DTN Weekly DDG Update

DDG Market Showing Flu Symptoms

OMAHA (DTN) -- An epidemic of avian influenza has ravaged many U.S. poultry operations in the Midwest, Upper Midwest and parts of the West Coast since December, resulting in the destruction of millions of chickens and turkeys. With the loss of so many birds, the ethanol industry is also feeling the effects due to the loss of dried distillers grain sales to the poultry industry.

The highly pathogenic avian influenza (HPAI) was first detected in December 2014 and quickly became an epidemic. The U.S. Department of Agriculture's Animal and Plant Health Inspection Service has reported there have been a total of 222 detections of HPAI involving more than 47 million birds.

The total number of birds euthanized now totals approximately 7.5 million turkeys and more than 41 million layer chickens and pullets, according to Dr. T.J. Myers, associate deputy administrator of veterinary services for APHIS. Myers told DTN that APHIS' indemnity commitment to cover producers' cost of the fair market value of the birds, disinfection and equipment replacements now stands at about $187 million.

The HPAI epidemic has also caused an estimated 10% or more decline in national egg production, according to Rafael Rivera, food safety and production manager for the U.S. Poultry and Egg Association.

USDA's National Agricultural Statistics Service reports that in 2014, the U.S. poultry industry produced 8.54 billion broilers, 99.8 billion eggs, and 238 million turkeys. The combined value of production from broilers, eggs, turkeys, and the value of sales from chickens in 2014 was $48.3 billion, up 9% from $44.4 billion in 2013.

Distillers grains are widely used as feed in the poultry industry, especially for laying hens, according to Sheila Purdum, professor of poultry nutrition at the University of Nebraska-Lincoln.

DDG are fed to poultry mostly for their high energy and protein content.

Typically, the inclusion rate for poultry is between 5% and 10% of the daily rations. The only limiting factor in the inclusion of DDG in poultry rations is fiber, as poultry can't digest the complex fibers in distillers grains, Purdum said. However, some of the new, fractionated low-fiber DDG products could be well-suited for the poultry industry.

Purdum said the new low-oil DDG can lessen the amount of energy availability in poultry rations; however, if the price if cheap enough, producers will still likely make DDG work in the ration.

The largest determining factor in DDG's inclusion in poultry rations is cost, Purdum said. Especially vital is the cost of protein in DDG relative to the cost of protein in soybean meal and corn, the two ingredients that are DDG's biggest competitors.

Also factoring in the decision of poultry producers to use DDG is the operation's proximity to an ethanol plant, as well as the plant's ability and willingness to deliver dry product.

Purdum said she has no doubt that the avian influenza has put a dent in sales of DDG.

"I would assume that most of the birds destroyed are in areas where the majority of ethanol and DDG are product, so I have no doubt this has hurt the market considerably," she said. "If you take 50 million birds consuming 5% of DDG in their diet, that's a loss of more than 250 tons a day. It's quite significant."

Sean Broderick, senior merchandiser for CHS in Minneapolis, said he has seen the effects of HPAI, but on a more regional basis, particularly in western Minnesota and northwest Iowa. However, the dip in demand may have resulted in DDG prices decreasing.

"A lot of the operations were not using DDGS to the max in their rations, but, as they also did not consume other local products they may have been using like corn or soymeal, the addition of those products back into the market helped push down on prices as well," he said.

Joel Karlin, contributing DTN market analyst and commodity manager for Western Milling in Goshen, California, said he believes the HPAI epidemic had less of an impact.

DDG fits into a bird ration when it is very cheap compared to other protein feed and, until recently, this was not the case. Also, there are many poultry producers who do not incorporate DDG in their rations due to some deleterious effects on the carcass, Karlin said. "My understanding is that for most poultry producers, the diet is essentially corn and soybean meal with little substitution."

Some merchandisers told DTN that purchasing from the poultry industry had waned even before HPAI began to spread because DDGS prices were so high and some of those customers had pulled it from their rations.

Other DDGS merchandisers said that despite the decreased demand from the poultry sector, swine numbers are up substantially this year. The increased swine demand, along with lower DDGS prices that have increased inclusion rates from other sectors such as the beef market, have offset some of the dip in demand from poultry producers.

In addition, some poultry producers are beginning to repopulate, so that demand may recover as bird numbers increase over the next 60 days.

Another merchandiser commented that in May, rail prices were very good, but prices have decreased, possibly from a drop in demand from poultry producers that typically get shipments by rail. However, rail prices also may have decreased due to excessive rains and flooding causing problems with loading and barge shipments.

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

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IN THE NEWS

Grains Council Educates Japanese Swine Producers on DDGS

The U.S. Grains Council recently sent a team to the International Poultry and Pigs Show 2015 in Japan to educate Japanese swine producers with the latest information on U.S. dried distillers grains with solubles, according to an article by the council (http://bit.ly/…).

Currently, Japan is the seventh-largest importer of U.S. DDGS, importing 98,650 metric tons so far this year. However, the council believes that market could grow as there is room for expansion of inclusion rates in the country's livestock rations.

The council team that traveled to Japan was part of its ongoing efforts to build international awareness and demand for DDGS. The team included Dr. Gerald Shurson, professor of swine nutrition and management at the University of Minnesota, and Bruce Roher, past president of the Iowa Corn Growers Association and Council staff and consultants.

Those swine producers in attendance were given technical information on subjects that could enhance productivity, such as DDGS inclusion rates, nutritional benefits, etc.

The low-oil DDGS that have become popular in the U.S. should not be a problem for swine producers; in fact, the lower oil content should increase use by the Japanese swine industry. To date, the higher levels of oil in DDGS have been a limiting factor, as it makes the fat in pork excessively soft, an undesirable quality.

Another limiting factor has been price, making U.S. DDGS less competitive in Japanese markets. However, the council is confident that further promotion and education will work to increase sales when prices are lower.

The council will follow its work at the show with visits to individual feed companies and continuance of a series of technical seminars that distribute nutritional information about U.S. DDGS to Japan's livestock industry.

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

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DTN WEEKLY DDG SPOT PRICES

CURRENT PREVIOUS
COMPANY STATE 6/26/2015 6/19/2015 CHANGE
Bartlett and Company, Kansas City, MO (816-753-6300)
Missouri Dry $150 $160 -$10
Modified $65 $70 -$5
CHS, Minneapolis, MN (800-769-1066)
Illinois Dry $145 $145 $0
Indiana Dry $145 $145 $0
Iowa Dry $135 $145 -$10
Michigan Dry $145 $145 $0
Minnesota Dry $125 $135 -$10
North Dakota Dry $115 $125 -$10
New York Dry $155 $145 $10
South Dakota Dry $115 $125 -$10
MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253)
Kansas Dry $120 $125 -$5
POET Nutrition, Sioux Falls, SD (888-327-8799)
Indiana Dry $145 $150 -$5
Iowa Dry $125 $125 $0
Michigan Dry $145 $150 -$5
Minnesota Dry $130 $130 $0
Missouri Dry $145 $150 -$5
Ohio Dry $145 $150 -$5
South Dakota Dry $120 $125 -$5
United BioEnergy, Wichita, KS (316-616-3521)
Kansas Dry $120 $135 -$15
Wet $40 $40 $0
Illinois Dry $155 $155 $0
Nebraska Dry $120 $135 -$15
Wet $40 $40 $0
U.S. Commodities, Minneapolis, MN (888-293-1640)
Illinois Dry $150 $150 $0
Indiana Dry $140 $140 $0
Iowa Dry $130 $130 $0
Michigan Dry $140 $135 $5
Minnesota Dry $125 $130 -$5
Nebraska Dry $120 $120 $0
New York Dry $150 $150 $0
North Dakota Dry $120 $120 $0
Ohio Dry $140 $135 $5
South Dakota Dry $115 $120 -$5
Wisconsin Dry $145 $145 $0
Valero Energy Corp., San Antonio, TX (402-727-5300)
Indiana Dry $130 $130 $0
Iowa Dry $110 $125 -$15
Minnesota Dry $115 $125 -$10
Nebraska Dry $110 $120 -$10
Ohio Dry $140 $140 $0
South Dakota Dry $105 $120 -$15
Western Milling, Goshen, California (559-302-1074)
California Dry $205 $205 $0
*Prices listed per ton.
Weekly Average $131 $135 -$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 6/25/2015 $3.7650 $134.46
Soybean Meal 6/25/2015 $336.70
DDG Weekly Average Spot Price $131.00
DDG Value Relative to: 6/26 6/19 6/12
Corn 97.42% 105.59% 124.88%
Soybean Meal 38.91% 41.33% 50.73%
Cost Per Unit of Protein:
DDG $5.24 $5.40 $6.36
Soybean Meal $7.09 $6.88 $6.60
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 (June 18, 2015)

Dried Modified Wet
FOB PLANT PRICES PER TON
Iowa 125.00-155.00 59.00-75.00 37.00-44.00
Minnesota 138.00-140.00 65.00 40.00-42.00
Nebraska 120.00-138.00 50.00-65.00 39.00-52.00
South Dakota 125.00-135.00 65.00-72.50 42.00-47.00
Wisconsin 150.00-165.00 67.00-80.00 NQ
Eastern Corn Belt 130.00-165.00 59.00-72.00 NQ
Kansas 130.00-160.00 NQ 45.00-58.00
Northern Missouri 135.00-165.00 NQ 33.00-55.00
DELIVERED PRICES PER TON
CIF NOLA 165.00-192.00
Pacific Northwest 182.00-195.00
California 175.00-195.00
Texas Border (metric ton) 205.00-225.00
Lethbridge AB 138.00
Chicago 150.00-165.00

Dried Distillers Grain: 10% Moisture

Modified Wet Distillers: 50-55% Moisture

Wet Distillers Grains: 65-70% Moisture

CALIFORNIA WHOLESALE FEEDSTUFF PRICES (Tue Jun 23, 2015)

Distillers Dry Grains

  Rail to California Points         195.00-200.00    up 3.00-dn 18.00
  FOB Truck to California Points    205.00-208.00    dn 5.00-27.00

PACIFIC NORTHWEST WEEKLY FEEDSTUFFS (Tue Jun 23, 2015)

Distillers Dried Grains: Offers for Distillers Dried Grains delivered in September by rail to feed mills in the Pacific Northwest were 5.00 to 12.00 lower from 190.00-198.00. Offers for distillers dried grains trans-loaded onto trucks and delivered to Willamette Valley dairies were 12.00 to 15.00 lower from 198.00-213.00.

*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

February 2015 - April 2015

Jun 1, 2015

Highlights:

Dry mill co-product production of distillers dried grains with solubles (DDGS) was 1.69 million tons during April 2015, down 7 percent from March 2015 but up 3 percent from February 2015. Distillers wet grains (DWG) 65 percent or more moisture was 1.20 million tons in April 2015, down 5 percent from March 2015 but up 5 percent from February 2015.

Wet mill corn gluten feed production was 313.9 thousand tons during April 2015, down 5 percent from March 2015 but up 11 percent from February 2015. Wet corn gluten feed 40 to 60 percent moisture was 314.0 thousand tons in April 2015, up 2 percent from March 2015 and up 14 percent from February 2015.

Co-products and Products Feb 2015 Mar 2015 Apr 2015
Dry Mill tons
Condensed distillers solubles (CDS-syrup) 128,057 163,713 139,930
Corn oil 96,347 107,141 102,610
Distillers dried grains (DDG) 405,025 438,728 411,664
Distillers dried grains with solubles (DDGS) 1,649,534 1,810,473 1,690,903
Modified distillers wet grains (DWG) <65% moisture 1,144,177 1,264,104 1,200,282
Modified distillers wet grains (DWG) 40-64% moisture 421,666 498,977 389,889
Wet Mill
Corn germ meal 48,546 57,439 61,922
Corn gluten feed 283,990 331,547 313,889
Corn gluten meal 80,855 93,078 89,356
Corn oil 41,020 42,684 42,998
Wet corn gluten feed 40-60% moisture 274,763 308,444 314,047

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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.)
5/29/15 96709 9930 1839 108478 5718308
6/05/15 98699 10134 1877 110710 5835968
6/12/15 97505 10012 1854 109371 5765372
6/19/15 98898 10155 1881 110933 5847734

*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

http://ncga.com/…

*Iowa Corn

http://www.iowacorn.org/…

Nebraska Corn Board

http://www.nebraskacorn.org/…

*Renewable Fuels Association - Ethanol Co-Products

http://www.ethanolrfa.org/…

*American Coalition for Ethanol

http://www.ethanol.org/…

*U.S. Grains Council

http://www.grains.org/…

*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

http://www.ddgs.umn.edu

*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

http://beef.unl.edu/…

*University of Nebraska Extension

http://ianrpubs.unl.edu/…

*Iowa Beef Center - Iowa State University

http://www.iowabeefcenter.org/…

*University of Missouri - Byproducts Resource Page

http://agebb.missouri.edu/…

*South Dakota State University - Dairy Science Department - Dairy cattle research

http://dairysci.sdstate.edu/…

(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

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.

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