Distillers Dried Grains with Solubles (DDGS)
DDGS Comments: Prices for DDGS across the U.S. were higher, led by Gulf prices that rose $5/ton for October delivery and $6/ton for November. New Orleans CIF prices followed Gulf FOB prices higher but to a lesser degree. Rail rates to either the PNW or California were up modestly (near $2/ton) while Texas prices were nearly unchanged (up $1/ton). Prices were stronger this week due to seasonal ethanol plant closures for maintenance. Most Midwest plants conduct brief closures for maintenance through the early fall which typically introduces a mild seasonal buoyancy to prices. This year’s DDGS prices appear to be following the typical pattern. Some merchandisers are expecting largely sideways price action as markets weigh opportunities to cover short sales with cheap corn versus fundamentals suggesting DDGS should price near 100 percent of corn value later this year.
International DDGS prices firmed this week after international shipping concerns sent them lower last week. On average, prices to Southeast Asia were up $1/ton this week with South Korean prices rising $4/ton for October delivery. The forward curve for international shipments from October to December is relatively flat, indicating a largely sideways trading pattern is likely for the near term.
Ethanol Comments: Ethanol margins are higher after production fell 23,000 barrels per day from last week, reaching only 0.981 million barrels per day. The production slowdown drew down ethanol stocks by 191,000 barrels to 20.016 million. Helping draw down stocks was a week-over-week increase in gasoline consumption of 244,000 barrels per day. Ethanol margins have been helped this week by higher gasoline prices that stem from Colonial Pipeline’s week-long closure a major pipeline in Alabama.
The margin between the corn price and the value of ethanol and coproducts was higher this past week across the four reference markets (see below), with the largest gains noted in Iowa and South Dakota. Compared to this same week last year, the spread is $0.36-$0.78 higher in all reference markets.
- Illinois differential is $2.19 per bushel, in comparison to $2.04 the prior week and $1.68 a year ago.
- Iowa differential is $2.23 per bushel, in comparison to $1.86 the prior week and $1.45 a year ago.
- Nebraska differential is $1.81 per bushel, in comparison to $1.71 the prior week and $1.45 a year ago.
- South Dakota differential is $2.20 per bushel, in comparison to $1.99 the prior week and $1.72 a year ago.