Fact Sheet Written by:
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++
+Department of Agricultural Economics and ++Department of Animal Science, University of Nebraska Lincoln.
And Provided by
University of Nebraska-Lincoln http://beef.unl.edu
The rapid growth of the ethanol industry in recent years has led to the development 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.
Although much research has been conducted exploring methods to store co-products and the effects of co-product feeding on cattle performance (Erickson et al., 2007), little has been done in evaluating the economics of storing co-products for extended periods of time. The following discussion will address the potential opportunities to store co-products and will describe a user-friendly Excel spreadsheet called Co-Product STORE (Storage To Optimize Ration Expenses) that is designed to analyze the costs associated with different co-product storage methods for the purpose of co-product inclusion in cattle rations.
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