Ethanol Blog

After weeks of steady distillers grains prices, the market experienced an upheaval in the past week when China began to refuse shipments of DDG containing the GMO trait MIR 162 developed by Syngenta. Without China's appetite for U.S. DDG, a glut in the market became apparent and prices began a swift fall to the lowest level in two years.

The DTN weekly DDG spot price average fell a whopping $30 per ton in the past two weeks, from $189 per ton on Dec. 20 to $219 per ton Friday.

The last time the average was $189 per ton was in mid-January of 2012. In fact, the average has not fallen below $200 per ton since early February 2012. This huge price drop follows nearly a month of prices hovering around $218 to $219 per ton in what appeared to be a pre-holiday lull in buying.

Of the 30 Midwestern locations DTN collects prices from, 28 locations reported their prices had increased in the past two weeks between $10 and $50 per ton, though most increases were in the $15 to $35 per ton range. Two locations reported no offers this week.

Besides product stockpiling without the Chinese market, plants have filled up with product over the holidays and weekend and need to start dumping inventory. While a few exporters are still sending shipments to China and waiting to see what happens, others have stopped and have to find new homes for shipments. While nearby prices are now cheapest, prices are "all over the board" as one merchandiser said. Many felt it may take several weeks for the market to settle down and find where prices are at.

The falling prices did serve to decrease the record high values of DDG relative to corn: the value fell from 142% on Dec. 20 to just 126% this week. Likewise, the value of DDG relative to soybean meal fell from nearly 50% on Dec. 20 to about 45% this week.

The cost per unit of protein for DDG this week was $7.56, compared to the cost per unit of protein for soybean meal at $8.92.

Cheryl Anderson can be reached at Cheryl.anderson@telventdtn.com.

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