Ethanol Blog

The DTN weekly DDG spot price average fell $4 per ton in the past week, from $173 per ton on May 8 to $169 per ton this week. This is the sixth week in a row that the average has declined, falling $16 per ton in that time. The $169 is also the lowest the average has reached since mid-December 2014.

Of the 36 Midwestern locations DTN collects spot prices from, 16 locations reported their spot prices had decreased between $5 per ton and $20 per ton in the past two weeks, although most price decreases were in the $5 to $10 per-ton range. Prices at 15 locations remained unchanged in the past two weeks, while four locations reported price increases between $5 and $10 per ton. One location had no offer two weeks ago, so no change could be reported.

Merchandisers told DTN this week that the lack of export was one of the primary factors pushing down the price of DDG. This could be a continuing effect from reports that surfaced earlier this month that China may be considering restricting imports of DDG, milo and barley and beginning stricter testing for phyto sanitary requirements such as pests and pathogens. The talk is still just rumors and many believe the talk is merely China attempting to push down U.S. corn and DDG prices to enable selloff of the country's huge surplus of corn. However, memories of the 2014 trade debacles with China over the MIR 162 biotech trait could be fueling fears of trade disruption.

Merchandisers also mentioned that DDG prices could be falling simply from the recent history of DDG being overpriced in the domestic market, prompting sellers to lower prices to remain competitive with other feed ingredients. Also, sellers may be trying to sell off product with the end of the month approaching.

Also, with spring well underway and pastures green and lush from the abundance of spring rains in many cattle-producing areas, domestic demand could be falling simply because more cattle are out on pasture and producers have less need for feedstuffs.

The value of DDG relative to corn this week was at about 129.64%, the first time the value has dipped below 130% since the end of March. The value of DDG relative to soybean meal was at about 55.57% this week.

The cost per unit of protein for DDG was at about $6.76 this week, compared to the cost per unit of protein for soybean meal at $6.40.

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

(ES)

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