Ethanol Blog

After recent weeks of plummeting prices of dried distillers grains, the nosedive seems to have at least slowed down last week, possibly indicating that the market found its bottom.

Although the DTN weekly spot price average fell another $10 last week, that decrease is smaller than the $48 plunge prices took in the past month, $32 of that drop in the prior week.

Last week's $160-per-ton average marks the lowest the average has reached in almost 3 1/2 years; the last time prices were this low was in early December 2010. This was also the 11th week that the average has decreased, falling a total of $79 per ton since early April.

Of the 37 Midwestern locations DTN collects spot prices from, 25 reported that their prices had decreased between $5 and $20 per ton since the prior week. Prices at 11 locations remained unchanged and only one price increase was reported.

Merchandisers told DTN that DDG may have found the bottom of the market for now, as the industry waits to see what China's next move will be. China announced a couple weeks ago that it will no longer issue permits for imports of U.S. DDG because of the MIR 162 GMO trait. The move caused DDG prices to take a nose dive; however, China has made no definitive moves since then. For the time being, DDG merchandisers are "sitting on their hands waiting to see what happens," as one merchandiser described.

While an excess in supply was also moving prices downward in recent weeks, plants now seem to have moved some product. Even though some bids are coming in quite low, some plants are refusing to sell much cheaper than current levels.

A positive effect of the price decline, however, is that the cheaper prices are causing some end users to put DDG back in their livestock rations. For many months, the value of DDG relative for corn has risen to 120% to 130%, occasionally rising as high as 140%.

This week, the value of DDG relative to corn fell to about 99%, the first time it fell below 100% since July 2013. The price of DDG relative to soybean meal was at about 35% last week.

The cost per unit of protein for DDG last week was at about $6.40, compared to the cost per unit of protein for soybean meal at $9.50.

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

(ES)

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