Distillers Dried Grains with Solubles (DDGS)
DDGS Comments: Merchandisers are reporting a stronger DDGS market despite the post-WASDE selloff in corn, soybean, and soybean meal futures. Corn prices’ recent strength has eroded ethanol margins, which will limit DDGS supply growth for a little while. Additionally, the abnormally hot weather across the Midwest is slowing ethanol plant production and creating more off-specification product. Consequently, the market for DDGS meeting required specifications is becoming even tighter. Traders are noting buyers aren’t interested at these prices but, given tightening fundamentals, sellers are sticking to asking prices. Some merchandisers are reporting the two-day selloff in corn futures helped facilitate trades.
FOB ethanol plant DDGS prices remain at 33 percent of Kansas City soybean meal prices, yielding a $2.56 per-protein unit cost advantage. Similarly, FOB Gulf DDGS retained 97 percent and 46 percent of FOB Gulf corn and soybean meal values, respectively. The price ratios are still below historic norms and imply DDGS should remain competitive for export demand.
FOB Gulf DDGS are higher this week while Barge CNF NOLA prices rose an equal amount. Prices for DDGS rail-delivered to the PNW are up $10/MT this week despite a $3/MT decrease in FOB PNW corn prices. Prices for 40-foot containers to Southeast Asia were up $2/MT this week with prices increasing for all reported destinations except Vietnam and Japan.