The DTN average dried distillers grains, or DDG, spot price was up $1 from two weeks ago, at $95, for the week ended April 20. Of the 39 locations from which DTN collects spot prices, eight bids were $2 to $10 higher, three bids were $2 to $5 lower and the balance of the prices were unchanged.
The value of DDG relative to corn for the week ended April 20 was at 74.35% and the value of DDG relative to soybean meal was at 30.85%. The cost per unit of protein for DDG was at $3.80, compared to the cost per unit of protein for soybean meal, which was at $6.48.
Merchandisers told DTN that with some plants still down for spring maintenance, some areas are lighter on supply, causing prices to move higher in those areas. Also, with the long Easter weekend behind us, buyers are coming back to the market to refresh their supplies. The recent strength in cash corn basis should help keep DDG competitive in feed rations. Informa Economics reported, "The relative prices to corn and soybean meal futures are well enough below their average levels to ensure that end users will keep inclusion rates near maximum levels."
CIF NOLA (New Orleans, Louisiana) dried distillers grains with solubles, or DDGS, prices for the week ended April 20 were unchanged to down 1 cent for April at $121 to $123. May/June prices are steady at $122 to $125. Export demand has been flat with the most demand coming from Mexico. Merchandisers noted that since it is the "only game in town" as far as exports right now, all the sellers want a piece of the action.
Javier Chavez, U.S. Grains Council (USGC) Mexico marketing specialist, said in the April 20 USGC newsletter that the North America Free Trade Agreement has helped U.S. DDGS become available and accessible in southeastern Mexico. While DDGS is a well-known and frequently used feed source in northern Mexico, it does not benefit from the same recognition seen in the southeastern region of the country. Chavez explained that this substantial market is largely undeveloped due a lack of knowledge of superior feeding practices and inefficient distribution of feed ingredients. USGC has identified the need in this area for higher-quality feed and an opportunity to create demand for U.S. DDGS.
"Without the trade agreement," said Chavez, "it would be harder, and more expensive, to get U.S. DDGS to this market with fewer suppliers willing to sell it." USGC also noted that this win-win scenario for U.S. farmers and Mexican producers is built on a strong trading relationship that benefits from advantageous trade policy and robust market development. "The trading preferences in the North American Free Trade Agreement (NAFTA) have incentivized the integration of logistics on both sides of the border, and the Council's work in Mexico over the past 30 years has helped expand the use of U.S. grain products throughout the country."
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