Distiller’s dried grains are a co-product of dry-milled ethanol production. U.S. ethanol plants have the capacity to produce more than 17.5 billion gallons of ethanol and 35.3 million tons of DDGs. DDGs from corn contain, on average, 30 percent protein, 10 percent fat and 7 percent fiber. About 18 pounds of DDGs – 10 percent moisture content – are produced from 1 bushel of corn. Because their protein content is greater than that of corn, DDGs can be substituted for corn and soybean meal in livestock diets.
Given the substitutability of DDGs for corn and soybean meal, we would expect DDG prices to be significantly related to those feedstuffs. To help explain fluctuations in DDG prices, this article examines the relationship between DDG prices, and corn and soybean-meal prices. Price data used were obtained from monthly issues of Feed Outlook, which reports DDG, corn and soybean-meal prices for central Illinois.
Figure 1 depicts monthly DDG and corn prices from January 2007 to December 2024. The average DDG and corn prices during that period were $173 per ton and $167 per ton, respectively. Those two price series are strongly correlated, with r equaling 0.851. The positive correlation indicates that corn and DDG prices tend to move in the same direction. But there are times when the two prices diverge. For example in December 2008 and January 2009, corn prices were 33 percent to 37 percent more than DDG prices, while from March 2020 to July 2020 during the heart of the COVID outbreak, corn prices were from 25 percent to 46 percent less than DDG prices.
Monthly DDG and soybean-meal prices from January 2007 to December 2024 are illustrated in Figure 2. Average DDG and soybean-meal prices during the period were $173 per ton and $363 per ton, respectively. On average, soybean-meal prices were 119 percent more than DDG prices. Though soybean-meal prices tend to be more than DDG prices, those two price series are strongly correlated, with r equaling 0.727. Note that the correlation between soybean-meal and DDG prices is less than the correlation between corn prices and DDG prices. But the correlation between corn and soybean-meal prices is 0.615, less than the correlation between soybean-meal and DDG prices. The difference between soybean-meal and DDG prices ranged from 35 percent in November 2011 to 338 percent in September 2014.