In any industry, profits swing up and down in the short term, but for the ethanol industry the major long-term profitability trend continues to be quite favorable. Growth from this point will not likely be as fast and furious as it was in the previous five years, but growth nonetheless is continuing.

An interesting note is the profit picture for an ethanol plant has been changing significantly. More and more of the profits are coming from distillers’ dried grains (DDGs) as the export market is starting to take off. The charts show the magnitude of exports of DDGs – not to mention the potential if the trend can continue.

Before summer 2009, exports of DDGs were essentially nonexistent. This year it’s expected to be at least a 3-million-metric-ton business, and the challenge will be supplying the quantities requested.

While the coffee shop talks about China buying corn, that’s not likely to occur in significant quantities in the near term. The Chinese have only bought about 313,600 metric tons (12 million bushels) of U.S. corn this crop year. What China does want, however, are DDGs. They look more and more at the cost of shipping per protein-pound, and with the much higher protein content of DDGs, it makes more sense to import this product than it does corn itself.

Of all the DDG exports, as 2010 ended, over 30% of the exports were going to China monthly. That will likely increase as the ethanol industry grows and has a ready supply available for China.