Market Perspectives – September 2, 2021

Distiller’s Dried Grains with Solubles (DDGS)

DDGS Comments: U.S. DDGS prices are up $7/MT this week as buyers are once again looking to fill fall needs and as ethanol plan run rates remain slow. DDGS prices have rallied despite weakness in soymeal futures and cash markets. Kansas City soymeal prices are down $33/MT this week after the futures market broke lower and traded to fresh 2-month lows. The DDGS/Kansas City soymeal ratio is at 0.56 this week, up from last week’s value of 0.52. The DDGS/cash corn ratio is also higher this week at 1.01, up from 0.92 last week but below the three-year average of 1.10.

Exporters report the DDGS market should not be as impacted by Hurricane Ida as the corn, wheat, and soybean markets. One source noted DDGS offers are appearing again as “floating rigs are expected to be functional again” in the near future. Barge CIF NOLA prices are $8-10/MT lower while FOB Gulf offers are down $5-6/MT for October/November/December shipment. U.S. rail rates are lower this week but that could change quickly if commodities formerly destined for export from the Gulf are to be re-routed to the PNW. Offers for 40-foot containers to Southeast Asia are mixed this week but steady overall at $335/MT for Q4 positions.

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.