DTN Weekly Distillers Grains Update

Global Demand for Protein Pushes DDG Prices Higher

Price of distillers dried grains rose sharply this week, following a spike in soybean meal prices after Tuesday's World Agricultural Supply and Demand Estimates (WASDE) Report.

The DTN weekly DDG spot price average spiked a whopping $13 per ton in the past week, from $126 per ton last week to $139 per ton this week. This is the highest the average has reached since late August 2015.

Of the 36 Midwestern locations DTN collects spot prices from, 31 locations reported that their spot price increased in the past week between $7 and $20 per ton, though most price increases were in the $10 to $15 per ton range. Prices at five locations remained unchanged. No price decreases were reported.

DTN Market Analyst Todd Hultman said, soybean meal prices have been rising aggressively since early April with evidence of strong commercial buying, especially in the new-crop months. This suggested a much stronger demand situation for meal than most other analysts had been talking about this spring but was difficult to fundamentally explain outside of damage from heavy rains in Argentina at harvest time, he added.

"USDA's report on May 10 supported what the futures spreads in soybean meal had been indicating -- namely that USDA expects world soybean demand to be stronger than many expected in 2016-17," he said. "In particular, global consumption of protein meal is expected to increase 3% in 2016-17 and exports are also expected to increase. Since soybean meal accounts for 70% of the world's protein meal consumption, USDA specifically identified soybean meal demand as the main driver of those increased exports, especially to Europe and Southeast Asia."

USDA also estimated that Brazil's ending soybean stocks will total just 37 million bushels in the current season and Argentina's supplies will fall to 312 million bushels, much lower than what USDA expected a year ago at this time, Hultman said. That should help increase U.S. exports of both soybeans and meal in 2016-17.

Merchandisers told DTN that while global demand for protein has run up values for DDG, export markets are equally responsible for driving value higher. Rumors of Chinese business being transacted, however, increased activity in container markets has caused some speculation that a lot of demand is from non-China destinations such as Pakistan.

In spite of this week's jump in prices, DDG is still undervalued slightly compared to other proteins, causing customers to pursue it.

The value of DDG relative to corn this week rose sharply as well, from about 95% last week to about 102% this week. The value of DDG relative to soybean meal remained unchanged at 38%.

The cost per unit of protein for DDG was about $5.56 this week, compared to the cost per unit of protein for soybean meal at $7.60.

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

Follow Cheryl Anderson on Twitter @CherylADTN

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DTN WEEKLY DDG SPOT PRICES

CURRENT PREVIOUS
COMPANY STATE 5/13/2016 5/5/2016 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 $155 $140 $15
Indiana Dry $150 $135 $15
Iowa Dry $145 $125 $20
Michigan Dry $150 $135 $15
Minnesota Dry $130 $115 $15
North Dakota Dry $135 $120 $15
New York Dry $155 $145 $10
South Dakota Dry $130 $115 $15
MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253)
Kansas Dry $138 $128 $10
POET Nutrition, Sioux Falls, SD (888-327-8799)
Indiana Dry $147 $130 $17
Iowa Dry $140 $123 $17
Michigan Dry $120 $120 $0
Minnesota Dry $130 $120 $10
Missouri Dry $148 $138 $10
Ohio Dry $147 $130 $17
South Dakota Dry $135 $118 $17
United BioEnergy, Wichita, KS (316-616-3521)
Kansas Dry $127 $127 $0
Wet $50 $50 $0
Illinois Dry $140 $140 $0
Nebraska Dry $127 $127 $0
Wet $50 $50 $0
U.S. Commodities, Minneapolis, MN (888-293-1640)
Illinois Dry $150 $135 $15
Indiana Dry $145 $130 $15
Iowa Dry $135 $120 $15
Michigan Dry $145 $125 $20
Minnesota Dry $130 $115 $15
Nebraska Dry $135 $125 $10
New York Dry $165 $140 $25
North Dakota Dry $145 $125 $20
Ohio Dry $150 $130 $20
South Dakota Dry $135 $120 $15
Wisconsin Dry $135 $128 $7
Valero Energy Corp., San Antonio, TX (402-727-5300)
Indiana Dry $145 $130 $15
Iowa Dry $135 $120 $15
Minnesota Dry $130 $115 $15
Nebraska Dry $140 $130 $10
Ohio Dry $150 $135 $15
South Dakota Dry $125 $115 $10
Western Milling, Goshen, California (559-302-1074)
California Dry $205 $192 $13
*Prices listed per ton.
Weekly Average $139 $126 $13
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 5/13/2016 $3.8200 $136.43
Soybean Meal 5/13/2016 $361.00
DDG Weekly Average Spot Price $139.00
DDG Value Relative to: 5/13 5/6 4/29
Corn 101.88% 94.90% 88.97%
Soybean Meal 38.50% 37.61% 37.34%
Cost Per Unit of Protein:
DDG $5.56 $5.04 $4.96
Soybean Meal $7.60 $7.05 $6.99
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 (May 6, 2016)

Dried Modified Wet
FOB PLANT PRICES PER TON
Iowa 125.00-130.00 49.00-65.00 36.00-40.00
Minnesota 113.00-120.00 55.00 35.00-45.00
Nebraska 115.00-142.00 58.00-70.00 46.00-53.00
South Dakota 108.00-120.00 59.00-65.00 38.00-40.00
Wisconsin 120.00-125.00 52.00-65.00 NQ
Eastern Corn Belt 115.00-138.00 62.00-63.00 32.00-40.00
Kansas 125.00-148.00 NQ 47.00-54.00
Northern Missouri 130.00-137.00 65.00 40.00-42.00
DELIVERED PRICES PER TON
CIF NOLA 150.00-165.00
Pacific Northwest 176.00-190.00
California 178.00-190.00
Texas Border (metric ton) 192.00-210.00
Lethbridge AB 155.00
Chicago 145.00-154.00

Dried Distillers Grain: 10% Moisture

Modified Wet Distillers: 50-55% Moisture

Wet Distillers Grains: 65-70% Moisture

CALIFORNIA WHOLESALE FEEDSTUFF PRICES (Tue May 10, 2016)

Distillers Dry Grains

  Rail to California Points          188.00           up 10.00-8.00
  FOB Truck to California Points     192.00-205.00    up 4.00-10.00

PACIFIC NORTHWEST WEEKLY FEEDSTUFFS (Tue May 10, 2016)

Offers for Distillers Dried Grains delivered by rail to feed mills in the Pacific Northwest were steady to 2.00 higher from 181.00-190.00. Offers for distillers dried grains trans-loaded onto trucks and delivered to Willamette Valley dairies were also steady to 2.00 higher from 199.00-205.00.

*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

February 2016 - March 2016

May 2, 2016

Highlights:

Dry mill co-product production of distillers dried grains with solubles (DDGS) was 1.92 million tons during March 2016, up 7 percent from February 2016 and up 8 percent from March 2015. Distillers wet grains (DWG) 65 percent or more moisture was 1.32 million tons in March 2016, up 6 percent from February 2016 but down 6 percent from March 2015.

Wet mill corn gluten feed production was 342.7 thousand tons during March 2016, up 10 percent from February 2016 and up 3 percent from March 2015. Wet corn gluten feed 40 to 60 percent moisture was 290.6 thousand tons in March 2016, up 5 percent from February 2016 but down 6 percent from March 2015.

Co-products and Products Mar 2015 Feb 2016 Mar 2016
Dry Mill tons
Condensed distillers solubles (CDS-syrup) 163,796 122,291 137,541
Corn oil 106,270 123,806 125,483
Distillers dried grains (DDG) 438,728 367,436 384,739
Distillers dried grains with solubles (DDGS) 1,781,563 1,795,472 1,919,507
Modified distillers wet grains (DWG) <65% moisture 1,399,125 1,247,751 1,317,118
Modified distillers wet grains (DWG) 40-64% moisture 494,835 401,370 456,256
Wet Mill
Corn germ meal 57,439 65,123 68,140
Corn gluten feed 331,547 312,012 342,668
Corn gluten meal 93,078 83,643 91,945
Corn oil 42,684 46,490 51,415
Wet corn gluten feed 40-60% moisture 308,444 277,434 290,565

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DDG LINKS/RESOURCES

National Organizations:

Distillers Grains Technology Council (www.distillersgrains.org)

Renewable Fuels Association (www.ethanolrfa.org)

U.S. Grains Council (www.grains.org)

National Corn Growers Association (www.ngfa.org)

American Feed Industry Association (www.afia.org)

Government/Regulatory:

National Grains and Feed Association (www.ngfa.org)

Association of American Feed Control Officials (www.aafco.org)

USDA Animal Feed Safety System (http://1.usa.gov/…)

USDA Food Safety Modernization Act (http://1.usa.gov/…)

University Websites:

Corn Processing Coproducts Manual, Nebraska Corn Board and Nebraska Corn Board and the University of Nebraska-Lincoln Institute of Agriculture and Natural Resources Agricultural Research Division Cooperative Extension Division (http://bit.ly/…)

University of Minnesota Biofuels Coproducts in Animal Feed (www.biofuelscoproducts.umn.edu)

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DDG CONFERENCES

*Distillers Grains Technology Council Inc.'s 20th Annual Distillers Grains Symposium

The Distillers Grains Technology Council will hold its 20th Annual Distillers Grains Symposium on May 18-19, 2016 at the Hyatt Regency at The Arch in St. Louis, 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/CZ)