Distillers Dried Grains with Solubles (DDGS)
DDGS Comments: The recent rally in corn futures will likely be supportive for DDGS as we approach the year’s end. Markets in recent weeks have observed buyers filling only near-term needs while waiting for corn’s harvest low to procure product. Now that corn futures have almost certainly achieved their harvest low buyers will begin covering beyond their near-term needs and deferred shipment prices will strengthen. Moreover, the rally in soybean meal will also be supportive to DDGS use in feed rations. On a per protein unit basis, soybean meal gained $0.10 this week while DDGS held relatively steady (declining a mere $0.04). If the soybean complex rally continues, DDGS will have opportunities to make inroads in some livestock rations.
Traders are reporting that the market does indeed have a firmer tone this week. U.S. prices for November delivery increased $9/ton this week with FOB Gulf prices climbing $11/ton. Canadian rail prices jumped $19/ton for November delivery and $24/ton for December this week. Current prices have sparked some value buying for U.S. Gulf shipments to Southeast Asia, and prices for shipment to Taiwan and the Philippines rose modestly this week.
Ethanol Comments: Ethanol margins are predominantly lower this week and incentivized plants to lower production by 7,000 barrels per day from last week, with production reaching 991,000 barrels per day. Ethanol stocks jumped 877,000 barrels this week (5 percent) even as gasoline consumption rose 749,000 barrels per day this week.
The margin between the corn price and the value of ethanol and coproducts was lower this past week across three of the four reference markets (see below), with South Dakota posting the only weekly gains. Compared to this same week last year, the spread is roughly $0.40 higher in all reference markets.
- Illinois differential is $2.12 per bushel, in comparison to $2.29 the prior week and $1.68 a year ago.
- Iowa differential is $2.12 per bushel, in comparison to $2.29 the prior week and $1.68 a year ago.
- Nebraska differential is $2.08 per bushel, in comparison to $2.09 the prior week and $1.71 a year ago.
- South Dakota differential is $2.16 per bushel, in comparison to $2.09 the prior week and $1.74 a year ago.