to the regulatory oversight of the US Food and Drug Administration, which ensures that ethanol plants comply with preventive control requirements as mandated by the Food Safety Modernization Act (FSMA). This federal rule requires facilities to follow hazard-free and safe manufacturing practices for animal food production. These preventive controls provide a formal assurance to buyers worldwide that American ethanol co-products continue to be safe feed ingredients.
The United States leads in the production as well as exports of DDGS. It had a major share of production and export with 44 million metric ton and 11 million metric ton, respectively, in 2021. Mexico is now the top buyer of US DDGS, which has been made possible by the North American Free Trade Agreement (NAFTA) through its market development measures and trade interrelationships.
