Ethanol Blog

It seems the long downtrend in dried distillers grains prices may be slowing. Merchandisers reported prices fell again last week, though at a much slower pace than in recent weeks.

The DTN weekly DDG spot price average fell $4 per ton last week, a much smaller decline than in the two previous weeks when prices plummeted $24 per ton. This is the lowest point the average has reached since the first week of December 2014.

Of the 36 Midwestern locations DTN collects spot prices from, 19 reported decreases between $5 and $15 per ton. Prices at 15 locations remained unchanged, while only two locations reported price increases of $5 per ton each.

Merchandisers told DTN it was a slow week in trade with little export demand -- likely the reason prices still continued to fall. On the other hand, lower prices have increased domestic demand.

Some trading for July/August/September has occurred, however the market is still extremely cautious about the status of China. Some Chinese importers have recently been dealing with over purchases of U.S. DDG and have cancelled or rolled over shipments or attempted to renegotiate contracts at lower prices. While the trade disruptions are attributed to individual companies and not governmental sanctions, memories of last year's ban of all DDG imports from the U.S. over the MIR 162 biotech trait have traders wary of what the future might bring.

Continued rains in many Midwestern states, including flooding in the St. Louis area, have complicated logistics. Some rail cars are unable to pass through swamped areas and flooding on the Mississippi has made loading barges difficult.

The value of DDG relative to corn this week fell from about 106% last week to about 97% this week. Not only is this a substantial drop, but it is the first time the value has dipped below 100% since mid-December 2014. The value of DDG relative to soybean meal was about 39% this week.

The cost per unit of protein for DDG was just slightly lower at about $5.24 this week, compared to the cost per unit of protein for soybean meal at about $7.09.

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

(CZ)

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