Distillers Dried Grains with Solubles (DDGS)
DDGS Comments: The spike in soybean meal prices is putting upward pressure on the cost of DDGS. Adding to the price increases are buyers that had held off, hoping the cost would decline but can no longer wait to refill their pipeline. This could keep prices elevated for a while. Price increases in recent weeks have swung back and forth, showing up at boarding facilities in the U.S. one week, and then getting reflected in export destinations the following week.
This week it was U.S. export locations rising with the average FOB Gulf rate increasing by an average of $14/container. The only decline in price across 14 tracked markets were minor dollar or two reductions in container prices headed to Indonesia in July/August.
Ethanol Comments: China’s ethanol imports declined in April but state-owned COFCO Agri has reportedly set up a U.S. ethanol trading desk, which implies some longer term interest.
U.S. ethanol production and stocks continued their decline. The Energy Information Administration (EIA) again reduced (-1.4 percent) the estimated stocks of ethanol to 20.8 million barrels, and pegged production for the past week to be down (-2.0 percent) to 946,000 barrels per day.
The margin between the corn price and the value of ethanol and coproducts was up this past week in all four key markets (see below).
- Illinois differential is $1.78 per bushel, in comparison to $1.77 the prior week and $2.60 a year ago.
- Iowa differential is $1.63 per bushel, in comparison to $1.54 the prior week and $2.35 a year ago.
- Nebraska differential is $1.63 per bushel, in comparison to $1.60 the prior week and $2.11 a year ago.
- South Dakota differential is $2.15 per bushel, in comparison to $1.87 the prior week and $2.51 a year ago.