Despite continued hopes that prices of dried distillers grains might someday find a bottom, it looks like a reversal in the downward trend of the past 16 weeks was not in the cards just yet. Prices of DDG continued to plunge again last week amid rumors of puzzling news by China.
Of the 37 Midwestern locations DTN collects spot prices from last week, 28 reported their prices had decreased between $5 and $15 since the week prior. Prices at eight locations remained the same, while only one location reported a slight price increase.
The DTN weekly DDG spot price average fell another $6 per ton last week, from $131 per ton the week prior, to Friday's average of $125. This marks the 16th week that the average has decreased, falling a whopping $114 per ton since the first week of April.
This is the lowest the average has fallen in nearly four years. The last time the average fell to $125 per ton was in mid-September 2010.
Merchandisers told DTN last week that rumors circulating about China's latest irrational move was causing uncertainty in the market and contributed to the continued downward trend.
China announced last week that it will now require official certification that shipments of DDG arriving in Chinese ports contain no MIR 162, a GMO trait that is yet unapproved in China. The industry currently has no such certification and in a news release, the U.S. Grains Council stated that the requirement would be impossible to meet. Other industry experts said U.S. exporters will never agree to such a requirement, especially since testing for GMO traits is variable and unreliable.
Merchandisers seemed to agree that more needs to be known about the situation before pricing can settle down.
Another contributing factor to the falling prices is the general excellent condition in crops so far this year. With great improvement in rainfall this growing season, this year's crop seem robust, indicating a bumper crop.
The value of DDG relative to corn remained relative unchanged last week at about 97%, while the value of DDG relative to soybean meal fell slightly from about 32% last week from about 34% the week prior.
The cost per unit of protein for DDG fell to about $5 last week from about $5.24 the week prior, compared to the cost per unit of soybean meal at about $8.32.
Cheryl Anderson can be reached at Cheryl.firstname.lastname@example.org.
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