Distillers Dried Grains with Solubles (DDGS)
DDGS Comments: Despite a second week of lower ethanol production, merchandisers are reporting ethanol plants have plenty of product to offer. Ample supplies are failing to spur much buying interest, however, though buyers are reportedly working the phones aggressively and checking prices with multiple sellers. Sellers are defending prices and are not moving much closer to bids. Accordingly, prices are steady FOB ethanol plants and CNF barge NOLA while FOB NOLA prices slipped modestly.
DDGS prices FOB ethanol plants were $1/ton higher this week ($102/ton) while cash soybean meal prices rose $5/ton. On a per-protein unit basis, DDGS were priced at $4.10 and soybean meal at $6.22. The difference between the two moved to favor more heavily DDGS, falling to -$2.12 this week.
FOB NOLA DDGS prices softened to remain competitive with lower corn prices. FOB DDGS were priced at $144/ton this week, down $2/ton from the prior week, which left DDGS priced at 90 percent of FOB corn values. Prices for DDGS delivered via rail to the PNW were steady while rail-delivered to California prices increased $6/ton this week, reaching $175.
On the international front, buyers from Korea, Thailand, Taiwan, and the Philippines have been active this week. Prices were broadly stronger this week for 40-foot containers destined for Southeast Asia with most markets rising a few dollars per ton. Larger decreases in prices to Vietnam left the average weekly price change near zero, however.
With sideways price action in corn and essentially steady soybean meal prices, buyers are seeing little reason to become aggressive on DDGS procurement. The big-supply, low-price environment in which most commodities find themselves is reducing incentives to procure supplies in advance. The market outlook is for generally steady prices with a slight upward lean as expanding livestock production and global protein needs support consumption.