The increased corn harvest in 2013 brought lower corn prices, lowering the corn input costs for ethanol producers. Those producers are also benefiting from improving margins for dried distillers grains, an important supplement for animal feed that is the major co-product of ethanol production from corn. Sales of dried distillers grains provide a significant portion of the total revenue received by ethanol facilities, underpinning the economic feasibility of ethanol fuel production.
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In addition to supplying the domestic agricultural sector, demand for DDGS is growing in foreign markets. During 2013, total DDGS exports reached 9.7 million metric tons, more than double the 4.5 million metric tons of total exports in 2008. China has played a key role in driving this growth, with total DDGS exports to China rising from 1.4 million metric tons in 2011 (18% of total U.S. export volumes), to 2.2 million metric tons in 2012 (29% of total U.S. exports), and 4.5 million metric tons in 2013 (46% of total U.S. exports), according to U.S. Department of Agriculture data.
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