Distillers Dried Grains with Solubles (DDGS)
DDGS Comments: DDGS prices are higher with support from soybean meal and heightened international interest. The Vietnamese export restriction is officially lifted, which is expected to further tighten near-term supplies. Ethanol plants are pricing their product defensively given the anticipated demand increase and the start of the U.S. seasonal maintenance season.
Barge CIF NOLA prices are slightly higher this week, up $2.50/MT to $159.50/MT while FOB Gulf prices rose nearly $1.75/MT to $169.67/MT. Logistics issues at the gulf continue to limit movements somewhat, though marked improvements have occurred. Prices for DDGS delivered via rail to the PNW; Laredo, TX; and California each increased by $5/MT this week.
Kansas City soybean meal prices jumped $10/ton this week, leaving FOB ethanol plant DDGS priced at 38 percent of soybean meal value. DDGS retain a $1.75 per-protein unit cost advantages versus soybean meal, thanks to the soy-product price’s move higher. DDGS prices are 98 percent of those for cash corn after corn prices rose 7 cents/bushel.
On the international market, ocean carriers are asking for General Rate Increases (GRI) beginning in October. Consequently, there is a greater carry in the export market than there has been for most of the summer. September shipments to Southeast Asia destinations were $11/MT higher this week on average with prices to Malaysia and Indonesia leading the way. Prices for 40-foot containers to the region averaged $198/MT this week, their highest price since December 2016.
Despite the bullish news that hit the market this week, international buyers are reluctant to chase the market higher. After the initial price increase, buyers have backed off and will wait for next week’s WASDE report to provide clarity and direction for corn/DDGS prices. Unless the report is decidedly bullish, buyers will likely be slow to purchase and will procure product on an “as needed” basis. Accordingly, the market should remain near current prices will little justification or room to move notably higher.