Market Matters Blog

DDG Prices Firm

Mary Kennedy
By  Mary Kennedy , DTN Basis Analyst
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DTN's average weekly spot price for DDG was 2 cents higher at $113 per ton, as demand is picking up. (DTN file photo by Elaine Shein)

OMAHA (DTN) -- The DTN average dried distillers grains (DDG) spot price from the 39 locations DTN collects bids from was $113 for the week ended Oct. 26, 2 cents higher on average from two weeks ago. Merchandisers have noted that markets have been climber higher as demand is firming with the onset of colder temperatures.

Based on the average of bids collected by DTN, the value of DDG relative to corn for the week ended Oct. 26 was at 90.27%, and the value of DDG relative to soybean meal was at 36.20%. The cost per unit of protein for DDG was $4.19, compared to the cost per unit of protein for soybean meal at $6.57.

CIF NOLA (New Orleans, Louisiana) DDG prices were steady with October at $146 to $152, and November and December at $145 to $150. The U.S. river system is still not in the best shape in certain spots, slowing barges trying to move south in those areas. As of Oct. 26, Lock 52 on the Ohio River still had at least 41 boats waiting to pass. Since only 12-15 boats can lock through each day, two- to three-day delays are expected, according to barge lines. The Upper Mississippi River (UMR) is closed intermittently through Oct. 27 for powerline work, also stalling barges in that area. Barges needing to transit the UMR out of St. Paul will need to be on their way by mid-November to get past the Davenport, Iowa, district before the northern section of the UMR river closes for the winter.

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NEW OPPORTUNITY FOR U.S. DDGS?

The U.S. Grains Council (USGC) is exploring the geographic advantage of unit trains carrying U.S. corn and distillers dried grains with solubles (DDGS) to Canadian feedlots around Lethbridge, Alberta. In their weekly global update, the council noted that the first unit train of corn sold in the 2017/18 marketing year was delivered into Lethbridge the week before the recent October mission. "Thanks to continued market development work by the council and its Canadian consultants, more U.S. corn and DDGS will head north in the year to come."

According to the council, Canada imported 670,000 metric tons (26.4 million bushels) of U.S. corn in 2016/17 as well as 735,000 tons of U.S. DDGS, a 13% increase year over year. While these sales made Canada the sixth-largest market for U.S. DDGS, Canada has the potential to utilize more than 4 million tons of DDGS annually, which the council is working to capture.

"In the Lethbridge area, U.S. corn can be railed directly into the region on unit trains. Favorable pricing combined with these logistical opportunities promote inclusion into local feed rations." The council said it is working with other Alberta feedlots to support the development of additional trans-loading facilities in the region to further provide opportunities for rail shipments from the United States.

VALUE OF DDG VS. CORN & SOYBEAN MEAL
Settlement Price: Quote Date Bushel Short Ton
Corn 10/26/2017 $3.5050 $125.18
Soybean Meal 10/26/2017 $312.10
DDG Weekly Average Spot Price $113.00
DDG Value Relative to: 10/26 10/5
Corn 90.27% 88.92%
Soybean Meal 36.20% 35.85%
Cost Per Unit of Protein:
DDG $4.19 $4.11
Soybean Meal $6.57 $6.59
Notes:
Corn and soybean prices take from DTN Market Quotes. DDG price
represents the average spot price from Midwest companies
collected on Thursday afternoons. Soybean meal cost per unit
of protein is cost per ton divided by 47.5. DDG cost per unit
of protein is cost per ton divided by 27.

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

Follow Mary Kennedy on Twitter @MaryCKenn

(AG)

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