Distillers Dried Grains with Solubles (DDGS)
DDGS Comments: This week’s DDGS market has been active with buyers looking for offers. Strong interest from buyers in Southeast Asia has been noted, especially for product to be delivered in October and November. Prices for 40-foot containers to China for August delivery moved $5/container higher while containers to Japan rose $8/container. Despite the likely large corn production in the U.S. this fall, DDGS prices for September delivery are down very modestly ($6/container on average). Active buyer interest appears to be buoying the market for the near-term at least.
Ethanol Comments: International interest is developing in ethanol on two fronts this week. Mexico is showing interesting in importing U.S. sorghum to produce its own ethanol while Asian markets are keen to import ethanol.
Dropping concurrently this week were ethanol production and inventories in the U.S. Ethanol production fell from 1.029 million barrels last week to 998,000 this week, which is still a historically strong pace. This summer’s low gasoline prices boosted demand, causing ethanol stocks to fall from 21.2 to 20.4 million barrels, adding bullish sentiment to the market.
The margin between the corn price and the value of ethanol and coproducts was lower this past week in all of the four reference markets (see below), and the spread versus this time last year continues to widen.
- Illinois differential is $2.04 per bushel, in comparison to $2.16 the prior week and $1.61 a year ago.
- Iowa differential is $1.93 per bushel, in comparison to $2.27 the prior week and $1.46 a year ago.
- Nebraska differential is $1.57 per bushel, in comparison to $1.94 the prior week and $1.19 a year ago.
- South Dakota differential is $2.01 per bushel, in comparison to $2.34 the prior week and $1.54 a year ago.