Distillers Dried Grains with Solubles (DDGS)
DDGS Comments: DDGS prices continued to track those of corn in a downward spiral with near-term July delivery plunging the most and FOB Gulf taking a hit. The only market to show strength this past week were containers of DDGS to Japan for August/September delivery, which were up a few dollars. In fact, the largest reductions have been in the nearby July market with less impact in the August/September delivery months.
The DDGS market will likely stabilize now that corn futures have potentially found a near bottom. With pollination at hand and the market sending a clear signal that price has stabilized, it will be clearly attractive enough to stimulate additional demand.
Ethanol Comments: The U.S. ethanol market is increasingly being influenced by exports. Platts reports that the U.S. West Coast is being positioned to become the new export outlet for ethanol being shipped to Asia. The shorter turnaround and avoidance of congestion at the Gulf are pluses, though the lower cost of barging the fuel down the Mississippi and the larger number of available tankers remain an advantage for NOLA.
Ethanol production this past week at an average of 984 thousand barrels per day was 19 percent below a week ago, and yet stocks on hand rose by 1.8 percent to 21.6 million barrels.
The margin between the corn price and the value of ethanol and coproducts was higher this past week in all four reference markets (see below), and the spread versus this time last year continues to widen.
- Illinois differential is $2.20 per bushel, in comparison to $1.92 the prior week and $1.74 a year ago.
- Iowa differential is $2.23 per bushel, in comparison to $2.03 the prior week and $1.52 a year ago.
- Nebraska differential is $1.99 per bushel, in comparison to $1.67 the prior week and $1.37 a year ago.
- South Dakota differential is $2.22 per bushel, in comparison to $2.09 the prior week and $1.65 a year ago.