Market Perspectives – September 16, 2021

Distiller’s Dried Grains with Solubles (DDGS)

DDGS Comments: U.S. DDGS prices are down $4/MT this week and continued slow exports from the Gulf and rising ethanol run rates increase domestic supplies. The markets have been somewhat quiet this week with buyers, having filled near-term needs, content to watch the corn market rally and not chase DDGS values higher. Kansas City soymeal prices are down $2.10/MT, putting the DDGS/Kansas City soymeal ratio at 0.56 this week, down from last week’s value of 0.57 and above the three year-average of 0.47. The DDGS/cash corn ratio is also higher this week at 1.01, down from 1.04 last week but below the three-year average of 1.10.

On the export market, DDGS values are quoted steady or $4-5/MT higher this week, depending on the source. Some brokers report offers moved higher earlier this week, but it remains unclear if stronger trade interest drove the rally or supply-side dynamics. Regardless, FOB Gulf offers are steady this week at $265/MT while November and December positions are up $5/MT. Prices for 40-foot containers to Southeast Asia are mostly steady but slightly higher this week, with rates to Vietnam, Malaysia, and Myanmar leading the way.

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.