Distillers Dried Grains with Solubles (DDGS)
DDGS Comments: One key feature of commodity markets is that they are a “zero-sum game.” Someone wins at someone else’s loss and only one of two opposing views can be right. This dichotomy was prevalent in the DDGS market this week: buyers are sitting tight, waiting for softer prices as the weather warms, while sellers are defending offers in anticipation of week-long “turnarounds” heading in to April and May. Consequently, the market was quiet and featured infrequent, low-volume trading. Only time will tell which of these views will ultimately prove correct, but last year’s two-month-long bullish move started in April.
FOB NOLA DDGS prices remain competitive against FOB soybean meal, priced at 41 percent of soybean meal. This equates to a $1.55 per protein-unit cost advantage for DDGS on the export market. FOB corn prices came under pressure from Brazil this week which pressured FOB Gulf DDGS lower by $2/MT. The value of FOB DDGS versus FOB corn was down slightly but basically unchanged at 90 percent. Barge rates were essentially unchanged this week (down $1/MT) in line with price signals from the Gulf.
CNF Prices for 40-foot containers to Southeast Asia were higher this week, climbing $3/MT. Prices for containers destined for Vietnam rose $6/MT while product destined for Taiwan increased $3/MT. The forward curve for internationally-destined DDGS is looking stronger with prices for April, May, and June shipment all increasing ($1/MT on average). If FOB Gulf prices attract significant buying attention near $150/MT, it seems CNF prices to Southeast Asia have done the same at $175/MT.