Market Matters Blog

OMAHA (DTN) -- The DTN average dried distillers grains (DDG) spot price from the 39 locations DTN collects bids from was $131 for the week ended Dec. 7, 5 cents higher than two weeks ago.

Merchandisers noted that supplies are "very tight" right now, and prices are "well supported," which is pushing the market higher. The California market has also moved higher with one merchandiser noting the latest round of wildfires is slowing commerce in some spots. There is still very strong demand for rail shipments to the Pacific Northwest, California and Mexico.

Based on the average of bids collected by DTN, the value of DDG relative to corn for the week ended Dec. 7 was at 108.28%, and the value of DDG relative to soybean meal was at 39.28%. The cost per unit of protein for DDG was $4.85, compared to the cost per unit of protein for soybean meal at $7.02. DDG has a per-protein unit cost advantage over soybean meal as meal prices rose faster than DDG, according to the U.S. Grains Council (USGC).

The USGC said in their weekly price update that merchandisers are reporting DDGS shipments to Vietnam are slowing in December as all Midwest loading points are too cold for the required fumigation. However, merchandisers told DTN that the recent uptick in shipments to Vietnam in October and through November were part of the reason domestic supplies have been tightening.

Prices for 40-foot containers to Southeast Asia rose $6/metric ton (mt) on average this week, with prices for Shanghai, China, and Taiwan increasing the most. "The forward curve for DDGS to Southeast Asia is relatively flat, meaning the market appears to be well-supplied but in balance with demand," said USGC.

Earlier in the week, USDA reported that U.S. exports of distillers grains totaled 1,027,051 mt in October, up 6% from a year ago. Mexico once again was the top importer in October, accounting for 20% of the total, followed by Turkey and then four countries in eastern Asia. In the first 10 months of 2017, exports of U.S. distillers grains were down 3% from a year ago. With Vietnam back in the picture, we should see exports begin to recover. China is still not much of a player, coming in at No. 19 on the list of export destinations in October.

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow Mary Kennedy on Twitter @MaryCKenn

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