Ethanol Blog

A drop in the price of barge freight in the past week caused the price of dried distillers grains to fall as well.

The DTN weekly DDG spot price average fell a total of $6 per ton in the past week, from $185 per ton last week to $179 per ton this week. This is the lowest the average has reached since mid-July, having hovered between $181 and $185 per ton since that time. But despite the sharp drop, the average has still remained between $176 and $185 per ton since mid-January.

Of the 36 Midwestern locations DTN collects spot prices from, 25 locations reported their spot prices had increased between $5 and $15 per ton in the past week. Prices at nine locations remained the same, and one location had no offers. Only one price increase of $2 per ton was reported.

Merchandisers told DTN that much of the fall in DDG prices can be attributed to barge freight prices which were trading $10 to $15 lower than last week. These price decreases caused a lot of product to move down river, pushing a lot of product into those markets.

There were some who felt that demand was slow because many buyers are waiting to make purchases, believing that prices will likely fall.

Merchandisers also cited a lack of demand, most likely from DDG being overvalued compared to the price of corn. One merchandiser commented that there are "just too many cheap feed ingredients out there right now."

The value of DDG relative to corn this week was at about 135%, dropping from last week's value of 137%. The value of DDG relative to corn has not fallen below 100% since mid-January 2014. In fact, the value has not fallen below 130% since late January, reaching a high of nearly 140% around April 13.

The value DDG relative to soybean meal also fell from about 59% to about 57%.

The cost per unit of protein for DDG was at about $7.16 this week, compared to the cost per unit of protein for soybean meal at $6.67.

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

(ES)

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