DTN Weekly Distillers Grains Update
DDG Industry Better Prepared for Pending Anti-Dumping Investigation
If China pursues an anti-dumping case against U.S. dried distillers grains, the U.S. is much better prepared for such a market disruption than it was when China made similar announcements in previous years.
According to Tom Sleight, president and chief executive officer of the U.S. Grains Council, the Chinese Ministry of Commerce notified the U.S. Embassy in Beijing last week that they would be investigating a petition against the U.S. for DDG dumping.
Sleight wanted to make sure the industry understands that the Chinese Ministry of Commerce has only accepted a petition for an anti-dumping case, but that does not mean a case has actually been initiated.
"We're kind of standing by to see if a case is actually initiated. That has not happened yet, and we certainly hope it doesn't," he said, adding, "but it probably will."
HISTORY REPEATS ITSELF
This is the third time in the past five years that China has made some sort of dramatic announcement regarding DDG trade with the U.S. just a few days before or after Christmas, continuing its pattern of trade disruptions.
China announced its first anti-dumping probe Dec. 28, 2010, when Chinese ethanol producers claimed the U.S. dumped its DDG into Chinese markets at a cheaper price than China could produce it domestically. Chinese importers immediately suspended all purchases of U.S. DDG and the Grains Council coordinated an industry-wide registration process for U.S. companies.
Just before Christmas 2013, China began rejecting shipments of U.S. DDGS after shipments were found to contain the Agrisure Viptera (MIR 162) biotech trait produced by Syngenta Ag. China announced its intentions to test all imports of U.S. DDGS for the trait, and exports of DDG to China came to an immediate halt. This caused a glut in U.S. supplies that sent prices of DDG plummeting as much as $70 in three days. The continued cease in trade and DDG glut kept prices falling to the lowest levels in nearly two years.
In June 2014, China dropped another bombshell on the industry, announcing it would stop issuing permits for U.S.-produced DDG, wreaking havoc on the market and sending DDG prices on an unprecedented downward spiral. Merchandisers reported prices plummeting as much as $45 in one week. In late June, DDG prices dropped to the lowest level since December 2010 to an average of $125 per ton, a far cry from the average high of nearly $300 reached in July 2012.
In August 2014, China demanded that all U.S. DDG shipments arriving in Chinese ports be accompanied by an official letter of certification that it contained no trace of MIR 162. Since the U.S. has no such certification and tests for the trait are largely unreliable, the U.S. refused to meet China's demand, and DDG trade with China came to a standstill. This caused another nosedive in prices, as spot prices fell to a five-year low of just $97 per ton.
By mid-December 2014, after a year of trade disruptions, China announced it had formally granted approval of imports of corn and DDG with the MIR 162 trait. Prices of DDG responded immediately, rising as the announcement prompted trade once again and purchasing began to resume.
U.S. BETTER PREPARED
All indications point toward a likely investigation, Sleight said, although the DDG industry is much better prepared.
"We are reviewing what happened last time back in 2010 and reviewing that process," Sleight said. "We're are concerned, but the disruptions are going to be less because we've been anticipating this. There are alternative markets and we've been working those markets. We're better prepared this time around."
Sleight pointed out that the industry and the council have been working hard at achieving greater market diversification.
"When we had interruptions with the biotech issues, we found alternative markets," he said. "There are a lot of other markets around the world that are ready to pick up the slack. It's just hard to pick up the slack when your number-one market drops out."
Sean Broderick, senior merchandiser for CHS in Minneapolis, agreed. Given China's decreasing imports in recent months, he said the market is clearly finding other destination to fill for now.
China is the largest importer of U.S. DDG and has imported nearly five times the U.S. DDG than any other country. According to statistics from the U.S. Department of Agriculture's Foreign Agricultural Service, China has purchased nearly 5.8 million metric tons of U.S. DDG so far in 2015 at a value of nearly $1.5 billion. The next largest importer is Mexico, who has purchased, about .41 million metric tons at a value of about $291 million. The other top five DDG importers are Vietnam with about 528,691 mt, South Korea with 473,300 mt, and Canada with 403,968 mt.
As for short- or long-term effects on the market, Broderick pointed out that after the 2010 anti-dumping case, the market changed a lot more quickly than the current situation.
"Back then, the market was dropping daily and there was nowhere to go quickly in some markets to anything but the barge markets," Broderick said.
Broderick added that even if China does file a case with the World Trade Organization, there will be a time frame before imports are truly curtailed.
"The last time this happened, those who had product in storage in China were able to command a health premium for it," he said. "So I would expect to start to see increasing shipments to China in anticipation of that."
Sleight pointed out the price of DDG is still fairly low right now, but added that having the top export market potentially being diminished is always cause for concern.
Many in the industry believe this latest issue is yet another attempt by China to manipulate the market and force Chinese buyers to buy off some of China's own domestic glut of corn. Sleight said this latest issue with China is another manifestation of the fact that China's internal supply and demand economics for corn and feed grains need some work.
"The high internal price in China is one of the main reasons behind this," he said. "That's a policy I know China has been looking at very closely."
Sleight also pointed out that the U.S. and the U.S. Grains Council have had more than 30-plus years of engagement with China on feed, livestock and food production issues.
"It's kind of disappointing to see something like this happen with a partnership we thought was getting stronger," he said. "We're sorry to see this thing raise its head again, because I think there's a lot that we can still do to work together."
Cheryl Anderson can be reached at Cheryl.anderson@dtn.com.
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IN THE NEWS
Free Trade Agreement Expands U.S. Grains/DDGS Sales to Korea
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A 2012 free trade agreement has increased sales of U.S. grains and dried distillers grains with solubles to Korea, according to an article by the U.S. Grains Council (http://bit.ly/…).
The free trade agreement between the U.S. and Korea (KORUS FTA) has allowed the Council an opportunity to develop sales to Korea, an important market for U.S. agriculture since the Council opened an office in Seoul in 1972.
The FTA locked in zero tariffs for most U.S. ag products and resulted in opportunities for sales of U.S. barley, with Korea's purchases growing to $1.2 million in the 2014-2015 marketing year.
The agreement also allowed corn co-products such as DDGS to enter Korea duty free. In fact, sales of U.S. DDGS to Korea have grown from $90 million in 2011, to $178 million in 2014, making Korea the third largest market for U.S. DDGS.
Programs the Council has utilized to increase Korean demand include feed grain buyers teams, food-corn buyers teams, trade service, feed grain trade seminars, as well as DDGS programs and promotion activities, biotech safety evaluations, etc.
Cheryl Anderson can be reached at Cheryl.anderson@dtn.com.
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DTN WEEKLY DDG SPOT PRICES
| CURRENT | PREVIOUS | ||||
| COMPANY | STATE | 12/25/2015 | 12/18/2015 | CHANGE | |
| Bartlett and Company, Kansas City, MO (816-753-6300) | |||||
| Missouri | Dry | $135 | $135 | $0 | |
| Modified | $65 | $65 | $0 | ||
| CHS, Minneapolis, MN (800-769-1066) | |||||
| Illinois | Dry | $135 | $133 | $2 | |
| Indiana | Dry | $135 | $125 | $10 | |
| Iowa | Dry | $120 | $120 | $0 | |
| Michigan | Dry | $130 | $130 | $0 | |
| Minnesota | Dry | $115 | $110 | $5 | |
| North Dakota | Dry | $120 | $110 | $10 | |
| New York | Dry | $140 | $135 | $5 | |
| South Dakota | Dry | $115 | $110 | $5 | |
| MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253) | |||||
| Kansas | Dry | $135 | $135 | $0 | |
| POET Nutrition, Sioux Falls, SD (888-327-8799) | |||||
| Indiana | Dry | $138 | $130 | $8 | |
| Iowa | Dry | $120 | $115 | $5 | |
| Michigan | Dry | $137 | $135 | $2 | |
| Minnesota | Dry | $112 | $108 | $4 | |
| Missouri | Dry | $143 | $130 | $13 | |
| Ohio | Dry | $140 | $135 | $5 | |
| South Dakota | Dry | $120 | $115 | $5 | |
| United BioEnergy, Wichita, KS (316-616-3521) | |||||
| Kansas | Dry | $130 | $130 | $0 | |
| Wet | $50 | $50 | $0 | ||
| Illinois | Dry | $140 | $140 | $0 | |
| Nebraska | Dry | $130 | $130 | $0 | |
| Wet | $50 | $50 | $0 | ||
| U.S. Commodities, Minneapolis, MN (888-293-1640) | |||||
| Illinois | Dry | $130 | $130 | $0 | |
| Indiana | Dry | $132 | $132 | $0 | |
| Iowa | Dry | $122 | $122 | $0 | |
| Michigan | Dry | $132 | $132 | $0 | |
| Minnesota | Dry | $120 | $120 | $0 | |
| Nebraska | Dry | $135 | $135 | $0 | |
| New York | Dry | $150 | $150 | $0 | |
| North Dakota | Dry | $130 | $130 | $0 | |
| Ohio | Dry | $135 | $135 | $0 | |
| South Dakota | Dry | $120 | $120 | $0 | |
| Wisconsin | Dry | $120 | $120 | $0 | |
| Valero Energy Corp., San Antonio, TX (402-727-5300) | |||||
| Indiana | Dry | $125 | $125 | $0 | |
| Iowa | Dry | $115 | $115 | $0 | |
| Minnesota | Dry | $110 | $110 | $0 | |
| Nebraska | Dry | $135 | $135 | $0 | |
| Ohio | Dry | $130 | $130 | $0 | |
| South Dakota | Dry | $110 | $110 | $0 | |
| Western Milling, Goshen, California (559-302-1074) | |||||
| California | Dry | $187 | $185 | $2 | |
| *Prices listed per ton. | |||||
| Weekly Average | $127 | $125 | $2 | ||
| The weekly average prices above reflect only those companies DTN | |||||
| collects spot prices from. States include: Missouri, Iowa, Nebraska, | |||||
| Kansas, Illinois, Minnesota, North Dakota, South Dakota, Michigan, | |||||
| Wisconsin and Indiana. Prices for Pennsylvania, New York and | |||||
| California are not included in the averages. | |||||
*The spot prices gathered by DTN are only intended to reflect general market trends and may vary. Please contact individual plant or merchandiser for exact prices.
If you would be willing to take a weekly phone call and have your distiller grains spot prices listed in this feature, please contact Cheryl Anderson at (308) 224-1527 or (800) 369-7875, or e-mail cheryl.anderson@dtn.com.
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| VALUE OF DDG VS. CORN & SOYBEAN MEAL | ||||
| Settlement Price: | Quote Date | Bushel | Short Ton | |
| Corn | 12/23/2015 | $3.6550 | $130.54 | |
| Soybean Meal | 12/23/2015 | $272.40 | ||
| DDG Weekly Average Spot Price | $127.00 | |||
| DDG Value Relative to: | 12/25 | 12/18 | 12/11 | |
| Corn | 97.29% | 93.46% | 90.55% | |
| Soybean Meal | 46.62% | 44.48% | 44.49% | |
| Cost Per Unit of Protein: | ||||
| DDG | $5.08 | $5.00 | $4.88 | |
| Soybean Meal | $5.73 | $5.92 | $5.77 | |
| Notes: | ||||
| Corn and soybean prices taken from DTN Market Quotes. DDG | ||||
| price represents the average spot price from Midwest | ||||
| companies collected on Thursday afternoons. Soybean meal | ||||
| cost per unit of protein is cost per ton divided by 47.5. | ||||
| DDG cost per unit of protein is cost per ton divided by 25. | ||||
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USDA MARKET NEWS/DISTILLER GRAINS PRICES
USDA WEEKLY DISTILLERS GRAINS SUMMARY (Dec 18, 2015)
| Dried | Modified | Wet | |
| FOB PLANT PRICES PER TON | |||
| Iowa | 115.00-125.00 | 53.00-60.00 | 34.00-42.00 |
| Minnesota | 105.00-115.00 | 55.00 | 32.00-40.00 |
| Nebraska | 120.00-145.00 | 60.00-73.00 | 48.00-55.00 |
| South Dakota | 108.00-120.00 | 60.00-68.50 | 36.00-40.00 |
| Wisconsin | 115.00-120.00 | 50.00-65.00 | NQ |
| Eastern Corn Belt | 125.00-145.00 | 57.00-62.00 | NQ |
| Kansas | 135.00-165.00 | NQ | 48.00-62.00 |
| Northern Missouri | 135.00-150.00 | NQ | 42.00-47.00 |
| DELIVERED PRICES PER TON | |||
| CIF NOLA | 155.00-165.00 | ||
| Pacific Northwest | 176.00-190.00 | ||
| California | 178.00-190.00 | ||
| Texas Border (metric ton) | 190.00-210.00 | ||
| Lethbridge AB | 160.00 | ||
| Chicago | 138.00-145.00 | ||
Dried Distillers Grain: 10% Moisture
Modified Wet Distillers: 50-55% Moisture
Wet Distillers Grains: 65-70% Moisture
CALIFORNIA WHOLESALE FEEDSTUFF PRICES (Tue Dec 15, 2015) *no new report this week
Distillers Dry Grains
Rail to California Points 175.00-185.00 unch
FOB Truck to California Points 180.00-186.00 up 2.00-unch
PACIFIC NORTHWEST WEEKLY FEEDSTUFFS (Tue Dec 8, 2015) *no new report Christmas week
Offers for Distillers Dried Grains delivered in October by rail to feed mills in the Pacific Northwest were 2.00 to 5.00 higher from 182.00-188.00. Offers for distillers dried grains trans-loaded onto trucks and delivered to Willamette Valley dairies were 2.00 to 5.00 higher from 200.00-203.00.
*All prices quoted per ton unless otherwise noted.
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NASS/USDA MONTHLY CO-PRODUCTS PRODUCTION
Dry and Wet Mill, Co-products and Products Produced - United States
September 2015 - Octber 2015
Dec 1, 2015
Highlights:
Dry mill co-product production of distillers dried grains with solubles (DDGS) was 1.95 million tons during October 2015, up 2 percent from September 2015 and up 5 percent from October 2014. Distillers wet grains (DWG) 65 percent or more moisture was 1.23 million tons in October 2015, up 5 percent from September 2015 but down 8 percent from October 2014.
Wet mill corn gluten feed production was 326.1 thousand tons during October 2015, up 4 percent from September 2015 and up 2 percent from October 2014. Wet corn gluten feed 40 to 60 percent moisture was 297.0 thousand tons in October 2015, up 4 percent from September 2015 but down 7 percent from October 2014.
| Co-products and Products | Oct 2014 | Sept 2015 | Oct 2015 |
| Dry Mill | tons | ||
| Condensed distillers solubles (CDS-syrup) | 149,960 | 156,935 | 145,649 |
| Corn oil | 107,516 | 117,622 | 128,337 |
| Distillers dried grains (DDG) | 420,226 | 420,458 | 438,027 |
| Distillers dried grains with solubles (DDGS) | 1,856,472 | 1,907,470 | 1,953,850 |
| Modified distillers wet grains (DWG) <65% moisture | 1,333,264 | 1,165,422 | 1,226,333 |
| Modified distillers wet grains (DWG) 40-64% moisture | 413,040 | 369,209 | 386,299 |
| Wet Mill | |||
| Corn germ meal | 78,674 | 56,106 | 62,784 |
| Corn gluten feed | 320,692 | 312,543 | 326,055 |
| Corn gluten meal | 92,665 | 86,522 | 83,213 |
| Corn oil | 47,405 | 42,605 | 48,676 |
| Wet corn gluten feed 40-60% moisture | 320,919 | 286,615 | 296,954 |
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DDG LINKS/RESOURCES
Organizations
*Distillers Grains Technology Council
http://www.distillersgrains.org
*National Corn Growers Association Corn Distillers Grains Brochure
*Iowa Corn
Nebraska Corn Board
*Renewable Fuels Association - Ethanol Co-Products
*American Coalition for Ethanol
*U.S. Grains Council
*South Dakota Corn Utilization Council
http://www.drieddistillersgrains.com
Government Sites
*Iowa Department of Agriculture and Land Stewardship/Office of Renewable Fuels & Coproducts
http://www.distillersgrains.com
University Sites
*University of Minnesota - Distillers Grains By-Products in Livestock
and Poultry Feed
*University of Illinois - Illinois Livestock Integrated Focus Team Distillers Grains site
http://ilift.traill.uiuc.edu/…
*University of Nebraska - Beef Cattle Production By-Product Feeds site
*University of Nebraska Extension
*Iowa Beef Center - Iowa State University
http://www.iowabeefcenter.org/…
*University of Missouri - Byproducts Resource Page
*South Dakota State University - Dairy Science Department - Dairy cattle research
(select "Distillers Grains" from the topic menu)
*Purdue University Renewable Energy Web Site
http://www.extension.purdue.edu/…
(select "Biofuels Co-Products from the menu)
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DDG CONFERENCES
If you are sponsoring or know of any event, conference or workshop on distillers grains, and would like to list it in the DTN Weekly Distillers Grains Update, please contact Cheryl Anderson (see contact info below).
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We welcome any comments/suggestions for this feature. Please let us know what information is valuable to you that we could include in the Distillers Grains Weekly Update. Please feel free to contact Cheryl Anderson at (402) 364-2183, or e-mail cheryl.anderson@dtn.com.
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