DDGS Weekly Market Report – April 27, 2017

DDGS prices have trended sideways this week with little bullish or bearish news to influence them. The occurrence of plant closures for spring maintenance was supposed to have tightened supplies and supported prices, but that has yet to happen. Traders are reporting weak demand and steady pricing in Chicago and weaker prices in California. Prices for DDGS delivered via rail to the PNW had only enough room to advance $2/MT this week as PNW corn prices were steady.

More pricing strength is being reported on the international front where Gulf FOB prices are $3-4/MT higher this week. Merchandisers are reporting inquiries from several international destinations but little follow-through trading so far. Buyers seem content to shop around for now. Currency fluctuations and foreign exchange rates have been active in recent weeks which is further slowing international demand. Prices for 40-foot containers to Southeast Asia were steady this week, averaging $175/MT. FOB DDGS prices are equal to 92 percent of Gulf FOB corn, up 2 percent from the prior week as FOB corn prices slipped this week. FOB Gulf soybean meal increased $10/MT this week which kept the DDGS/soybean meal price ratio at 42 percent. On a per-protein unit basis, FOB Gulf DDGS increased their cost advantage over soybean meal, with prices now $1.52 lower than soybean meal. Similarly, FOB ethanol plant DDGS maintained a $2.27 per-protein unit cost advantage over FOB plant soybean meal.

In the long run, DDGS consumption has plenty of room to grow, driven by both economic and environmental factors. Recent research has highlighted the environmental benefits of feeding DDGS to livestock. Including DDGS in dairy cow rations was found to reduce methane production and reduce phosphorus excretion in swine and poultry manure. Both findings hint at significant environmental benefits, those of lowering greenhouse gas emissions and reducing phosphorous runoff from manure-fertilized fields. Accordingly, ethanol’s most prominent co-product has a place in livestock rations to help achieve production and environmental goals.