Ethanol Blog

Declining Exports, Increasing Supplies Push DDG Prices Downward

Cheryl Anderson
By  Cheryl Anderson , DTN Staff Reporter

After months of plummeting prices of dried distillers grains, the increases in prices since mid-August seemed to indicate long-term price recovery. However, declining exports and slow trade surprised the market by decreasing prices once again.

The DTN weekly DDG spot price average fell a total of $5 per ton since last week from $118 per ton last week to $113 per ton this week.

Of the 36 Midwestern locations DTN collects spot prices from, 21 locations reported their spot prices remained unchanged since last week; 14 said their prices had decreased between $5 and $10; one location had no offers; and there were no price increases reported.

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Merchandisers told DTN this week that price decreases were largely driven by exports, as foreign buyers failed to take as much product as they had on the books. With exports down, DDG began to pile up at plants, so prices fell in order to get product moved out.

Other reasons for the price plunge were corn and soybean meal values were down, so DDG prices mirrored that decrease. Another contributing factor was the World Agricultural Supply and Demand Estimates (WASDE) released by USDA Sept. 11 reported more corn than what was expected.

The value of DDG relative to corn this week fell from about 98% to about 95%. The value of DDG relative of soybean meal fell slightly, from about 27% last week to about 26% this week.

The cost per unit of protein for DDG was $4.52 this week, compared to the cost per unit of protein for soybean meal at $8.98.

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

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