Poor ethanol margins are causing some slowdowns in production, resulting in some shortness in supply and pushing up prices of dried distillers grains.
The DTN weekly DDG spot price average increased $3 per ton last week to $130 per ton from $127 per ton the week prior. The average has hovered between $125-to-$127 per ton since mid-December. This also marks the highest level the average has reached since the first week of September.
Of the 36 Midwestern locations DTN collects spot prices from, 23 locations reported that their prices increased last week between $1-to-$10 per ton, though most price increases were in the $3-to-$7 per ton range. Prices at 11 locations remained unchanged last week since the week prior, while only two locations reported prices increases of $2-to-$4 per ton.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT T
Merchandisers told DTN last week that with poor ethanol margins, some ethanol plants have been slowing down production and taking some product off the table. This tightness in supply is pushing prices up, especially on the nearby contract.
Some merchandisers also felt that the slow market is likely caused by some buyers taking it easy and keeping a close eye on China to see what might unfold due to its anti-dumping investigations against the U.S.
The value of DDG relative to corn last week was nearly 100%, up from about 97% the week prior. The value of DDG relative to soybean meal last week was about 49%, up just slightly from about 47% last week.
The cost per unit of protein for DDG was about $5.20 last week, compared to the cost per unit of protein for soybean meal at $5.62.
Cheryl Anderson can be reached at Cheryl.email@example.com.
© Copyright 2016 DTN/The Progressive Farmer. All rights reserved.