Distillers Dried Grains with Solubles (DDGS)
DDGS Comments: DDGS exports had a near-record year in 2016, almost matching the 2015 all-time record. Exports in 2016 totaled 11.48 MMT, the second highest figure on record and down just 10 percent from 2015. Per an industry report, roughly one of every three tons produced in the U.S. was exported during 2016, and Mexico along with several Asian countries were the primary buyers.
DDGS prices this week continued buying demand and remained competitive against slightly lower soybean meal prices. The value proposition offered by DDGS versus soybean meal is keeping Asian buyers eager to purchase U.S. product, according to DDGS merchandisers. U.S. FOB ethanol plant DDGS prices were lower this week, averaging $102/MT while FOB Gulf prices declined $3/MT to $145. Still, DDGS are holding their value against soybean meal, maintaining a $2.80 per protein unit advantage against soybean meal FOB plant and a $1.77 per protein unit advantage on the export market (FOB Gulf). Asian buyers are taking advantage of the competitiveness, purchasing higher DDGS volumes at lower prices (prices for 40-foot containers to southeast Asia were down this week). With ethanol production slowing and consumption of DDGS increasing, a turnaround in DDGS prices is possible in the coming weeks.