Distillers Dried Grains with Solubles (DDGS)
DDGS Comments: The DDGS market has apparently found equilibrium because prices are unchanged and little news is present. Ethanol plants are reporting their product is at a premium to both the domestic market and Mississippi River barge rates. DDGS Barge CIF NOLA rates have been stubbornly flat for the past two months, hovering between $135-136/MT. Similarly, Chicago prices have been essentially unchanged since March, stuck in a $128-131/MT trading range.
On the international front, inquiries from Southeast Asian buyers are active but merchandisers are reporting few trades. Traders are confirming May shipments to Indonesia while also noting container movement is signaling shipments to other, yet-unknown locations. Reports are circulating that Korean buyers are interested in July shipments but are not ready to commit just yet. Prices for 40-foot containers to Southeast Asia were flat this week and averaged $176/MT FOB for May. CNF Asia prices were up $0.38/MT at $197.75.
The recent cold weather across the Southern Plains states and other parts of the Midwest may temporarily boost feed demand for DDGS. Currently, DDGS FOB ethanol plants are priced at 34 percent of the value of soybean meal and 85 percent of the value of cash corn. The per-protein unit cost advantage of feeding DDGS versus soybean meal eroded 15 cents this week as DDGS prices were steady and soybean meal prices fell.
On the export market, DDGS are priced at 42 percent of FOB Gulf soybean meal values and 92 percent of FOB Gulf corn. The per-protein unit cost advantage of DDGS expanded 6 cents to $1.58 this week, driven by pricing strength for soybean meal.
DDGS prices will remain stable for the next several weeks unless some unforeseen policy change dictates otherwise. The market has found equilibrium between maintenance-induced supply reductions and already-filled procurements needs. There is little fundamental reason for prices to move significantly one way or the other. Looking toward the summer, however, international demand is expected to remain strong and domestic feed use of DDGS should pick up as well. This should be price supportive, even as ethanol/DDGS production picks up from its seasonal spring lull.