Ethanol Blog

Lackluster export demand and some tightness in supplies resulted in a leveling off of spot prices for dried distillers grains in the past week.

Of the 36 Midwestern locations DTN collects spot prices from, 22 locations reported their spot prices have remained unchanged since last week. Spot prices at eight locations decreased between $5 and $10 per ton since last week, while six locations reported price increases of $5 to $10 per ton.

The DTN weekly spot price average remained unchanged since last week at $178 per ton. This is the highest the average has been since early June 2014, but is the first week prices have not climbed upward since mid-October. The spot price average had increased a total of $81 since the third week of October.

Merchandisers told DTN this week that trade was relatively slow this week, due mostly to quietness in export markets. There was some speculation that prices may remain another week or two at these levels or possibly lower until there is more interest overseas and more vessels sold.

The slowness in export markets may be from some traders still being wary of jumping head first into resumed trade with China. After the past year of rejections of shipments and demand from Chinese buyers, U.S. exporters may be trying to test the waters and see what the Chinese government is going to do before resuming great volumes of trade.

Some merchandisers reported issues with some tightness in supplies in recent days. In fact, several said they were sold out or nearly sold out in the nearby.

The market is also seeing pressure from the local truck markets, as some end users have begun backing off on inclusion rates of DDG in rations. The value of DDG relative to corn has been rising higher, with no support from soybean prices, as the value of DDG is high compared to soybean meal as well.

The value of DDG relative to corn this week took a jump from about 128% last week to 134% this week, while the value of DDG relative to soybean meal remained relatively unchanged at about 53%.

The cost per unit of protein for DDG remained steady at about $7.12, while the cost per unit of protein for soybean meal was about equal at about $7.11.

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

(ES)

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