Market Perspectives – November 4, 2021

Distiller’s Dried Grains with Solubles (DDGS)

DDGS Comments: U.S. DDGS prices are down $1.50/MT this week as ethanol run rates remain steady and domestic demand is quiet. The recent rally in soymeal futures and cash prices (Kansas City cash values are up $8.20/MT this week) has increased DDGS’ competitiveness in feed rations, but end-users are reportedly well-covered for Q4 needs. The DDGS/Kansas City soymeal ratio sits at 0.50 this week, down from the prior week and above the three-year average of 0.47. The DDGS/cash corn ratio is lower this week at 0.92, down from 0.94 last week and below the three-year average of 1.09.

Export markets for DDGS are quiet again this week, though values are firming slightly. Barge CIF NOLA offers are steady/down $1/MT as freight rates ease from recent highs while FOB Gulf offers are up $4 for November shipment and $2/MT for December/January. Bids and offers for containerized DDGS into Southeast Asia remain spotty with light trade, but indications are mostly higher and average $358/MT this week.

Please note that FOB Gulf markets will likely be more volatile than normal as the industry works to recover full capacity in New Orleans area export facilities. There are significant questions about elevation capacity and availability and the DDGS market will have to compete with other grains as the U.S. new crop harvest approaches. Consequently, both flat prices and spreads versus other markets may see greater than normal volatility.