Implications of Growing Biofuels Demands on Northeast Livestock Feed Costs

Abstract

The relationship between complete-feed prices and ingredient prices are estimated to analyze the effect of higher commodity prices on feed costs, with particular attention to the substitutability of corn distillers dried grains with solubles (DDGS). Using an historical positive price correlation between corn and DDGS, each $1/ton increase in the price of corn increases feed costs between $0.45 and $0.59 per ton across livestock sectors. Assuming a negative long-run price correlation reduces these marginal feed costs to between $0.11 and $0.36. Overall, DDGS cost savings are relatively limited and insufficient to offset the impact of other higher-priced feedstocks.