Ethanol manufacturers are removing more and more oil from the residual distillers dried grains with solubles (DDGs) which make this by-product of ethanol a less valuable feed ingredient, according to a Dow Jones newswire report this week. Corn oil, which is used both for cooking oil and to make biodiesel fuel, has emerged over the last year as a lucrative niche product for ethanol producers.  Extracting corn-oil cuts into the fat and energy content of DDGs.

Researchers said concerns over the decreasing DDGs fat content are just starting to emerge. Livestock producers could start to reduce their use of DDGs in favor of returning to use more soybean meal, analysts and livestock nutritionists told Dow Jones.  As corn-oil extraction “becomes more widespread, livestock producers, particularly producers of hogs, will begin to shift feeding back to meal,” said Don Roose, president of U.S. Commodities.

University researchers and animal nutritionists across the Midwest said they are hearing concerns from cattle and hog producers about DDGs and are trying to determine the effects of corn oil extraction on the nutritional value of DDGs. Researchers at state universities in Nebraska, Illinois, and Minnesota plan to release findings in the weeks and months ahead on this issue.  The changes in DDGs for livestock  and poultry producers are “kind of throwing them a curve ball,” said Jay O’Neil, agricultural economist with Kansas State University.