Market Matters Blog

DDG Prices Lower as Demand Slows

By Mary Kennedy , DTN Basis Analyst
DTN's average weekly spot price for DDG was down $2, at $92 per ton. (DTN file photo by Elaine Shein)

The DTN average dried distillers grains, or DDG, spot price was down $2 per ton from two weeks ago, at $92, for the week ended March 16. Of the 39 locations from which DTN collects spot prices, 16 bids ranged from $2 to $10 lower, one bid was $5 higher and the balance of the prices were unchanged.

Prices moved lower the past week as markets remained quiet, adding to the pressure of ample supply and lack of buyers. Strong run times continue as was reported by the U.S. Energy Information Administration on Wednesday showing ethanol plant production for the week ending March 10 was up from the prior week and the largest since early February. In the coming weeks some maintenance downtimes should help alleviate the heavy supplies, causing pipelines to trickle lower.

According to Informa Economics, for now, ample supply and positive margins suggest plants will continue to have runtimes above year-ago levels causing supply to be a burden for price. "Relative prices will continue to stay below average levels and there is a bias for prices to remain range bound."

CIF NOLA (New Orleans, Louisiana) dried distillers grains with solubles, or DDGS, prices for the week ended March 16 were up 5 cents to up 1 cent for March compared to last week, at $120 to $125 per ton and up 1 cent to unchanged for April at $122 to $125. U.S. Grains Council in its March 16 newsletter reported that last month, Saudi Arabia buyers purchased 18,000 metric tons of U.S. DDGS, a relatively large amount and a dramatic increase from total sales of just 8,400 metric tons in 2014. While the dairy and poultry sectors in Saudi Arabia are large and modern with an estimated annual compound feed demand of 6.9 million metric tons, USGC's progress in persuading the Saudi industry to utilize DDGS has been limited by shipping distance and local subsidies that did not incentivize use of the product.

Now, those policies are changing, and DDGS is priced well in the market, USGC said. As a result, Saudi buyers and others in the region including in Egypt, Turkey, Morocco and Pakistan are taking a closer look at U.S. DDGS. Kurt Shultz, USGC senior director for global strategies said, "The timing of the purchases by Saudi Arabia could not be better. The DDGS export market has been under pressure with a slowdown in exports to key markets like China and Vietnam. However, other countries like Saudi Arabia are helping to fill that void."

CURRENT CURRENT CHANGE
COMPANY STATE 3/16/2017 3/9/2017
Bartlett and Company, Kansas City, MO (816-753-6300)
Missouri Dry $118 $118 $0
Modified $60 $60 $0
CHS, Minneapolis, MN (800-769-1066)
Illinois Dry $95 $100 -$5
Indiana Dry $90 $95 -$5
Iowa Dry $90 $95 -$5
Michigan Dry $85 $88 -$3
Minnesota Dry $85 $90 -$5
North Dakota Dry $90 $95 -$5
New York Dry $105 $115 -$10
South Dakota Dry $85 $90 -$5
MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253)
Kansas Dry $103 $105 -$2
POET Nutrition, Sioux Falls, SD (888-327-8799)
Indiana Dry $90 $90 $0
Iowa Dry $93 $95 -$2
Michigan Dry $90 $90 $0
Minnesota Dry $90 $93 -$3
Missouri Dry $115 $115 $0
Ohio Dry $90 $90 $0
South Dakota Dry $90 $95 -$5
United BioEnergy, Wichita, KS (316-616-3521)
Kansas Dry $100 $102 -$2
Wet $45 $45 $0
Illinois Dry $100 $102 -$2
Nebraska Dry $100 $102 -$2
Wet $35 $35 $0
U.S. Commodities, Minneapolis, MN (888-293-1640)
Illinois Dry $95 $95 $0
Indiana Dry $90 $90 $0
Iowa Dry $95 $95 $0
Michigan Dry $95 $95 $0
Minnesota Dry $85 $85 $0
Nebraska Dry $95 $90 $5
New York Dry $120 $120 $0
North Dakota Dry $100 $100 $0
Ohio Dry $98 $98 $0
South Dakota Dry $90 $90 $0
Wisconsin Dry $90 $90 $0
Valero Energy Corp., San Antonio, TX (402-932-5901)
Indiana Dry $80 $80 $0
Iowa Dry $85 $85 $0
Minnesota Dry $80 $80 $0
Nebraska Dry $85 $85 $0
Ohio Dry $90 $90 $0
South Dakota Dry $80 $80 $0
California $150 $150 $0
Western Milling, Goshen, California (559-302-1074)
California Dry $163 $166 -$3
*Prices listed per ton.
Weekly Average $92 $94 -$2
The weekly average prices above reflect only those companies DTN
collects spot prices from. States include: Missouri, Iowa, Nebraska,
Kansas, Illinois, Minnesota, North Dakota, South Dakota, Michigan,
Wisconsin and Indiana. Prices for Pennsylvania, New York and
California are not included in the averages.

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow Mary Kennedy on Twitter @MaryCKenn

(TN)

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