Distillers Dried Grains with Solubles (DDGS)
DDGS Comments: DDGS merchandisers indicate there is customer interest in January shipments, and some looking to January through March shipments, which may explain some of the current slowness. It is unclear that prices will be any lower then given the narrow trading range for corn presently, indicating a floor, and the notice to investors by Monsanto (see the Outlook section of this report) that even predicts an forthcoming increase in corn prices. All of this may encourage more to begin locking in prices sooner rather than later.
December and January DDGS prices fell slightly this past week versus the week before. The most significant change was a 4.4 percent drop in the cost of a 40 foot container to South Korea (Busan). There was no change in the price of DDGS delivered CIF NOLA by barge, Mid-Bridge Laredo, or for 40 foot containers to Jakarta.
Ethanol Comments: Crude oil futures remain in decline with December dropping below $40/barrel. The slide was triggered by a U.S. Energy Information Administration report that 300,000 barrels of crude had been added to inventory over the past week.
Fuel ethanol stocks were up 2.1 percent (400,000 barrels) from a week earlier, despite production being down 7,000 barrels/day from a week ago. Overall, production per day this past week was up 0.5 percent from a year earlier and stocks are up 11 percent. There were no net imports of ethanol for the past week, compared to 26,000 barrels a week earlier.
The International Energy Agency issued its World Energy Outlook for 2015 and predicted that renewable energy would fulfill more than five percent of transportation fuel demand by 2040, assuming continued government mandates for blending, and that 70 percent of that fuel would be ethanol. The Agency projects investments in biofuel supplies to average $15 billion per year over the period with the bulk concentrated in the U.S., Brazil and EU, and some increase in China and India. Note that this is down from the $27 billion peak reached in 2007, but one-third higher than during the 2010-2013 period.
- Illinois differential is $1.75 per bushel, in comparison to $1.70 the prior week and $3.73 a year ago.
- Iowa differential is $1.49 per bushel, in comparison to $1.47 the prior week and $3.36 a year ago.
- Nebraska differential is $1.71 per bushel, in comparison to $1.71 the prior week and $3.50 a year ago.
- South Dakota differential is $1.73 per bushel, in comparison to $1.67 the prior week and $3.42 a year ago.