DTN Weekly Distillers Grains Update

DDG Prices Drop, Export Demand Sluggish

OMAHA (DTN) -- After remaining stable in recent weeks, prices of dried distillers grains took a dip this week due to declining export demand, an oversupply of feed ingredients and barge markets down.

The DTN weekly DDG spot price average fell $3 per ton since last week, from $127 per ton to $124 per ton. Although the average has hovered between $125 and $130 for the past 13 weeks, this is the lowest the average has reached since mid-December.

According to Michael Peterson, senior merchandiser for U.S. Commodities in Minneapolis, DDG prices had remained relatively steady in recent weeks due to steady prices of corn and soybean meal, which are DDG's biggest competing feed ingredients.

He added that distillers grains have continued to stay firmer on the nearby than on the deferreds.

The impending spring maintenance shutdowns at ethanol plants may raise DDG prices somewhat in coming months. Most plants take downtime in April and May for bi-annual maintenance, which cuts supply slightly and pushes prices higher.

"With the upcoming downtime that we'll have here in April, I look for there to be a bit of a premium on the nearby," Peterson said.

Export demand from several countries, especially China, has been falling in recent weeks, he said. The lack of Chinese buying is due mostly to China's ongoing DDG anti-dumping and countervailing duties investigation against the U.S. Chinese buyers seem to be hesitant to buy U.S.-produced DDG too far out, fearing that in the future China may impose heavy duties on DDG as a result on the investigation.

"Export interests seem to have slowed up a bit from some countries, which we're seeing in forms of lower bids at the Gulf and some cheaper containers sold overseas," he said.

While domestic demand is good, it had been better as the lower prices of canola meal won out in some rations, he said. But that has now changed.

"Recently, canola prices have firmed back up and distillers has worked it out," Peterson said. "So I guess I'm optimistic we're going to see people increase their usage of DDG here in the coming weeks."

Supplies of DDG have been good and buyers are usually able to find the product they need and logistics are good as well.

"Freight has been easy to come by, whether it's by truck or getting things moved where you need to by rail cars," Peterson said. "The market is very efficient right now."

Peterson said that barges will start being loaded in Minneapolis beginning next week, adding that is more due to routine maintenance by the Army Corps of Engineers than river conditions.

In coming weeks, Peterson said prices should remain fairly steady.

"I don't look for prices to change too much, unless we happen to get some really great weather and can get corn in early and get some good crop progress going, but that's weeks ahead," he said.

Livestock producers who need to purchase product may find this is a good time to shore up some of their needs, as there is a chance that the planting season could bring some unexpected volatility.

"Prices of DDG relative to other ingredients right now are at a fair price," Peterson said. "So having what you need locked in for the next few months seems like a good idea."

The value of DDG relative to corn this week was at about 94%, down from 98% last week. The value of DDG relative to soybean meal fell only slightly, from about 47% to about 46%.

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

Follow Cheryl Anderson on Twitter @CherylADTN

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IN THE NEWS

U.S. Ethanol Exports Strong, While DDGS Exports Fall

Exports of U.S. ethanol have been robust so far in 2016, and in fact, grew 7% during December, reaching a 14-month high, according to an article by Ethanol Producer (http://bit.ly/…).

Approximately 87.1 million gallons of ethanol were exported, with a third of that total purchased by China.

But while exports of ethanol have begun the year strong, exports of U.S. dried distillers grains with solubles have fallen, decreasing 19% in February to 800,580 metric tons. Much of the decline was due to decreased purchasing by China, Spain and Turkey, although robust exports to Mexico helped offset those losses to some extent.

The decrease in exports to China was likely caused by the current anti-dumping and countervailing duties investigation against the U.S. that China announced Jan. 12 to see if U.S. agricultural policies in some way create unfair competition.

Chinese buyers may be hesitant to buy U.S. DDGS too far out, in case heavy duties are imposed as a result of the investigation. The drop in Chinese demand has contributed to the decrease in exports, as China has been the largest DDGS export market for the U.S. in recent years. China was the largest importer of U.S. DDGS in 2015, importing nearly 6.3 million metric tons at a value of nearly $1.6 billion.

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

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DTN WEEKLY DDG SPOT PRICES

CURRENT PREVIOUS
COMPANY STATE 3/18/2016 3/11/2016 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 $135 $138 -$3
Indiana Dry $128 $135 -$7
Iowa Dry $125 $128 -$3
Michigan Dry $130 $135 -$5
Minnesota Dry $115 $118 -$3
North Dakota Dry $115 $122 -$7
New York Dry $135 $138 -$3
South Dakota Dry $115 $122 -$7
MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253)
Kansas Dry $130 $135 $0
POET Nutrition, Sioux Falls, SD (888-327-8799)
Indiana Dry $127 $132 -$5
Iowa Dry $118 $122 -$4
Michigan Dry $125 $128 -$3
Minnesota Dry $118 $118 $0
Missouri Dry $138 $140 -$2
Ohio Dry $126 $128 -$2
South Dakota Dry $120 $120 $0
United BioEnergy, Wichita, KS (316-616-3521)
Kansas Dry $135 $130 $5
Wet $50 $50 $0
Illinois Dry $140 $140 $0
Nebraska Dry $135 $130 $5
Wet $50 $50 $0
U.S. Commodities, Minneapolis, MN (888-293-1640)
Illinois Dry $125 $130 -$5
Indiana Dry $120 $125 -$5
Iowa Dry $115 $120 -$5
Michigan Dry $125 $130 -$5
Minnesota Dry $115 $115 $0
Nebraska Dry $130 $125 $5
New York Dry $145 $150 -$5
North Dakota Dry $120 $120 $0
Ohio Dry $124 $128 -$4
South Dakota Dry $115 $120 -$5
Wisconsin Dry $120 $120 $0
Valero Energy Corp., San Antonio, TX (402-727-5300)
Indiana Dry $122 $128 -$6
Iowa Dry $118 $120 -$2
Minnesota Dry $114 $116 -$2
Nebraska Dry $125 $130 -$5
Ohio Dry $130 $135 -$5
South Dakota Dry $110 $112 -$2
Western Milling, Goshen, California (559-302-1074)
California Dry $188 $190 -$2
*Prices listed per ton.
Weekly Average $124 $127 -$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 3/17/2016 $3.6850 $131.61
Soybean Meal 3/17/2016 $267.00
DDG Weekly Average Spot Price $124.00
DDG Value Relative to: 3/18 3/11 3/4
Corn 94.22% 98.10% 102.11%
Soybean Meal 46.44% 47.00% 49.24%
Cost Per Unit of Protein:
DDG $4.96 $5.08 $5.16
Soybean Meal $5.62 $5.69 $5.52
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 (Mar 11, 2016)

Dried Modified Wet
FOB PLANT PRICES PER TON
Iowa 120.00-130.00 52.00-65.00 38.00-41.00
Minnesota 115.00-125.00 55.00 38.00-45.00
Nebraska 125.00-140.00 60.00-75.00 48.00-55.00
South Dakota 115.00-128.50 62.00-68.00 40.00-44.00
Wisconsin 120.00-130.00 52.00-60.00 NQ
Eastern Corn Belt 124.00-155.00 62.00-67.00 NQ
Kansas 135.00-153.00 NQ 45.00-60.00
Northern Missouri 135.00-148.00 NQ 38.00-49.00
DELIVERED PRICES PER TON
CIF NOLA 152.00-163.00
Pacific Northwest 176.00-185.00
California 180.00-187.00
Texas Border (metric ton) 195.00-210.00
Lethbridge AB 152.00
Chicago 139.00-145.00

Dried Distillers Grain: 10% Moisture

Modified Wet Distillers: 50-55% Moisture

Wet Distillers Grains: 65-70% Moisture

CALIFORNIA WHOLESALE FEEDSTUFF PRICES (Tue Mar 15, 2016)

Distillers Dry Grains

  Rail to California Points          180.00-186.00    unch
  FOB Truck to California Points     188.00-196.00    up 3.00-5.00

PACIFIC NORTHWEST WEEKLY FEEDSTUFFS (Tue Mar 15, 2016)

Offers for Distillers Dried Grains delivered by rail to feed mills in the Pacific Northwest were steady from 180.00-190.00. Offers for distillers dried grains trans-loaded onto trucks and delivered to Willamette Valley dairies were steady from 198.00-205.00.

*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

December 2015 - January 2016

Mar. 1, 2016

Highlights:

Dry mill co-product production of distillers dried grains with solubles (DDGS) was 1.87 million tons during January 2016, down 4 percent from December 2015 but up 2 percent from January 2015. Distillers wet grains (DWG) 65 percent or more moisture was 1.31 million tons in January 2016, down 6 percent from December 2015 and down 11 percent from January 2015.

Wet mill corn gluten feed production was 322.0 thousand tons during January 2016, down 5 percent from December 2015 but up slightly from January 2015. Wet corn gluten feed 40 to 60 percent moisture was 291.9 thousand tons in January 2016, down 5 percent from December 2015 and down 7 percent from January 2015.

Co-products and Products Jan 2015 Dec 2015 Jan 2016
Dry Mill tons
Condensed distillers solubles (CDS-syrup) 162,127 134,196 133,919
Corn oil 103,780 130,652 124,541
Distillers dried grains (DDG) 438,936 423,632 383,131
Distillers dried grains with solubles (DDGS) 1,831,393 1,941,708 1,869,722
Modified distillers wet grains (DWG) <65% moisture 1,480,431 1,398,280 1,311,155
Modified distillers wet grains (DWG) 40-64% moisture 476,760 442,448 449,256
Wet Mill
Corn germ meal 71,492 69,669 63,787
Corn gluten feed 321,768 340,460 321,956
Corn gluten meal 90,617 88,921 87,266
Corn oil 41,961 57,578 45,976
Wet corn gluten feed 40-60% moisture 313,400 307,874 291,882

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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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