Distillers Dried Grains with Solubles (DDGS)
DDGS Comments: The bullish tone in the futures market continues to give DDGS prices a firm foundation. The average change for DDGS containers in all surveyed locations rose an additional $2, but the increase was much larger for June shipment over May deliveries. It is believed that some buyers are holding off, hoping that the market will turn down. Price reporting indicates they will have to wait a while, and in trading, hope is not a strategy.
Meanwhile, USDA Chief Economist Robert Johansson told Reuters that the agency expects demand for feed from China’s livestock sector to remain strong and that could help drive up U.S. sales of corn substitutes such as sorghum, barley and DDGS. He said, “We hope we can continue to sell products to feed sectors in China as long as our prices are competitive in the market.”
Ethanol Comments: The Energy Information Administration (EIA) reduced the estimated stocks of ethanol to 21.6 million barrels (-1.9 percent) as production fell by 12,000 barrels per day to 927,000 barrels per day (-1.3 percent).
The margin between the corn price and the value of ethanol and coproducts took a break this past week from its previous upward trajectory in key markets (see below).
- Illinois differential is $1.55 per bushel, in comparison to $1.65 the prior week and $2.40 a year ago.
- Iowa differential is $1.58 per bushel, in comparison to $1.68 the prior week and $2.11 a year ago.
- Nebraska differential is $1.82 per bushel, in comparison to $1.85 the prior week and $1.95 a year ago.
- South Dakota differential is $1.79 per bushel, in comparison to $1.94 the prior week and $2.30 a year ago.