Implications of Growing Biofuels Demands on Northeast Livestock Feed Costs
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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.