Distillers Dried Grains with Solubles (DDGS)
DDGS Comments: As noted previously, nearby slots of DDGS for export are in tight supply. Some buyers are apparently hoping that China will impose import penalties, which can occur no earlier than March 20, 2016, and that this will soften prices thereafter. However, DDGS prices are also pressured by the decline in grind (see ethanol section) and tighter margins. The current premium over corn may be justified but the gamble is when and if this declines.
Traditionally, there has been a price decline beginning in March. However, this time around the trade reports there has even been a slight increase in values for shipments this April. Moreover, the cautionary tale is years like 2010/11 when prices continued to rise on supply concerns, and 2011/12 when DDGS prices climbed 36 percent from January to July.
Prices increased week-to-week for container shipments to certain Asian destinations by as much as $6. Domestic rail-delivered rates declined into April by as much as $3.
Ethanol Comments: Last week’s ethanol production fell 2.2 percent (21,000 barrels/day) from the prior week. This is the second weekly decline in a row. Encouragingly, ethanol stocks also declined by about 2.3 percent, but they were still 4 percent higher than last year. Export demand remains very hard to find; however, there are negligible imports.
Meanwhile, the margin between the corn price and the value of ethanol and co-products fell in Iowa to below $1.00.
- Illinois differential is $1.10 per bushel, in comparison to $1.13 the prior week and $1.63 a year ago.
- Iowa differential is $0.98 per bushel, in comparison to $1.02 the prior week and $1.32 a year ago.
- Nebraska differential is $1.17 per bushel, in comparison to $1.26 the prior week and $1.26 a year ago.
- South Dakota differential is $1.19 per bushel, in comparison to $1.20 the prior week and $1.60 a year ago.