Ethanol Blog

Prices of dried distillers grains dropped once again this week, following a nearly two-month downward trend and fueled by lackluster demand from both export and domestic markets.

The DTN weekly DDG spot price average fell again this week, dropping another $5 per ton, from $164 per ton last week to $159 per ton this week. This is the seventh consecutive week that the average has dropped, falling from $179 per ton in late April to this week's average of $159 per ton. This is also the lowest point the average has reached since mid-December.

Of the 36 Midwestern locations DTN collects spot prices from, 29 locations reported their spot prices had decreased between $5 and $20 per ton in the past week, though most decreases were in the $5 to $10 range.

Merchandisers told DTN that the falling prices are due mostly because of a lack of both export and domestic demand. With demand waning, there is just not enough incentive to support last week's price levels. Forward numbers are down even more this week, which has put pressure on the nearby.

Contributing to a smaller degree to the declining prices is the seasonal drop in demand when more cattle are on pasture and producers need to purchase less feed.

Also contributing to the downward trend was the value of DDG, which is still somewhat overpriced compared to other competing feed ingredients, mainly corn and soybean meal.

The value of DDG relative to corn this week made some progress toward regaining competitiveness, dropping considerably to about 122% this week. This is the lowest value DDG has reached relative to corn since early January. The value of DDG relative to soybean meal dropped also, but to a lesser degree, from about 54% last week to about 52% this week.

The cost per unit of protein for DDG this week was at about $6.36, compared to the cost per unit of protein for soybean meal at $6.44.

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

(ES)

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