Ethanol Blog

Slow domestic demand, lackluster exports and rising river freight prices worked together to keep prices of dried distillers grains on a downward trend in the past two weeks.

The DTN weekly DDG spot price average fell $7 per ton in the past two weeks, from $109 per ton the third week of September to $102 per ton this week. This marks the sixth consecutive week that the average has fallen for a total decrease of $16 per ton since the last week of August. This is also the lowest the average has reached since the first week of August.

Of the 36 Midwestern locations DTN collects spot prices from, 23 reported prices had decreased in the past two weeks between $5 and $40 per ton, though most decreases were in the $5 to $15-per-ton range. Prices at 10 locations remained unchanged in the past two weeks, while two locations reported prices increasing $10 per ton at each location. One location had no offers two weeks ago, so no change was available.

Merchandisers told DTN this week the continuing price decline was due to a lull in domestic demand, as weather has not turned cold enough to begin the peak feeding season. Cold temperatures and winter weather end the grazing season and put more cattle on feed, necessitating increased purchases of feedstuffs such as DDG.

Consequently, domestic end users are just buying hand-to-mouth at the moment. With the continuing price decreases, some buyers seem to be waiting until they absolutely need product, then ordering. With prices falling downward, buyers evidently don't see any reason to buy ahead, one merchandiser noted.

Also, export trade is quiet, some barges have been taken out due to rising river freight charges and rail numbers are down -- all contributing to the price decline.

The value of DDG relative to corn fell considerably as well in the past two weeks, from about 94% to about 88%. The value of DDG relative to soybean meal fell only slightly, from about 35% two weeks ago, to about 33% this week.

The cost per unit of protein for DDG this week was $4.08, compared to the cost per unit of protein for soybean meal at $6.50.

Cheryl Anderson can be reached at Cheryl.anderson@dtn.com.

(ES)

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