DDGS Weekly Market Report- August 31, 2017

DDGS prices were softer early this week, in sympathy with those of corn, as merchandisers sought to keep DDGS competitive in feed rations. Merchandisers, however, pointed to near-term supply limitations that kept the market from falling more than $5/MT. With Thursday’s 12-cent rally in corn futures, however, DDGS prices moved $3/MT higher as ethanol plants positioned themselves defensively. Some traders are anticipating profit taking from short corn futures positions to continue over the Labor Day weekend, thereby offering very near-term support for DDGS prices.

Merchandisers and exporters are reporting overseas demand has been weaker this week. International buyers are waiting for corn futures to stabilize/hit seasonal lows before procuring DDGS supplies. Prices for 40-foot containers to Southeast Asia were essentially unchanged this week, though prices to Japan fell $4- 6/MT. Today’s corn futures rally will likely spark some buying interest from the international community and pricing strength should return to the market.

Domestically, DDGS are prices at 106 percent of cash corn and 39 percent of Kansas City soybean meal. On a per-protein unit basis, DDGS are $1.51  cheaper than soybean meal. Barge CIF NOLA prices fell $4/MT early this week while FOB U.S. Gulf prices lost $6/MT. Of course, Hurricane Harvey is creating disruptions for exporters in the region and prices reflect these logistical constraints. FOB Gulf DDGS prices are 109 percent of those for FOB Gulf corn, down from the past two weeks and below historic norms.