Co-Product Storage To Optimize Ration Expenses

Josie A. Waterbury, Graduate Research Assistant, Darrell R. Mark, Extension Livestock Marketing Specialist, Rick J. Rasby, Extension Beef Specialist, Galen E. Erickson, Extension Beef Feedlot Specialist, University of Nebraska

The rapid growth of the ethanol industry in recent years has led to the formation of a new commodity market for ethanol coproducts. The variability in co-product prices over time and across markets suggests fundamental supply and demand factors are influencing prices. However, the relative infancy of these co-product markets presents cattle producers with the opportunity to benefit from seasonal price changes. Until recently, there was no means in which to arbitrage temporal price differences in coproduct prices because storage was not considered feasible. In the past two years, there has been a substantial amount of research devoted to methods of co-product storage (Erickson et al., 2008). Thus, livestock producers can now take advantage of seasonal price changes in co-products, similar to purchasing and storing grain.

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