DTN Weekly DDG Update

Export Demand Will Drive DDG Prices

Future prices of dried distillers will likely be export driven in coming weeks, according to Andy Lindsay, territory sales manager at POET Nutrition in Sioux Falls, South Dakota.

After tumultuous trade relations with China last year, the country's DDG imports had returned to previous robust levels, until mid-June when some Chinese companies began cancelling shipments of DDG. While the cancellations were due to the actions of individual companies and not the Chinese government, the end result was DDG prices plummeting as much as $30 per ton over the course to seven to 10 days.

While China took some huge volumes in May and June, Lindsay told DTN that China will be a vital factor in future DDG prices.

"If China really comes back and starts buying again, I think that will be a determining factor," he said. "We haven't seen a lot of interest back from China, but we are starting to get interest from places other than China."

Even though export demand has been off a little, Lindsay said Vietnam, and some South American and African countries have begun to show interest in taking product once again.

Last week, prices of DDG rose for the first time in many weeks. The DTN weekly DDG spot price average increased last week for the first time since mid-June, rising $7 per ton, from $131 per ton two weeks ago to $138 per ton last week. The average rose slightly again this week to $140 per ton.

What prompted the rise was a bullish quarterly USDA Grains Stocks report that estimated both corn and soybean stocks on June 1 were less than expected. Assisting the price increase was USDA's report that 88.9 million acres of corn will be planted in 2015, less than the 89.2 million acres estimated earlier.

Also, the corn market rallied 30 cents in one day, so DDG prices basically followed corn's move in price.

Domestic demand has improved since prices have fallen to lower levels, Lindsay said. The value of DDG relative to corn remained well above 100% since mid-December 2014, sometimes reaching as high as 130% to 140%.

That value finally dipped below $100 in late June, and according to DTN statistics, the value of DDG relative to corn last week fell to about 92%.

These lower values have sparked renewed interest in DDG, Lindsay said.

"We have seen domestic usage start to come back," he said. "People have started using DDG again, not huge inclusions, but they're starting to put it back in diets."

He added that he is starting to see some local truck demand return as well.

Supplies of DDG are fairly plentiful currently and buyers are able to purchase what they need. Run rates are still pretty high, so the DDG supply is good. Lindsey added that issues with logistics around St. Louis last month due to flooding that were backing up product are now beginning to clear up.

Lindsay advised end users that with the downturn in prices, this may be a pretty good time to buy product.

"We've seen end users, instead of just looking at next week, wanting to look at next month or at two or three-month contracts," he said. "We've definitely seen people starting to look at buying forward instead of buying spot."

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

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IN THE NEWS

Improved Relations With Cuba Could Increase DDGS Market

With diplomatic relations between the U.S. and Cuba restored as of July 20, Cuba could be a growing market for U.S. corn and dried distillers grains with solubles, according to an article by Agriculture.com (http://bit.ly/…).

The U.S. has sold corn to Cuba each market year since the early 2000s and DDGS since 2005. The U.S. share of the Cuban corn market has varied during that time between 100% in 2007/08 and 15% in recent years. The National Corn Growers Association estimates that with restored and open trade, the potential market in Cuba could total 35.4 million bushels of corn and 150,000 tons of distillers grains. Cuba has the potential to become the 12th largest export market for U.S. corn.

The only obstacles in recapturing that market are a number of U.S. policies learned from a recent trip to Cuba by leaders of the NCGA, the U.S. Grains Council and the North Dakota Barley Council. One of those obstacles is an embargo that gives competitors like Brazil opportunities to dominate the market.

As the country's economy improves, Cuba's goal of improving its agricultural sector could likely result in increased demand for meat products, which would increase demand for corn and DDGS. In fact, last week Cuba already reported a 5.7% increase in livestock production in the first quarter of 2015 compared to last year.

Easing trade restriction such as lifting restrictions on travel and capital flow and allowing USDA to conduct market development and credit guarantee programs, could help the U.S. regain its market share in Cuba and increase new opportunities for U.S. ag exports.

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

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DTN WEEKLY DDG SPOT PRICES

CURRENT PREVIOUS
COMPANY STATE 7/10/2015 7/3/2015 CHANGE
Bartlett and Company, Kansas City, MO (816-753-6300)
Missouri Dry $155 $165 -$10
Modified $65 $70 -$5
CHS, Minneapolis, MN (800-769-1066)
Illinois Dry $155 $150 $5
Indiana Dry $155 $150 $5
Iowa Dry $150 $150 $0
Michigan Dry $150 $155 -$5
Minnesota Dry $130 $135 -$5
North Dakota Dry $130 $130 $0
New York Dry $170 $160 $10
South Dakota Dry $130 $130 $0
MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253)
Kansas Dry $135 $130 $5
POET Nutrition, Sioux Falls, SD (888-327-8799)
Indiana Dry $145 $145 $0
Iowa Dry $130 $120 $10
Michigan Dry $140 $140 $0
Minnesota Dry $130 $130 $0
Missouri Dry $145 $140 $5
Ohio Dry $140 $140 $0
South Dakota Dry $120 $120 $0
United BioEnergy, Wichita, KS (316-616-3521)
Kansas Dry $135 $125 $10
Wet $45 $40 $5
Illinois Dry $165 $165 $0
Nebraska Dry $135 $125 $10
Wet $45 $40 $5
U.S. Commodities, Minneapolis, MN (888-293-1640)
Illinois Dry $160 $160 $0
Indiana Dry $150 $150 $0
Iowa Dry $135 $135 $0
Michigan Dry $150 $150 $0
Minnesota Dry $135 $135 $0
Nebraska Dry $125 $125 $0
New York Dry $160 $160 $0
North Dakota Dry $130 $130 $0
Ohio Dry $150 $150 $0
South Dakota Dry $125 $125 $0
Wisconsin Dry $150 $150 $0
Valero Energy Corp., San Antonio, TX (402-727-5300)
Indiana Dry $145 $140 $5
Iowa Dry $125 $120 $5
Minnesota Dry $130 $125 $5
Nebraska Dry $125 $120 $5
Ohio Dry $155 $150 $5
South Dakota Dry $120 $115 $5
Western Milling, Goshen, California (559-302-1074)
California Dry $210 $215 -$5
*Prices listed per ton.
Weekly Average $140 $138 $2
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 7/9/2015 $4.2125 $150.45
Soybean Meal 7/9/2015 $364.00
DDG Weekly Average Spot Price $140.00
DDG Value Relative to: 7/10 7/3 6/26
Corn 93.06% 92.33% 97.42%
Soybean Meal 38.46% 38.94% 38.91%
Cost Per Unit of Protein:
DDG $5.60 $5.52 $5.24
Soybean Meal $7.66 $7.46 $7.09
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 (Jul 2, 2015)

Dried Modified Wet
FOB PLANT PRICES PER TON
Iowa 120.00-155.00 46.00-75.00 36.00-42.00
Minnesota 110.00-130.00 55.00 32.00-40.00
Nebraska 110.00-136.00 53.00-75.00 38.00-51.00
South Dakota 105.00-125.00 65.00-77.50 35.00-42.00
Wisconsin 145.00-160.00 65.00-70.00 NQ
Eastern Corn Belt 135.00-165.00 46.00-70.00 NQ
Kansas 125.00-150.00 NQ 40.00-65.00
Northern Missouri 132.00-150.00 NQ 33.00-42.00
DELIVERED PRICES PER TON
CIF NOLA 180.00-220.00
Pacific Northwest 195.00-207.00
California 200.00-210.00
Texas Border (metric ton) 215.00-235.00
Lethbridge AB 175.00
Chicago 165.00-178.00

Dried Distillers Grain: 10% Moisture

Modified Wet Distillers: 50-55% Moisture

Wet Distillers Grains: 65-70% Moisture

CALIFORNIA WHOLESALE FEEDSTUFF PRICES (Tue Jul 7, 2015)

Distillers Dry Grains

  Rail to California Points        200.00-213.00    dn 13.00-unch
  FOB Truck to California Points   195.00-208.00    dn 10.00-up 3.00

PACIFIC NORTHWEST WEEKLY FEEDSTUFFS (Tue Jul 7, 2015)

Distillers Dried Grains: Offers for Distillers Dried Grains delivered in September by rail to feed mills in the Pacific Northwest were steady to 4.00 higher from 194.00-205.00. Offers for distillers dried grains trans-loaded onto trucks and delivered to Willamette Valley dairies were steady to 4.00 higher from 212.00-220.00.

*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

March 2015 - May 2015

Jul 1, 2015

Highlights:

Dry mill co-product production of distillers dried grains with solubles (DDGS) was 1.89 million tons during May 2015, up 12 percent from April 2015 and up 5 percent from March 2015. Distillers wet grains (DWG) 65 percent or more moisture was 1.23 million tons in May 2015, up 2 percent from April 2015 but down 3 percent from March 2015.

Wet mill corn gluten feed production was 350.1 thousand tons during May 2015, up 12 percent from April 2015 and up 6 percent from March 2015. Wet corn gluten feed 40 to 60 percent moisture was 325.3 thousand tons in May 2015, up 4 percent from April 2015 and up 5 percent from March 2015.

Co-products and Products Mar 2015 Apr 2015 May 2015
Dry Mill tons
Condensed distillers solubles (CDS-syrup) 163,713 139,930 148,637
Corn oil 107,141 102,610 118,281
Distillers dried grains (DDG) 438,728 411,664 418,448
Distillers dried grains with solubles (DDGS) 1,810,473 1,690,903 1,892,983
Modified distillers wet grains (DWG) <65% moisture 1,264,104 1,200,282 1,228,598
Modified distillers wet grains (DWG) 40-64% moisture 498,977 389,889 417,888
Wet Mill
Corn germ meal 57,439 61,922 69,135
Corn gluten feed 331,547 313,889 350,141
Corn gluten meal 93,078 89,356 97,295
Corn oil 42,684 42,998 53,208
Wet corn gluten feed 40-60% moisture 308,444 314,047 325,292

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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.)
6/12/15 97505 10012 1854 109371 5765372
6/19/15 98898 10155 1881 110933 5847734
6/26/15 96311 9889 1811 10832 5694775
7/03/15 98202 10083 1867 110152 5806553

*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.

(AG/SK)