Distillers Dried Grains with Solubles (DDGS)
DDGS Comments: DDGS prices continued their higher trek this past week, though at a more tempered pace. The seesaw in price movements showed last week’s increases pushed forward into Asian markets this week. Some Asian buyers have begun looking at purchases for July/August shipment; others may be gambling that good weather and increased ethanol grind will eventually deliver cheaper prices. Of course, those buyers that failed to cover prior to the most recent increase in corn and soymeal prices have paid a price.
Overall, the market continues to be influenced by high soymeal prices, and the July soybean contract has remained firm. There is ample supply but there is also big demand, with China back in the market this past week for both corn and DDGS.
Ethanol Comments: U.S. Environmental Protection Agency (EPA) called for ethanol blending in 2017 to be 300 million gallons (100 million bushels of corn) greater than in 2016, but 200 million gallons less than the amount targeted by statute.
The Energy Information Administration (EIA) again reduced (-0.7 percent) the estimated stocks of ethanol to 21.1 million barrels, and pegged production for the past week to be down (-1.5 percent) to 948,000 barrels per day.
The margin between the corn price and the value of ethanol and coproducts was up in three out of the four key markets from a week ago (see below).
- Illinois differential is $1.77 per bushel, in comparison to $1.44 the prior week and $2.49 a year ago.
- Iowa differential is $1.63 per bushel, in comparison to $1.54 the prior week and $2.39 a year ago.
- Nebraska differential is $1.60 per bushel, in comparison to $1.72 the prior week and $2.18 a year ago.
- South Dakota differential is $1.87 per bushel, in comparison to $1.74 the prior week and $2.56 a year ago.