Distillers Dried Grains with Solubles (DDGS)
DDGS Comments: USDA’s recent Grain Crushing and Coproducts Production report indicates that production of both distillers dried grains (423.6 KMT) and distillers dried grains with solubles (1.97 MMT) were up in December versus November, but down relative to totals in December 2014. The U.S. produced 27.7 MMT of distillers dried grains in 2015, and exported half of it with China a major buyer.
For this week’s report, February prices firmed to all tracked destinations while there were only a few declines in March and April positions; all of this took place despite a relatively quiet market. March/April prices for U.S. delivery points firmed. Thailand showed the largest decline at $5/container. Still, there was a 4,000 MT sale to Thailand for March/April delivery. The price, at $208/container, was aggressive but reflected that there is still some demand in the market.
Ethanol Comments: USDA raised corn use for ethanol grind by 25 million bushels in its February 9, 2016 WASDE report. Low petroleum prices are pressuring ethanol margins but biofuel mandates will keep exports large in 2016. Ethanol exports in December (309 million liters) were at a nine-month high. Ethanol exports overall in 2015 (836 million gallons) represented 6 percent of total U.S. production in 2015. March ethanol futures jumped to a six-week high this past week as a result of an arbitrage opportunity as Brazilian ethanol prices hit a 5-year high.
Fuel ethanol stocks rose last week by 600,000 barrels to 23 million total on production that was up nearly 10,000 barrels per day. There were again no imports.
Meanwhile, the margin between the corn price and the value of ethanol and coproducts dropped last week in all four tracked markets (see below).
- Illinois differential is $1.29 per bushel, in comparison to $1.35 the prior week and $1.84 a year ago.
- Iowa differential is $1.16 per bushel, in comparison to $1.21 the prior week and $1.50 a year ago.
- Nebraska differential is $1.39 per bushel, in comparison to $1.41 the prior week and $1.41 a year ago.
- South Dakota differential is $1.38 per bushel, in comparison to $1.55 the prior week and $1.66 a year ago.