Ethanol Blog

Supplies of dried distillers grains continue to remain tight, continuing with the same scenario that merchandisers have been reporting for many weeks now. It doesn't appear that relief may come for at least several months.

The factors that began the initial supply crunch are the same factors that remain plaguing the flow of product from ethanol plants to end users. The glitches began with the severe winter weather and near-record amounts of snow that hindered logistics, especially wreaking havoc with railcar deliveries.

Ethanol plants began having trouble getting railcars and consequently slowed down production when their storage reached near capacity. Less ethanol production results in less DDG production as well. Thus began the tightness in DDG supplies.

Merchandisers seemed to be in agreement, telling DTN that the backup in railcars will not be alleviated soon. Most predict that rail availability will not improve at least through March and April, but possibly until June.

Although the tightness in product continues, the DTN weekly DDG spot price average remained unchanged this week, having settled at $234 per ton for two weeks now. This breaks the eight-week trend of rising spot prices.

Of the 30 Midwestern locations DTN collects spot prices from, 12 locations reported that their prices had decreased since last week between $4 and $10 per ton. Prices at nine locations increased between $5 and $30 per ton since last week. Prices at seven locations remained unchanged since last week, while two locations reported no offers.

The value of DDG relative to corn this week was at about 135%, just slightly higher than last week's 134%. The value of DDG relative to soybean meal also rose slightly, from 51% last week to 52% this week.

The cost per unit of protein for DDG was $9.36 this week, compared to the cost per unit of protein for soybean meal at $9.47.

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

(ES)

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