Distiller’s Dried Grains with Solubles (DDGS)
DDGS Comments: U.S. DDGS prices are down $1/MT this week as continued increases in ethanol run rates boost domestic supplies. Brokers note logistics complications and high barge freight rates make it more attractive to sell product into the domestic or Mexican and Canadian markets than down into the Gulf. Kansas City soymeal prices are up $3.50/MT this week as cash markets are slowly following futures higher. The DDGS/Kansas City soymeal ratio sits at 0.52 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 0.94, down from 0.97 last week and below the three-year average of 1.09.
A wide bid-ask spread continues to characterize the DDGS export market and prices are largely steady with the prior two weeks. Barge CIF NOLA offers are slightly lower this week while FOB Gulf offers are up $1-2/MT. Brokers report demand from Southeast Asia has been quiet, allowing offers for 40-foot containers to fall slightly.
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.
