DTN Weekly Distillers Grains Update

Despite China Rumors, DDG Prices Strengthen Amid Renewed Demand

The low prices of dried distillers grains in the past months have paid off for ethanol producers in terms of renewed interest from the livestock industry. At the same time, DDG prices seem relatively unaffected by rumors of more trade volatility with China.

DTN's weekly spot price average began a long downward trend that lasted approximately 10 weeks, falling from $148 per ton in late July to $116 in mid-October. After that downward trend, prices of dried distillers grains began a slight increase in the past three weeks, rising from an average of $116 per ton in mid-October to this week's average of $123 per ton.

Renewed domestic demand prompted the turnaround. Lower DDG prices in recent weeks sparked renewed interest from livestock producers, who began to increase the inclusion rate of DDG in their rations.

Also, merchandisers recently told DTN that buyers may have begun to feel that prices may not fall any further, prompting more buying before prices began to rise once again.

But finally, the market began to strengthen, and prices increased slightly. With export numbers up and Gulf barge freight down, DDG values began to improve.

According to Steve Knier, merchandiser for U.S. Commodities in Minneapolis, it seems like the market has found a comfortable spot in pricing, with inclusion rates for local customers up.

"The market seems to be in an OK spot right now," he said. "I don't think a lot of trade has been done past January, but it will be interesting to see closer to the New Year if deferred prices start coming down or if we starting bridging the gap and December start going up."

In spite of scheduled maintenance shutdowns of some plants, product seems to be moving. And although shutdowns typically cause some tightness, any shortages are localized. In some locations, supplies are ample, Knier said.

In coming weeks, Knier said, he thinks prices will be sideways, maybe a little bit firmer, but nothing that's going to run away. No big surprises.

Knier said livestock producers may want to purchase some of their winter needs right now.

CHINA RUMORS CAUSE LESS ALARM

Rumors surfaced in late October that China may try to manipulate DDG trade by launching a second antidumping probe against the U.S. Some news sources reported that Chinese buyers ceased purchases of DDG, in fear of another antidumping case. China announced the first antidumping probe in late December 2010, prompting Chinese importers to suspend all purchases. Further trade disruptions caused a dramatic fall and great volatility in DDG prices in 2011.

China has been the largest importer of U.S. DDG and has purchased more than 4.9 million metric tons of U.S. DDG so far in 2015 at a value of nearly $1.3 billion. This is nearly five times the amount of DDG purchased by any other country, according to statistics from the U.S. Department of Agriculture's Foreign Agricultural Service.

While the rumors left some suspicious, they did not have a great effect on prices and caused much less of a reaction in the market than in the past. Like the boy who cried wolf, Knier said, China's threats are having less and less of an impact on the U.S. DDG market.

"The market already knew what's going on," Knier said. "With the amount of headaches that have happened over there, the reaction and volatility that comes with it gets less and less."

U.S. ethanol producers have done a good job of finding other export customers, and sales of DDG to other countries are up, he said.

"We have found other places to send products to besides China," he said. "Usage from other countries is picking up some of the slack."

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

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IN THE NEWS

Gas Prices, Threat to DDG Exports May Affect Ethanol Industry

The slide in gasoline prices is pressuring ethanol prices in Nebraska and other Midwest states. Coupled with other factors such as possible decreased purchases of dried distillers grains from China, this will likely mean some struggles for the ethanol sector nationwide, according to an article by the Grand Island Independent (http://bit.ly/…).

Richard Perrin, agricultural economist at the University of Nebraska-Lincoln, said that predictions of weaker crops and higher corn prices may result in even more worries about profit margins for ethanol producers in coming months.

According to a report from the Colorado-based CoBank, "ethanol profitability will face headwinds in the coming 12 to 18 months from persistent pressure on ethanol prices, modest increases in ethanol production and capacity, flat domestic demand, and the risk that (distillers grains) exports to China will decrease."

The bank's report stressed that the industry need not be overly alarmed by reports of financial stress and predicted ethanol prices will likely be volatile for only the near future.

CoBank said, "Following 18 months of record earnings, the U.S. ethanol industry has rebalanced in 2015. As energy prices collapsed in late 2014, so did ethanol prices and plant margins. However, ethanol's supply/demand has been well balanced in 2015."

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

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DTN WEEKLY DDG SPOT PRICES

CURRENT PREVIOUS
COMPANY STATE 11/6/2015 10/30/2015 CHANGE
Bartlett and Company, Kansas City, MO (816-753-6300)
Missouri Dry $135 $135 $0
Modified $65 $65 $0
CHS, Minneapolis, MN (800-769-1066)
Illinois Dry $128 $125 $3
Indiana Dry $122 $122 $0
Iowa Dry $120 $118 $2
Michigan Dry $128 $125 $3
Minnesota Dry $110 $110 $0
North Dakota Dry $110 $110 $0
New York Dry $135 $140 -$5
South Dakota Dry $118 $118 $0
Hawkeye Gold, IA (515-663-6413)
Iowa Dry NA NA #VALUE!
Modified NA NA #VALUE!
MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253)
Kansas Dry $135 $130 $5
POET Nutrition, Sioux Falls, SD (888-327-8799)
Indiana Dry $120 $120 $0
Iowa Dry $115 $115 $0
Michigan Dry $125 $125 $0
Minnesota Dry $115 $110 $5
Missouri Dry $130 $125 $5
Ohio Dry $125 $125 $0
South Dakota Dry $115 $110 $5
United BioEnergy, Wichita, KS (316-616-3521)
Kansas Dry $128 $125 $3
Wet $50 $50 $0
Illinois Dry $140 $140 $0
Nebraska Dry $128 $125 $3
Wet $50 $50 $0
U.S. Commodities, Minneapolis, MN (888-293-1640)
Illinois Dry $125 $125 $0
Indiana Dry $130 $125 $5
Iowa Dry $115 $115 $0
Michigan Dry $130 $125 $5
Minnesota Dry $115 $111 $4
Nebraska Dry $125 $115 $10
New York Dry $150 $145 $5
North Dakota Dry $130 $130 $0
Ohio Dry $130 $125 $5
South Dakota Dry $115 $110 $5
Wisconsin Dry $117 $115 $2
Valero Energy Corp., San Antonio, TX (402-727-5300)
Indiana Dry $125 $125 $0
Iowa Dry $115 $105 $10
Minnesota Dry $110 $105 $5
Nebraska Dry $130 $120 $10
Ohio Dry $135 $130 $5
South Dakota Dry $110 $105 $5
Western Milling, Goshen, California (559-302-1074)
California Dry $180 $180 $0
*Prices listed per ton.
Weekly Average $123 $120 $3
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 11/5/2015 $3.7450 $133.75
Soybean Meal 11/5/2015 $296.40
DDG Weekly Average Spot Price $123.00
DDG Value Relative to: 11/6 10/30 10/23
Corn 91.96% 88.42% 88.42%
Soybean Meal 41.50% 39.79% 39.79%
Cost Per Unit of Protein:
DDG $4.92 $4.80 $4.80
Soybean Meal $6.24 $6.35 $6.35
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 (Oct 23, 2015)

Dried Modified Wet
FOB PLANT PRICES PER TON
Iowa 98.00-120.00 50.00-60.00 35.00-40.00
Minnesota 100.00-115.00 55.00 32.00-40.00
Nebraska 100.00-125.00 55.00-65.00 44.00-55.00
South Dakota 95.00-110.00 55.00-64.00 35.00-40.00
Wisconsin 110.00-125.00 48.00-60.00 NQ
Eastern Corn Belt 104.00-140.00 55.00-60.00 NQ
Kansas 120.00-145.00 NQ 48.00-60.00
Northern Missouri 120.00-135.00 NQ 40.00-44.00
DELIVERED PRICES PER TON
CIF NOLA 155.00-165.00
Pacific Northwest 173.00-181.00
California 173.00-185.00
Texas Border (metric ton) 185.00-210.00
Lethbridge AB 150.00-162.00
Chicago 136.00-145.00

Dried Distillers Grain: 10% Moisture

Modified Wet Distillers: 50-55% Moisture

Wet Distillers Grains: 65-70% Moisture

CALIFORNIA WHOLESALE FEEDSTUFF PRICES (Tue Nov 3, 2015)

Distillers Dry Grains

  Rail to California Points         180.00-185.00    dn 2.00-up 3.00
  FOB Truck to California Points    178.00-185.00    dn 2.00-5.00

PACIFIC NORTHWEST WEEKLY FEEDSTUFFS (Tue Nov 3, 2015)

Offers for Distillers Dried Grains delivered in October by rail to feed mills in the Pacific Northwest were steady to 4.00 higher from 178.00-180.00. Offers for distillers dried grains trans-loaded onto trucks and delivered to Willamette Valley dairies were 1.00 to 3.00 higher

from 195.00-196.00.

*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

July 2015 - September 2015

Nov 2, 2015

Highlights:

Dry mill co-product production of distillers dried grains with solubles (DDGS) was 1.91 million tons during September 2015, down 3 percent from August 2015 and down 5 percent from July 2015. Distillers wet grains (DWG) 65 percent or more moisture was 1.17 million tons in September 2015, up 1 percent from August 2015 and up 2 percent from July 2015.

Wet mill corn gluten feed production was 312.5 thousand tons during September 2015, down 9 percent from August 2015 and down 6 percent from July 2015. Wet corn gluten feed 40 to 60 percent moisture was 286.6 thousand tons in September 2015, down 1 percent from August 2015 and down 9 percent from July 2015.

Co-products and Products Jul 2015 Aug 2015 Sept 2015
Dry Mill tons
Condensed distillers solubles (CDS-syrup) 149,927 156,262 156,935
Corn oil 125,497 121,810 117,622
Distillers dried grains (DDG) 450,829 452,969 420,458
Distillers dried grains with solubles (DDGS) 2,000,851 1,961,145 1,907,470
Modified distillers wet grains (DWG) <65% moisture 1,137,600 1,151,297 1,165,422
Modified distillers wet grains (DWG) 40-64% moisture 350,460 341,837 369,209
Wet Mill
Corn germ meal 68,528 66,563 56,106
Corn gluten feed 333,828 343,476 312,543
Corn gluten meal 97,130 96,072 86,522
Corn oil 53,364 52,514 42,605
Wet corn gluten feed 40-60% moisture 315,090 290,652 286,615

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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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