Distillers Dried Grains with Solubles (DDGS)
DDGS Comments: Merchandisers are reporting that DDGS prices are more supply/demand driven right now than following corn/soybean futures prices. The barge market is supporting broadly higher prices but is keeping domestic delivered prices at a discount to containerized product. Sellers successfully increased domestic prices a few dollars without much resistance early this week, but weaker CBOT corn is generating some pushback late this week.
Domestically, merchandisers are noting DDGS are a “fantastic value” and that feed inclusion rates are being kept high. It’s easy to see why. DDGS are priced at 95 percent of cash corn and 37 percent of KC soybean meal and retain a $1.97 per-protein unit cost advantage over soybean meal. FOB Gulf DDGS are prices at 107 percent of corn’s value.
International interest is picking up, especially to Indonesia and South Korea, but the current price spread is limiting completed trades. U.S. ethanol plants and merchandisers are factoring in a significant carry in the corn market that is also being priced into DDGS. International demand, however, has been flat. Reportedly, there are several shorts in the export market trying to cover which is helping keep a carry in the DDGS market.