Distillers Dried Grains with Solubles (DDGS)
DDGS Comments: Despite near-term inventories tightening, softer demand for Southeast Asian buyers let DDGS prices slip $3-5/MT this week. DDGS sellers are facing tight margins but are executing trades amid a softer pricing environment. Merchandisers are expecting demand to show more interest with prices having come off recent highs.
DDGS FOB U.S. ethanol plants were stable this week, averaging $104.56/ton while KC soybean meal fell $6/ton. This dynamic sent the per-protein unit cost of DDGS to $4.18 and KC soybean meal to $5.91, meaning DDGS still retain a $1.72 per-protein unit cost advantage. Given year-over-year increases in the cattle on feed inventories and record-large hog inventory numbers, DDGS should see a substantial bump in domestic demand in late summer and early fall.
On the international market, Barge CNF NOLA prices fell $1/MT to $145.5 while FOB Gulf prices fell to $156.83. This pricing dynamic clearly illustrates the tight margins merchandisers are facing. FOB Gulf DDGS are prices at 100 percent of FOB Gulf corn, down slightly from last week. Prices for 40-foot containers to Southeast Asia were steady on average, but prices to Thailand increased $4/MT while prices to the Philippines fell $2/MT. The forward curve for shipments to Asian destinations is still upward sloping but flattened this week. Look for prices to remain softer but steady until buying interest picks up.