Distillers Dried Grains with Solubles (DDGS)
DDGS Comments: While some buyers may be holding off – hoping that DDGS will trend lower after its recent run-up – the rally in soybeans may have the opposite effect. The soybean/corn price ratio is now at 2.75:1, which is well above the level at which farmers would decide to switch some acres away from corn and into additional soybean production. Additionally, excess moisture in the eastern corn belt may prompt even more shifting away from corn production and towards soybeans since they can be planted later after the fields have been able to dry.
Indications are that China is back buying, having seen the run-up in soymeal and needing protein for inclusion in hog rations. Indeed, DDGS prices continued their climb upward this past week only this time the bigger increases were at the U.S. Gulf. Still, there were notable increases to every delivery point and in each of the near-term delivery months. Prices for 40-foot containers of DDGS delivered near-term to Southeast Asia were up 8.5 percent this past week and up 6.8 percent for delivery to Shanghai.
Ethanol Comments: The Energy Information Administration (EIA) called weekly ethanol production 39,000 barrels per day higher, likely due to plants coming back on line after maintenance. However, stocks dropped 900,000 barrels during the week from 22.2 million to 21.3 million. Current estimated stocks remain above last year’s level.
The margin between the corn price and the value of ethanol and coproducts was down in all four of the key markets from a week ago (see below).
- Illinois differential is $1.44 per bushel, in comparison to $1.57 the prior week and $2.59 a year ago.
- Iowa differential is $1.54 per bushel, in comparison to $1.64 the prior week and $2.30 a year ago.
- Nebraska differential is $1.72 per bushel, in comparison to $1.76 the prior week and $2.18 a year ago.
- South Dakota differential is $1.74 per bushel, in comparison to $2.02 the prior week and $2.40 a year ago.