Distillers Dried Grains with Solubles (DDGS)
DDGS Comments: The holiday-shortened trading week left DDGS prices mostly steady with a higher undertone for domestically-consumed product. Some were expecting more volatility following the holiday but trading has been quiet so far. FOB NOLA prices were steady to $5/MT higher, depending on the delivery month. June shipments continue to be tough to find and offers for August increased $7/MT this week.
The Southeast Asia market has been softer this week, despite robust exports done so far this year. Korean buyers are saturated with product for nearby delivery and are bidding $5-8/MT under offers for forward delivery.
Domestically, DDGS are priced at 85 percent of cash corn and 36 percent of Kansas City soybean meal. The per-protein unit cost of DDGS is $1.85 lower than that of soybean meal, though DDGS’ advantage slipped from last week due to weakness in the soybean meal market. The USDA’s May Cattle on Feed report showed a 2 percent increase in feedlot inventories from last year, which will be positive for U.S. DDGS consumption.
On the export front, DDGS are priced at 96 percent of FOB Gulf corn, equal to last week’s value, and 47 percent of soybean meal. The per-protein unit cost of DDGS versus soybean meal favors DDGs by $0.75 currently, down from $0.94 last week. It is important to note, however, that changes in the DDGS/soybean meal cost ratio is due to weakness in soybean meal prices, not DDGS. DDGS exports have been robust so far this year and look to remain so.