DTN Weekly Distillers Grains Update
Existing Import Permits Still Valid in China
Although China has yet to formally announce its ban on new permits of U.S. dried distillers grains with solubles, existing permits are being honored and the market seems to have found the bottom of a price free-fall.
Existing permits for DDGS to enter China are still valid and contracts are still being written, according to an article by the U.S. Grains Council (http://bit.ly/…).
With existing permits still being honored and contracts still being written, the market has had to quickly adjust to the new rules for DDGS shipped to China.
Restrictions for unapproved genetically modified (GM) traits will continue to be enforced, and future shipments will likely be subject to even more stringent inspections for any GMOs such as the MIR 162 trait developed by Syngenta Ag.
China is still rejecting shipments of DDGS containing the MIR 162 GMO trait, creating headaches for U.S. sellers who must try and reroute cargo to other locations. The U.S. Grains Council is working with traders on re-exporting cargoes that have failed inspection in China to try and find new destinations for rejected shipments.
This will be a continuing issue, since the price of stranded shipments declines quickly, according to Jason Charles, domestic export trader for Land O'Lakes Purina Feed LLC in Minneapolis, Minn.
When shipments slated for China are rejected, sellers look for the least-cost opportunities to re-route, Charles said.
"But when there's blood in the water, it will often go to the cheapest bidder, and you end up giving it away," he said.
PRICES CONTINUE TO FALL
The announcement by China several weeks ago brought an immediate and unprecedented nosedive in prices of DDGS. Prices fell as much as $50 per ton in the past month, reaching the lowest level since December 2010. The DTN weekly DDG spot price average fell from $192 per ton the first week of June to $148 per ton this week.
For many months, the value of DDG relative for corn rose to 120% to 130%, occasionally rising as high as 140%. Last week, the value of DDG relative to corn fell below 100% for the first time since July 2013, inched back up just slightly more than 100% last week and then fell to 94% this week. In any case, due to the price decline, the cheaper prices are prompting some end users to put DDG back in their livestock rations.
Last week, the free-fall in prices seemed to slow down, and many in the industry believed the market had finally found its bottom. The surprise came this week when prices fell again. Many merchandisers attribute this to plants trying to empty out some storage before the Fourth of July holiday weekend, as well as some problems with logistics, as flooding on the Mississippi has caused some issues with barges.
Charles said the market could change with the June 30 USDA reports.
"I do believe on Monday we will receive a bearish bean stocks report. But more so given current acreage/weather and conditions, we will have a bearish overall report with current potential production for this year's crop," he said.
Charles said there have been very few years when the U.S. has had this amount of planted acreage look as good with a very zonal/benign forecast for the next two weeks. By July 15-20, more than 50% of this corn crop will be pollinated.
If the report is indeed bearish, Charles said he does not anticipate that DDGS will move from the current level of 85% to 90% value of corn.
"But all things being equal, if DDG remains steady and corn drops in price, we could see distillers go even lower after Monday. Everything is relative," he said.
COMING WEEKS
It is difficult to predict China's next move, especially in light of its unsuccessful attempts at selling off a glut of corn and other feed grains.
"China has a lot of feed grains, but their auctions are going poorly," Charles said. "A lot is out of spec and has to go for non-food use. They are not selling nearly what they need to."
But despite the poor auction sales, Charles said he does not expect China to change its stance on MIR 162 prior to new crop.
Cheryl Anderson can be reached at cheryl.anderson@dtn.com.
-----------------------------------------------------------------------
IN THE NEWS
China Alternative Could Reduce DDG Demand
China has a number of choices in the future for meeting its demand for grains. Unfortunately, one of those choices could reduce the country's demand for U.S. dried distillers grains with solubles.
Feng Jilong, general manager of the Dalian Northern International Grains Logistics Company in China, spoke last week at the International Grains Council Conference in London. Jilong spoke about the long-term evolution of China's corn import demand, according to an article by the U.S. Grains Council (http://bit.ly/…).
Feng pointed out China's issue reconciling its growing middle class versus constraints on the country's domestic production. For instance, China's large production gains have resulting in increasing numbers of corn acreages and less for other crops. Other factors contributing to limited domestic production include labor shortages, domestic corn prices in China rising above world market levels and the number of individual farmers with very small operations.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
Considering China's current stance on biotechnology, Feng speculated that one of the country's strategies could be to allow increased imports of commodity corn for processing. However, increasing corn imports in order to produce its own ethanol and DDGS could reduce China's demand for U.S. DDGS.
Since China has been the largest importers of U.S. DDGS, such a move would certainly hurt the DDGS export market, as sales to China currently constitute about half of all DDGS exports.
Cheryl Anderson can be reached at cheryl.anderson@dtn.com.
-----------------------------------------------------------------------
DTN WEEKLY DISTILLERS GRAIN SPOT PRICES
| CURRENT | PREVIOUS | ||||
| COMPANY | STATE | 1/27/1900 | 1/20/1900 | CHANGE | |
| Bartlett and Company, Kansas City, MO (816-753-6300) | |||||
| Missouri | Dry | $185 | $185 | $0 | |
| Modified | $90 | $90 | $0 | ||
| CHS, Minneapolis, MN (800-769-1066) | |||||
| Illinois | Dry | $175 | $180 | -$5 | |
| Indiana | Dry | $170 | $175 | -$5 | |
| Iowa | Dry | $155 | $175 | -$20 | |
| Michigan | Dry | $180 | $200 | -$20 | |
| Minnesota | Dry | $120 | $170 | -$50 | |
| North Dakota | Dry | $120 | $170 | -$50 | |
| New York | Dry | $175 | $200 | -$25 | |
| South Dakota | Dry | $120 | $160 | -$40 | |
| Hawkeye Gold, IA (515-663-6413) | |||||
| Iowa | Dry | $163 | $163 | $0 | |
| Modified | $70 | $60 | $10 | ||
| MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253) | |||||
| Kansas | Dry | $150 | $155 | -$5 | |
| POET Nutrition, Sioux Falls, SD (888-327-8799) | |||||
| Indiana | Dry | $155 | $155 | $0 | |
| Iowa | Dry | $120 | $130 | -$10 | |
| Michigan | Dry | $170 | $170 | $0 | |
| Minnesota | Dry | $122 | $130 | -$8 | |
| Missouri | Dry | $145 | $150 | -$5 | |
| Ohio | Dry | $165 | $165 | $0 | |
| South Dakota | Dry | $115 | $115 | $0 | |
| United BioEnergy, Wichita, KS (316-616-3521) | |||||
| Kansas | Dry | $170 | $165 | $5 | |
| Wet | $70 | $65 | $5 | ||
| Illinois | Dry | $200 | $200 | $0 | |
| Nebraska | Dry | $170 | $165 | $5 | |
| Wet | $70 | $65 | $5 | ||
| Wisconsin | Dry | $190 | $190 | $0 | |
| U.S. Commodities, Minneapolis, MN (888-293-1640) | |||||
| Illinois | Dry | $165 | $165 | $0 | |
| Indiana | Dry | $165 | $170 | -$5 | |
| Iowa | Dry | $130 | $155 | -$25 | |
| Michigan | Dry | $170 | $180 | -$10 | |
| Minnesota | Dry | $120 | $150 | -$30 | |
| Nebraska | Dry | $135 | $135 | $0 | |
| New York | Dry | $190 | $200 | -$10 | |
| North Dakota | Dry | $110 | $140 | -$30 | |
| Ohio | Dry | $165 | $175 | -$10 | |
| South Dakota | Dry | $110 | $140 | -$30 | |
| Wisconsin | Dry | $155 | $155 | $0 | |
| Valero Energy Corp., San Antonio, TX (402-727-5300) | |||||
| Indiana | Dry | $170 | $175 | -$5 | |
| Iowa | Dry | $120 | $140 | -$20 | |
| Minnesota | Dry | $110 | $130 | -$20 | |
| Nebraska | Dry | $120 | $140 | -$20 | |
| Ohio | Dry | $165 | $175 | -$10 | |
| South Dakota | Dry | $110 | $130 | -$20 | |
| Western Milling, Goshen, California (559-302-1074) | |||||
| California | Dry | $233 | $235 | -$2 | |
| *Prices listed per ton. | |||||
| Weekly Average | $148 | $160 | -$12 | ||
| 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.
-----------------------------------------------------------------------
| VALUE OF DDG VS. CORN & SOYBEAN MEAL | ||||
| Settlement Price: | Quote Date | Bushel | Short Ton | |
| Corn | 6/26/2014 | $4.4275 | $158.13 | |
| Soybean Meal | 6/26/2014 | $465.50 | ||
| DDG Weekly Average Spot Price | $148.00 | |||
| DDG Value Relative to: | 6/27 | 6/20 | 6/13 | |
| Corn | 93.60% | 99.45% | 107.21% | |
| Soybean Meal | 31.79% | 35.46% | 36.23% | |
| Cost Per Unit of Protein: | ||||
| DDG | $5.92 | $6.40 | $6.80 | |
| Soybean Meal | $9.80 | $9.50 | $9.88 | |
| 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. | ||||
-----------------------------------------------------------------------
USDA MARKET NEWS/DISTILLER GRAINS PRICES
USDA WEEKLY DISTILLERS GRAINS SUMMARY (June 20, 2014)
| Dried | Modified | Wet | |
| FOB PLANT PRICES PER TON | |||
| Iowa | 130.00-165.00 | 60.00-80.00 | 40.00-53.00 |
| Minnesota | 130.00-145.00 | 75.00 | 55.00A |
| Nebraska | 137.00-150.00 | 60.00-75.00 | 39.00-59.75 |
| South Dakota | 130.00-145.00 | 78.00 | 40.00-50.00 |
| Wisconsin | 170.00-180.00 | 78.00-100.00 | NQ |
| Eastern Corn Belt | 160.00-180.00 | 85.00-90.00 | NQ |
| Kansas | 145.00-165.00 | NQ | 60.00-65.00 |
| Northern Missouri | 140.00-160.00 | 95.00 | 55.00-60.00 |
| DELIVERED PRICES PER TON | |||
| CIF NOLA | 199.00-210.00 | ||
| Pacific Northwest | 214.00-228.00 | ||
| California | 213.00-224.00 | ||
| Texas Border (metric ton) | 245.00 | ||
| Lethbridge AB | 190.00 | ||
| Chicago | 187.00-205.00 | ||
Dried Distillers Grain: 10% Moisture
Modified Wet Distillers: 50-55% Moisture
Wet Distillers Grains: 65-70% Moisture
CALIFORNIA WHOLESALE FEEDSTUFF PRICES (Tue Jun 24, 2014)
Distillers Dry Grains
FOB Truck 233.00-239.00 dn 2.00-up 4.00
Rail Delivered California Points 225.00-229.00 dn 4.00-unch
PACIFIC NORTHWEST WEEKLY FEED (Tue Jun 24, 2014)
Offers for Distillers Dried Grains delivered in June by rail to feed mills in the Pacific Northwest were 222.00-230.00, 13.00 to 22.00 lower than week ago offers. Offers for distillers dried grains trans-loaded onto trucks and delivered during June to Willamette Valley dairies were 240.00-245.00, also 13.00 to 22.00 lower than week ago offers.
*All prices quoted per ton unless otherwise noted.
-----------------------------------------------------------------------
RFA WEEKLY U.S. LIVESTOCK FEED PRODUCTION
| CO-PRODUCT OUTPUTS (metric tons) | |||||
| Week Ending | Distillers Grains | Corn Gluten Feed | Corn Gluten Meal | Total Feed | Corn Oil (lbs.) |
| 5/30/14 | 93326 | 9583 | 1775 | 104684 | 4885388 |
| 6/06/14 | 93923 | 9644 | 1786 | 105353 | 4916638 |
| 6/13/14 | 96709 | 9930 | 1839 | 108478 | 5062471 |
| 6/20/14 | 93326 | 9583 | 1775 | 104684 | 4885388 |
*Information from 2010 Weekly U.S. Fuel Ethanol/Livestock Feed Production report (http://www.ethanolrfa.org/…)
-----------------------------------------------------------------------
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)
-----------------------------------------------------------------------
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).
-----------------------------------------------------------------------
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) 364-2183-1527, or e-mail cheryl.anderson@dtn.com.
(PH/GH/ES/SKĂ‚Â)
Copyright 2014 DTN/The Progressive Farmer. All rights reserved.
