DTN Weekly Distillers Grains Update
Flailing Export Demand Pushes Down DDG Prices
A lack of export demand is causing prices of dried distillers grains to continue to fall and it is the uncertainty of future purchasing from China that seems to have the industry the most worried.
In the past week, DDG prices have continued a downward trend. The DTN weekly DDG spot price average fell another $4 per ton in the past week, from $139 per ton last week to $135 per ton. This is the fifth consecutive week the average has fallen, and is the lowest point it has reached since mid-June.
Hindering China's purchases of U.S. DDG are its difficulties with economic growth, continuing devaluation of its currency and having a plentiful supply of its own domestic grain and feed.
According to Steve Knier, merchandiser for U.S. Commodities in Minneapolis, the market is watching China, which is the "big question mark" for future DDG prices.
"When your biggest buyer exits the market or puts on the brakes on what they're taking in, it's going to put some pressure on prices," Knier said.
China's current economic status may lead to lower prices, at least for the time being.
"Everyone is watching China," he said. "If they keep devaluing their currency like they are and trying to grow their own crop, I think we're going to have to get used to some lower prices for a while."
Domestic demand is also down, but not low enough yet to spark end users to buy.
"We haven't moved downward aggressively enough to where it would make sense for local end users in the U.S. to pick up the slack, to pick up the tonnage that would otherwise go to China," he said. "So I think that's why we're seeing this continual slide downward on DDG prices."
Plentiful supplies of U.S. grain and relatively low corn prices are also acting as disincentives to DDG sales.
"There's no point in buying DDG that are 110% the value of corn when you're already sitting on a ton of corn," Knier said.
Also hindering domestic demand are hot summer weather and livestock's tendency to eat less during hot temperatures. Also in the summer, more animals are out on pasture and the plentiful summer rains have made lush, green grass available in many areas.
On the other hand, upcoming fall maintenance shut-downs at ethanol plants could artificially prop up the market temporarily, Knier said, but there may not be a lot of sales on the books to keep product flowing.
"I don't think I'm alone in thinking that, so that may be why we're seeing a lot of deferreds come down as well," he said.
In coming weeks, the DDG market may be in for a shaky ride, Knier said. Prices may still continue to drop somewhat, but not quickly because of the fall shut-downs.
"I think there's still room for prices to go down, but we haven't hit the sweet spot yet where we're peaking local interest to pick up the slack," he said.
Although right now DDG supplies are somewhat tight with plants trying to finish August contracts and some early fall maintenance shut-downs, prices will still continue to fall. He added that harvest time may also mean that ethanol plants run full speed, and with export demand unlikely to increase any time soon, there may be a pipeline of DDG that plants need to move, which may bring prices down as well.
Knier advised end users to keep buying hand-to-mouth.
"I think there's going to be cheaper prices on the horizon," he said. "I would keep just buying what you need for a week or two, then just wait and see."
Cheryl Anderson can be reached at Cheryl.anderson@dtn.com.
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IN THE NEWS
China's Economic Woes Could Slow Down DDG Imports
The economic slowdown in China could mean a consequent slowdown in the country's demand for U.S. beef, swine and poultry, according to an article by The Des Moines Register (http://dmreg.co/…).
But if China's demand for U.S. meat declines, a consequent decrease in imports livestock feed ingredients like dried distillers grains, soybeans and soybean meal could be next.
U.S. Department of Agriculture statistics place China as the largest buyer of U.S. agricultural products, with its imports rising 63% from 2008 to 2013 to a total of $26 billion.
China's slumping economy caused its government to devalue its currency in early August in an attempt to help the economy recover.
According to USDA reports, about 40% of China's $109 billion 2013 agricultural imports were soybeans and other oilseeds. China has been the largest importer of U.S. DDG for some time.
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Any decrease in China's imports of U.S. DDG can cause an immediate market reaction. Last year, China's sudden stop in DDG imports due to its delays to approve the MIR 162 biotech trait caused U.S. DDG prices to plummet.
Cheryl Anderson can be reached at Cheryl.anderson@dtn.com
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DTN WEEKLY DDG SPOT PRICES
| CURRENT | CURRENT | ||||
| COMPANY | STATE | 8/28/2015 | 8/21/2015 | CHANGE | |
| Bartlett and Company, Kansas City, MO (816-753-6300) | |||||
| Missouri | Dry | $155 | $155 | $0 | |
| Modified | $70 | $70 | $0 | ||
| CHS, Minneapolis, MN (800-769-1066) | |||||
| Illinois | Dry | $140 | $145 | -$5 | |
| Indiana | Dry | $145 | $150 | -$5 | |
| Iowa | Dry | $140 | $148 | -$8 | |
| Michigan | Dry | $148 | $155 | -$7 | |
| Minnesota | Dry | $125 | $125 | $0 | |
| North Dakota | Dry | $125 | $125 | $0 | |
| New York | Dry | $155 | $155 | $0 | |
| South Dakota | Dry | $125 | $125 | $0 | |
| MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253) | |||||
| Kansas | Dry | $140 | $145 | -$5 | |
| POET Nutrition, Sioux Falls, SD (888-327-8799) | |||||
| Indiana | Dry | $140 | $140 | $0 | |
| Iowa | Dry | $130 | $140 | -$10 | |
| Michigan | Dry | $145 | $145 | $0 | |
| Minnesota | Dry | $130 | $140 | -$10 | |
| Missouri | Dry | $145 | $150 | -$5 | |
| Ohio | Dry | $135 | $135 | $0 | |
| South Dakota | Dry | $130 | $130 | $0 | |
| United BioEnergy, Wichita, KS (316-616-3521) | |||||
| Kansas | Dry | $135 | $140 | -$5 | |
| Wet | $55 | $55 | $0 | ||
| Illinois | Dry | $155 | $168 | -$13 | |
| Nebraska | Dry | $135 | $140 | -$5 | |
| Wet | $55 | $55 | $0 | ||
| U.S. Commodities, Minneapolis, MN (888-293-1640) | |||||
| Illinois | Dry | $145 | $155 | -$10 | |
| Indiana | Dry | $140 | $145 | -$5 | |
| Iowa | Dry | $125 | $130 | -$5 | |
| Michigan | Dry | $145 | $145 | $0 | |
| Minnesota | Dry | $125 | $130 | -$5 | |
| Nebraska | Dry | $120 | $130 | -$10 | |
| New York | Dry | $150 | $155 | -$5 | |
| North Dakota | Dry | $120 | $125 | -$5 | |
| Ohio | Dry | $140 | $145 | -$5 | |
| South Dakota | Dry | $120 | $125 | -$5 | |
| Wisconsin | Dry | $135 | $140 | -$5 | |
| Valero Energy Corp., San Antonio, TX (402-727-5300) | |||||
| Indiana | Dry | $130 | $135 | -$5 | |
| Iowa | Dry | $135 | $135 | $0 | |
| Minnesota | Dry | $130 | $135 | -$5 | |
| Nebraska | Dry | $135 | $130 | $5 | |
| Ohio | Dry | $140 | $145 | -$5 | |
| South Dakota | Dry | $120 | $120 | $0 | |
| Western Milling, Goshen, California (559-302-1074) | |||||
| California | Dry | $190 | $195 | -$5 | |
| *Prices listed per ton. | |||||
| Weekly Average | $135 | $139 | -$4 | ||
| The weekly average prices above reflect only those companies DTN | |||||
| collects spot prices from. States include: Missouri, Iowa, Nebraska, | |||||
| Kansas, Illinois, Minnesota, North Dakota, South Dakota, Michigan, | |||||
| Wisconsin and Indiana. Prices for Pennsylvania, New York and | |||||
| California are not included in the averages. | |||||
*The spot prices gathered by DTN are only intended to reflect general market trends and may vary. Please contact individual plant or merchandiser for exact prices.
If you would be willing to take a weekly phone call and have your distiller grains spot prices listed in this feature, please contact Cheryl Anderson at (308) 224-1527 or (800) 369-7875, or e-mail cheryl.anderson@dtn.com.
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| VALUE OF DDG VS. CORN & SOYBEAN MEAL | ||||
| Settlement Price: | Quote Date | Bushel | Short Ton | |
| Corn | 8/27/2015 | $3.6375 | $129.91 | |
| Soybean Meal | 8/27/2015 | $322.90 | ||
| DDG Weekly Average Spot Price | $135.00 | |||
| DDG Value Relative to: | 8/28 | 8/21 | 8/14 | |
| Corn | 103.92% | 104.91% | 110.85% | |
| Soybean Meal | 41.81% | 42.01% | 41.85% | |
| Cost Per Unit of Protein: | ||||
| DDG | $5.40 | $5.56 | $5.76 | |
| Soybean Meal | $6.80 | $6.97 | $7.24 | |
| Notes: | ||||
| Corn and soybean prices taken from DTN Market Quotes. DDG | ||||
| price represents the average spot price from Midwest | ||||
| companies collected on Thursday afternoons. Soybean meal | ||||
| cost per unit of protein is cost per ton divided by 47.5. | ||||
| DDG cost per unit of protein is cost per ton divided by 25. | ||||
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USDA MARKET NEWS/DISTILLER GRAINS PRICES
USDA WEEKLY DISTILLERS GRAINS SUMMARY (Aug 21, 2015)
| Dried | Modified | Wet | |
| FOB PLANT PRICES PER TON | |||
| Iowa | 130.00-150.00 | 50.00-70.00 | 40.00-52.00 |
| Minnesota | 140.00-150.00 | 55.00 | 40.00-45.00 |
| Nebraska | 130.00-148.00 | 60.00-75.00 | 40.00-45.00 |
| South Dakota | 125.00-137.00 | 62.00-67.50 | 43.00-48.00 |
| Wisconsin | 142.00-160.00 | 63.00-70.00 | NQ |
| Eastern Corn Belt | 140.00-168.00 | 43.00-70.00 | NQ |
| Kansas | 140.00-169.00 | NQ | 45.00-60.00 |
| Northern Missouri | 150.00-160.00 | NQ | 42.00-47.00 |
| DELIVERED PRICES PER TON | |||
| CIF NOLA | 172.00-185.00 | ||
| Pacific Northwest | 180.00-185.00 | ||
| California | 180.00-195.00 | ||
| Texas Border (metric ton) | 200.00-220.00 | ||
| Lethbridge AB | 160.00 | ||
| Chicago | 155.00-170.00 | ||
Dried Distillers Grain: 10% Moisture
Modified Wet Distillers: 50-55% Moisture
Wet Distillers Grains: 65-70% Moisture
CALIFORNIA WHOLESALE FEEDSTUFF PRICES (Tue Aug 25, 2015)
Distillers Dry Grains
Rail to California Points 183.00-195.00 dn 7.00-9.00
FOB Truck to California Points 184.00-197.00 dn 11.00-8.00
PACIFIC NORTHWEST WEEKLY FEEDSTUFFS (Tue Aug 25, 2015)
Offers for Distillers Dried Grains delivered in September by rail to feed mills in the Pacific Northwest were 3.00 to 9.00 lower at 188.00. Offers for distillers dried grains trans-loaded onto trucks and delivered to Willamette Valley dairies were 6.00 lower from 203.00-206.00.
*All prices quoted per ton unless otherwise noted.
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NASS/USDA MONTHLY CO-PRODUCTS PRODUCTION
Dry and Wet Mill, Co-products and Products Produced - United States
April 2015 - June 2015
Aug 3, 2015
Highlights:
Dry mill co-product production of distillers dried grains with solubles (DDGS) was 1.98 million tons during June 2015, up 4 percent from May 2015 and up 17 percent from April 2015. Distillers wet grains (DWG) 65 percent or more moisture was 1.14 million tons in June 2015, down 7 percent from May 2015 and down 5 percent from April 2015.
Wet mill corn gluten feed production was 324.9 thousand tons during June 2015, down 7 percent from May 2015 but up 4 percent from April 2015. Wet corn gluten feed 40 to 60 percent moisture was 306.4 thousand tons in June 2015, down 6 percent from May 2015 and down 2 percent from April 2015.
| Co-products and Products | Apr 2015 | May 2015 | Jun 2015 |
| Dry Mill | tons | ||
| Condensed distillers solubles (CDS-syrup) | 139,930 | 148,637 | 145,244 |
| Corn oil | 102,610 | 119,281 | 120,582 |
| Distillers dried grains (DDG) | 411,664 | 418,448 | 407,259 |
| Distillers dried grains with solubles (DDGS) | 1,690,903 | 1,892,983 | 1,976,508 |
| Modified distillers wet grains (DWG) <65% moisture | 1,200,282 | 1,228,598 | 1,136,491 |
| Modified distillers wet grains (DWG) 40-64% moisture | 389,889 | 417,888 | 367,092 |
| Wet Mill | |||
| Corn germ meal | 61,922 | 69,135 | 62,917 |
| Corn gluten feed | 313,889 | 350,141 | 324,905 |
| Corn gluten meal | 89,356 | 53,208 | 51,281 |
| Corn oil | 42,998 | 53,208 | 51,281 |
| Wet corn gluten feed 40-60% moisture | 314,047 | 325,292 | 306,354 |
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RFA WEEKLY U.S. LIVESTOCK FEED PRODUCTION
| CO-PRODUCT OUTPUTS (metric tons) | |||||
| Week Ending | Distillers Grains | Corn Gluten Feed | Corn Gluten Meal | Total Feed | Corn Oil (lbs.) |
| 7/31/15 | 94967 | 9818 | 1818 | 106603 | 5653594 |
| 8/07/15 | 95363 | 9859 | 1826 | 107047 | 5677126 |
| 8/14/15 | 95363 | 9859 | 1826 | 107047 | 5677126 |
| 8/21/15 | 94078 | 9726 | 1801 | 105605 | 5600647 |
*Information from 2010 Weekly U.S. Fuel Ethanol/Livestock Feed Production report (http://www.ethanolrfa.org/…)
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DDG LINKS/RESOURCES
Organizations
*Distillers Grains Technology Council
http://www.distillersgrains.org
*National Corn Growers Association Corn Distillers Grains Brochure
*Iowa Corn
Nebraska Corn Board
*Renewable Fuels Association - Ethanol Co-Products
*American Coalition for Ethanol
*U.S. Grains Council
*South Dakota Corn Utilization Council
http://www.drieddistillersgrains.com
Government Sites
*Iowa Department of Agriculture and Land Stewardship/Office of Renewable Fuels & Coproducts
http://www.distillersgrains.com
University Sites
*University of Minnesota - Distillers Grains By-Products in Livestock
and Poultry Feed
*University of Illinois - Illinois Livestock Integrated Focus Team Distillers Grains site
http://ilift.traill.uiuc.edu/…
*University of Nebraska - Beef Cattle Production By-Product Feeds site
*University of Nebraska Extension
*Iowa Beef Center - Iowa State University
http://www.iowabeefcenter.org/…
*University of Missouri - Byproducts Resource Page
*South Dakota State University - Dairy Science Department - Dairy cattle research
(select "Distillers Grains" from the topic menu)
*Purdue University Renewable Energy Web Site
http://www.extension.purdue.edu/…
(select "Biofuels Co-Products from the menu)
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DDG CONFERENCES
*Distillers Grains Technology Council Inc.'s 19th Annual Distillers Grains Symposium
The Distillers Grains Technology Council will hold its 19th Annual Distillers Grains Symposium on May 13-14, 2015 at the Sheraton Crown Center at Kansas City, Missouri. For information, contact the DGTC office at (515) 294-4019 or (800) 759-3448, or check the DGTC website (http://www.distillersgrains.org).
(If you are sponsoring or know of any event, conference or workshop on distillers grains, and would like to list it in the DTN Weekly Distillers Grains Update, please contact Cheryl Anderson (see contact info below).
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We welcome any comments/suggestions for this feature. Please let us know what information is valuable to you that we could include in the Distillers Grains Weekly Update. Please feel free to contact Cheryl Anderson at (402) 364-2183, or e-mail cheryl.anderson@dtn.com.
(AG)
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