DTN Weekly Distillers Grains Update

Market Conditions Drop DDG Prices Dramatically

A number of market conditions created the perfect storm in the past week that resulted in a dramatic fall in spot prices of distillers dried grains.

The DTN weekly average DDG spot price dropped $12 per ton in the past week from $154 per ton to $142. This is the third week that the average has fallen, dropping $26 per ton between mid-June ($168) and this week. This is also the lowest point prices have reached since late May.

Of the 36 Midwestern locations DTN collects spot prices from, 33 locations reported their prices had decreased between $5 and $30 per ton in the past week, though most spot price decreases were in the $10 to $20 per ton range. Prices at three locations remained unchanged. No price increases were reported to DTN this week.

Merchandisers told DTN that the largest driver in the price plunge this week was falling prices of corn, soybeans and soybean meal. All three fell significantly, and since DDG prices typically mirror movement of those competing sources for protein in livestock rations, DDG prices fell as well.

Another factor is that the ethanol plants are very profitable at present and are running as hard as they can. This increased production is putting a lot of product out on the market, which has lowered prices, as well as the seasonal decline in demand with the onset of hot weather and cattle consuming less feed. With increased supplies and less demand, some merchandisers have had a hard time finding buyers for their DDG.

Other merchandisers noted that DDG spot prices rose very quickly, so they are now falling just as quickly and are due for a price correction.

Buyers also may be witnessing this quick drop in prices and are likely sitting on the sidelines, waiting to see how much farther prices fall before they make purchases.

The value of DDG relative to corn fell just slightly in the past week, from about 120% last week to nearly 119% this week. The value of DDG relative to soybean meal remained steady at about 38%.

The cost per unit of protein for DDG fell this week, from about $6.16 last week to $5.68 this week. The cost per unit of protein for soybean meal also fell from $8.53 last week to $7.79 this week.

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

Follow Cheryl Anderson on Twitter @CherylADTN

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NEWS IN BRIEF

Grains Council Hosts DDG Workshops in Peru

Educational workshops on the value of U.S. distillers dried grains were hosted recently in Peru by the U.S. Grains Council, along with the U.S. Department of Agriculture's Foreign Agricultural Service office in Lima, according to an article on the Council's website (http://bit.ly/…).

Peru's demand for U.S. corn has been rising, largely due to the U.S.-Peru Trade Promotion Agreement. So far in 2016, Peru has already purchased 2.0 million metric tons (78.7 million bushels) of U.S. corn.

The growing demand for U.S. corn has created opportunities for expansion of sorghum and DDGS sales through vessel traffic and combination shipments. To pursue those markets, the Council's workshops focused on the nutritional value of both U.S. DDGS and sorghum, as well as U.S. contracting procedures and purchasing specifications.

One of the consistent buyers of U.S. DDGS is Peruvian milk processor Gloria.

USGC Regional Director for the Western Hemisphere Marri Carrow said, "We want to expand that use to the poultry, swine and even beef sectors, and encourage additional consistent buyers."

Grains Council representatives also educated Peruvian buyers and nutritionists on sorghum and DDGS supply/demand, nutritional value and quality standards. The Council group also visited some large dairy operations in Peru to better understand their needs and the potential markets for U.S. coarse grains and coproducts.

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

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DTN WEEKLY DDG SPOT PRICES

CURRENT PREVIOUS
COMPANY STATE 7/8/2016 7/1/2016 CHANGE
Bartlett and Company, Kansas City, MO (816-753-6300)
Missouri Dry $170 $170 $0
Modified $70 $70 $0
CHS, Minneapolis, MN (800-769-1066)
Illinois Dry $145 $170 -$25
Indiana Dry $145 $165 -$20
Iowa Dry $145 $165 -$20
Michigan Dry $150 $165 -$15
Minnesota Dry $130 $140 -$10
North Dakota Dry $130 $130 $0
New York Dry $150 $165 -$15
South Dakota Dry $120 $130 -$10
MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253)
Kansas Dry $140 $145 -$5
POET Nutrition, Sioux Falls, SD (888-327-8799)
Indiana Dry $165 $165 $0
Iowa Dry $140 $155 -$15
Michigan Dry $155 $160 -$5
Minnesota Dry $130 $152 -$22
Missouri Dry $145 $170 -$25
Ohio Dry $165 $170 -$5
South Dakota Dry $135 $150 -$15
United BioEnergy, Wichita, KS (316-616-3521)
Kansas Dry $130 $135 -$5
Wet $40 $40 $0
Illinois Dry $160 $170 -$10
Nebraska Dry $130 $135 -$5
Wet $40 $40 $0
U.S. Commodities, Minneapolis, MN (888-293-1640)
Illinois Dry $150 $175 -$25
Indiana Dry $145 $175 -$30
Iowa Dry $138 $155 -$17
Michigan Dry $150 $160 -$10
Minnesota Dry $130 $145 -$15
Nebraska Dry $125 $135 -$10
New York Dry $155 $165 -$10
North Dakota Dry $130 $145 -$15
Ohio Dry $145 $160 -$15
South Dakota Dry $125 $135 -$10
Wisconsin Dry $140 $160 -$20
Valero Energy Corp., San Antonio, TX (402-727-5300)
Indiana Dry $150 $160 -$10
Iowa Dry $140 $150 -$10
Minnesota Dry $135 $145 -$10
Nebraska Dry $135 $150 -$15
Ohio Dry $160 $165 -$5
South Dakota Dry $130 $140 -$10
Western Milling, Goshen, California (559-302-1074)
California Dry $195 $205 -$10
*Prices listed per ton.
Weekly Average $142 $154 -$12
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 7/7/2016 $3.3550 $119.82
Soybean Meal 7/7/2016 $370.00
DDG Weekly Average Spot Price $142.00
DDG Value Relative to: 7/1 6/24 6/24
Corn 118.51% 120.20% 115.69%
Soybean Meal 38.38% 38.00% 41.75%
Cost Per Unit of Protein:
DDG $5.68 $6.16 $6.40
Soybean Meal $7.79 $8.53 $8.07
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 (July 1, 2016)

Dried Modified Wet
FOB PLANT PRICES PER TON
Iowa 145.00-170.00 50.00-80.00 34.00-45.00
Minnesota 145.00-161.00 65.00 30.00-50.00
Nebraska 138.00-155.00 55.00-75.00 37.00-57.00
South Dakota 138.00-140.00 62.00-67.50 36.00-40.00
Wisconsin 144.00-175.00 52.00-67.50 NQ
Eastern Corn Belt 159.00-180.00 65.00-85.00 NQ
Kansas 140.00-175.00 NQ 45.00-60.00
Northern Missouri 166.00-170.00 72.00 46.00-49.00
DELIVERED PRICES PER TON
CIF NOLA 183.00-215.00
Pacific Northwest 193.00-200.00
California 193.00-205.00
Texas Border (metric ton) 206.00-225.00
Lethbridge AB n/a
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 July 5, 2016)

Distillers Dry Grains

  Rail to California Points          Ltd 198.00       no comp
  FOB Truck to California Points     190.00-205.00    dn 15.00-unch

PACIFIC NORTHWEST WEEKLY FEEDSTUFFS (Tue July 5, 2016)

Offers for Distillers Dried Grains delivered by rail to feed mills in the Pacific Northwest were mixed, from 4.00 lower to 1.00 higher from 193.00-218.00. Offers for distillers dried grains trans-loaded onto trucks and delivered to Willamette Valley dairies were also mixed, from 4.00 lower to 1.00 higher from 211.00-233.00.

*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

April 2016 - May 2016

July 1, 2016

Highlights:

Dry mill co-product production of distillers dried grains with solubles (DDGS) was 1.84 million tons during May 2016, up 7 percent from April 2016 but down 1 percent from May 2015. Distillers wet grains (DWG) 65 percent or more moisture was 1.23 million tons in May 2016, down 2 percent from April 2016 and down 10 percent from May 2015.

Wet mill corn gluten feed production was 333 thousand tons during May 2016, up 9 percent from April 2016 but down 4 percent from May 2015. Wet corn gluten feed 40 to 60 percent moisture was 306 thousand tons in May 2016, up 2 percent from April 2016 but down 5 percent from May 2015.

Co-products and Products May 2015 Apr 2016 May 2016
Dry Mill tons
Condensed distillers solubles (CDS-syrup) 148,757 130,324 131,318
Corn oil 117,049 111,077 121,699
Distillers dried grains (DDG) 418,448 374,750 411,467
Distillers dried grains with solubles (DDGS) 1,861,795 1,717,024 1,842,182
Modified distillers wet grains (DWG) <65% moisture 1,368,926 1,264,745 1,234,315
Modified distillers wet grains (DWG) 40-64% moisture 414,956 429,972 425,532
Wet Mill
Corn germ meal 69,274 67,530 63,859
Corn gluten feed 348,355 306,464 332,975
Corn gluten meal 97,139 84,916 88,177
Corn oil 53,208 51,455 50,262
Wet corn gluten feed 40-60% moisture 323,436 301,283 306,424

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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 21th Annual Distillers Grains Symposium

The Distillers Grains Technology Council will hold its 21st Annual Distillers Grains Symposium on May 17-18, 2017 at the downtown Marriott in Indianapolis, IN. 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.

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