Distillers Dried Grains with Solubles (DDGS)
DDGS Comments: Prices were higher this week on modest supply reductions. Spring maintenance season has sprung for Midwest ethanol plants which resulted in a 3.3 percent drop in weekly ethanol production. In turn, DDGS prices were steady to a few dollars higher, led by FOB ethanol plant values.
The average DDGS price quoted by ethanol plants increased $2/MT this week to $100.03. Spring maintenance closures and modest CBOT gains allowed merchandisers to gain some pricing advantages. Domestically, DDGS are priced at 70 percent of corn futures and hold a $2.88 per-protein-unit advantage over soybean meal. Both values are essentially unchanged from last week.
Prices at the Gulf have come off recent lows by $3-4/MT. FOB Gulf prices averaged $146.25 this week (up $3/MT) while Barge CIF NOLA values were steady. Increases in PNW corn prices pulled rail-delivered DDGS higher by about $2/MT as export demand to Asian destinations remains strong. On the export market, DDGS are priced at 91 percent of FOB corn values and have a $1.17 per-protein-unit advantage over soybean meal.
Coming off recent lows, DDGS prices have additional upward potential. However, as spring weather increases across the Midwest and pastures green up, there will be some reduction in feed demand. International buyers will have to provide the bulk of any price increases. Merchandisers are reporting some increased interest from international buyers who were well covered through the early spring but are looking to secure product for late spring/early summer. In summary, pricing strength remains but significant gains are not expected for this well-supplied market.