U.S. DDGS prices are down slightly this week as the situation at the U.S. Gulf is slowing export trade and pushing additional production into the domestic market. Ethanol run rates remain comparatively low, however, which is preventing product from overwhelming the market. U.S. DDGS prices are down $1.15/MT this week at $214 while Kansas City soymeal prices are down $3.2/MT with continued futures market weakness. The DDGS/Kansas City soymeal ratio is at 0.57 this week, up from last week’s value of 0.56 and above the three year-average of 0.47. The DDGS/cash corn ratio is also higher this week at 1.04, up from 1.01 last week but below the three-year average of 1.10.
Exporters and merchandisers report spotty offers and indications for September/October shipment from the U.S. Gulf, with ingredient traders offering the only true interest in assessing logistics or booking product. Roughly speaking, Barge CIF NOLA values are up $6/MT this week while FOB Gulf offers are up $5/MT for October (based on scant indications) but November and December positions are steady/down $3/MT. Indications for 40-foot containers to Southeast Asia are wide-ranging this week but the general trend seems to be sideways.
Please note that FOB Gulf markets will likely be more volatile than normal as the industry works to recover full capacity in New Orleans area export facilities. There are significant questions about elevation capacity and availability and the DDGS market will have to compete with other grains as the U.S. new crop harvest approaches. Consequently, both flat prices and spreads versus other markets may see greater than normal volatility.