Ethanol Blog

A week of lackluster demand from both export and domestic markets caused prices of dried distillers grains to continue along its five-week downward trend.

The DTN weekly DDG spot price average fell another $4 per ton last, to $135 per ton, from $139 per ton the prior week. This marks the fifth consecutive week the average has decreased, falling from $148 per ton in late July to last week's average of $135, which is lowest point the average has reached since mid-June.

Of the 36 Midwestern locations DTN collects spot prices from, 24 locations reported their spot prices had decreased between $5 and $13 per ton, though most price decreases were in the $5 to $10-per-ton range. Prices at 11 locations remained unchanged. Only one location had a price increase of $5 per ton.

Merchandisers commented to DTN on the lack of action in the market, as end users continue buying hand-to-mouth in hopes that prices will fall even further.

China continued to be the center of attention from the industry, while sellers watch to see what will happen with demand from the economic uncertainty it has been experiencing. Some feel that Chinese DDG buyers are waiting to see what their government is going to do in terms of instituting further restrictions on imports before making more purchases.

Whether the prior week caused the price downturn, or last week was more of a reaction to the prior week's lack of demand remains to be seen. One merchandiser commented on the lack of transparency that contributed to price declines.

A few early fall maintenance shut-downs at ethanol plants have begun, although the majority will not happen until September and October.

The value of DDG relative to corn last week fell to about 104% from about 105% last week, a step in the right direction, but not enough to rekindle demand from domestic end users. The value of DDG relative to soybean meal remained steady last week at about 42%.

The cost per unit of protein for DDG was at about $5.40 this week, compared to the cost per unit of protein for soybean meal at $6.80.

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

(ES)

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