The current upward trend in prices of dried distillers grains is likely to continue, though prices may not reach last August's record levels, according to Steve Knier, merchandiser for U.S. Commodities in Minneapolis.
For the fourth week in a row, the DTN DDG spot price average rose last week to $269 per ton, rising $14 per ton in the past four weeks. The increase also marked the high point DDG prices have reached since mid-November.
The catalyst for the uptrend was the Jan. 11 USDA Crop Production report that showed ending stocks of corn were lower than expected, pushing corn prices and DDG prices higher.
Also adding to the uptrend is buyers short-covering their needs and plants buying in sales to cover what they have on the books, Knier said. However, barges are moving more easily down the Mississippi with higher water levels, which is helping temper DDG prices.
The market may experience tight supplies as high corn prices are forcing some ethanol plants to either shut down temporarily or scale back production, Less ethanol production results in less DDG production, which could push DDG prices up even more.
Knier said he would not rule out prices reaching August 2012's record levels.
"It's not outside the realm of possibility," he said.
Cheryl Anderson can be reached at Cheryl.email@example.com.
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