Higher corn and soybean meal values buoyed DDGS prices this week. Reported sales are $1-5/MT higher this week with a $1-2/MT carry for June, July, and August shipments. Merchandisers are reporting foreign buyers are actively seeking offers but are posting bids $5-10/MT below asking prices. A continued rally in corn prices would help increased bids but today’s modest gains may not offer enough support to substantially close DDGS’ bid/ask spread.
FOB Gulf DDGS prices were $2-6/MT higher this week, led by $3-7/MT gains in Barge CIF New Orleans rates. FOB NOLA, DDGS are prices at 90 percent of corn values and 44 percent of soybean meal, both figures up 1 percent from the prior week. Based on a two-year history, this week’s improvement in DDGS prices brings the ethanol co-product in-line with historic soybean meal value relationships. However, DDGS still appear undervalued relative to corn based on this recent history.
Domestically, DDGS are priced at a $1.87 per-protein unit discount to soybean meal. Rising soybean and soybean meal prices should help further improve this metric and expand DDGS consumption in livestock rations. Additionally, increases in the number of cattle on feed this spring, combined with reports of Dakota ranches selling cattle due to drought, will help spur domestic consumption.
During the first seven months of the 2016/17 corn marketing year (September-March), U.S. DDGS exports increased 6 percent from the prior year. Lower prices and consistent availability made U.S.-origin product attractive to foreign buyers during the first part of the marketing year. Notably, destinations for U.S. DDGS diversified from the prior year, with exports to Mexico, Turkey, Saudi Arabia, and Thailand growing substantially.
This week’s international prices were higher and 40-foot containers to Southeast Asia destinations were $1/MT higher on average. Prices to DDGS to Vietnam increased $7/MT, followed by those for Thailand (up $4/MT) and Malaysia (up $3/MT).