Distillers Dried Grains with Solubles (DDGS)
DDGS Comments: DDGS export prices are steady/lower as the corn market’s malaise reduces interest in forward contracting other commodities. U.S. exporters are reporting the Asian market has been very quiet with excitement over the Vietnamese market having faded somewhat. China, while not a major player in the DDGS market, is on holiday for this week which is reducing trading activity elsewhere in Asia.
Domestic U.S. prices have been steady with ethanol (and therefore DDGS) production increasing this week. Merchandisers are reporting near term inventory is almost all sold, leaving ethanol plants with little incentive to lower asking prices. Barge CIF NOLA rates are still increasing due to transportation issues along the Mississippi River, and rates for October barges to NOLA hit $161/MT this week. FOB Gulf prices are steady with last week for October shipment, but November/December shipments fell $1/MT. Prices for 40-foot containers destined for Southeast Asia were mixed but largely steady this week. Prices averaged $198.50/MT this week, nearly the same as last week.
USDA’s latest trade data shows U.S. DDGS exports YTD in 2017 hit 7.3 MMT, down 3 percent from the same period last year. Exports in August were 0.761 MMT, down 24 percent from July 2017 and down 66 percent from August 2016. The year-over-year change fails to reflect the true robustness of the U.S. export program, however, because exporters have overcome additional challenges this year. Thus, a DDGS export program nearly equal to the prior year shows the true value and competitiveness of U.S.-product on the international market.