DTN Weekly Distillers Grains Update
Lackluster Exports Result in DDG Price Downturn
DAVENPORT, Neb. (DTN) -- When months of plummeting prices of dried distillers grain finally began to turn around in early August, it appeared that price recovery was well in store. However, after just three short weeks, DDG prices began a downward trend once again.
The DTN weekly spot price average fell for the third week in a row, decreasing from $119 per ton the last week of August to $109 per ton this week.
Joel Karlin, DTN contributing market analyst and commodity manager for Western Milling in Goshen, Calif., said that a number of combined factors resulted in the recent downturn in prices.
A drop in exports is likely the single factor that has caused DDG prices to drop substantially from the levels that prevailed during the spring of 2014, Karlin said. Specifically, China, the world's largest buyer of U.S. DDG that took in more than one-third of U.S. production last year, has stopped purchasing.
"Beijing is now requiring all U.S. DDG shipments to be certified free of the MIR162 trait and such a certificate does not exist, so this is in effect a de facto Chinese ban on U.S. DDG," Karlin said.
He added that recently a group of 19 U.S. senators have been working with the U.S. trade representative to overturn the ban.
"That seems unlikely as China is sitting on a mountain of corn and have essentially banned U.S corn imports as well," Karlin said. "Talk that Chinese soybean crushing margins are deeply in the red would also suggest any resumption of U.S. DDG exports to that country is remote for now."
Also contributing to the downtrend in DDG prices was the recent World Agricultural Supply and Demand Estimates report that estimated more corn than was originally predicted.
The bearishly construed September USDA crop production report was also negative to DDG prices with corn and soybean bean meal falling. That puts downward pressure on DDG, a competing byproduct feed, Karlin said.
"Based on the fantastic finishing weather, unbelievably high crop ratings for both the corn and soybean crops as of mid-September, and historical precedent, it is expected that subsequent crop reports will report upward yield revisions, perhaps sizable," he said.
Soybean meal has belatedly started moving down rather sharply as new-crop beans move into the supply pipeline. So now, DDG that for many months was a very good buy on a per-unit-of-protein-meal basis, is no longer as price competitive compared to high-protein meals, he said.
A move in corn and soybean meal futures to new contract lows is one likely culprit, he said. Distillers grains compete with corn and soybean meal as a protein source in livestock rations and tend to mirror movement in those commodities as well.
Other factors leading to the downtrend are ample supplies, reduced demand in the latter part of summer, especially in western areas where heat remains relentless and temperatures continue at record highs, he said.
Domestic demand in recent weeks has been decent, Karlin said.
"Feeding margins are very profitable and we understand that some of the poultry and pork producers have been utilizing DDG in their feed rations for a while, though perhaps that will change as soybean meal prices recede," he said.
Supplies currently remain more than ample given a decent rate of production, with margins high and the slowdown in export business causing product to back up in the U.S.
In coming weeks, Karlin said, he believes prices will probably continue to ease into the fall with soybean and corn crops likely to get larger.
"With the USDA limited in their ability to increase demand for either crop, extra bushels will probably add to ending stocks, which for both corn and soybeans are the largest in years, and that will have a depressing impact on those two market drivers and in turn, the related feed by-product markets," he said.
End users buying near-term may want to just buy hand-to-mouth for the next few weeks, Karlin said. For those looking to contract out supplies going forward, it may be a propitious time to buy, as seasonal studies suggest certain feed ingredients such as DDG bottom prior to either corn or soybeans.
Karlin added that it may be a good idea to monitor the latest Environmental Protection Agency's stance on the Renewable Fuels Standard, since that will impact the amount of ethanol and DDG produced in 2015, as well as giving the trade a sense of where the EPA and administration stand on renewable fuels policy going forward.
Cheryl Anderson can be reached at Cheryl.anderson@dtn.com.
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IN THE NEWS
Lawsuit Filed Against Syngenta Over Unapproved Corn Traits
Two companies have filed lawsuits against Syngenta for selling a genetically-modified trait in corn before it was approved in China, Reuters reported recently, (http://reut.rs/…).
The latest suit was filed Friday in federal court in Urbana, Ill., by Trans Coastal Supply Co. of Decatur, Ill., a company that exports dried distillers grains with solubles to China, and seeks class-action status. A similar lawsuit was filed by Cargill Inc. on Sept. 12, but for losses relating to exports of corn.
The controversy stems from China's demand for governmental certification on all DDGS shipments guaranteeing they do not contain Syngenta's MIR 162 GMO trait. The announcement brought exports of DDGS to China to a standstill since such certification does not exist. China has been dragging its feet on approving the trait, although it has been approved in the U.S. and most major markets for some time.
In its lawsuit, Trans Coastal Supply Co. said it stands to lose more than $41 million due to Syngenta's sale of MIR 162 before it was approved in China, as corn containing the trait is found through the U.S. corn supply chain. Cargill estimates that Syngenta's sales could cost the company more than $90 million in losses.
The National Grain and Feed Association has estimated that the U.S. has already experienced between $1 billion and $2.9 billion in economics losses because of China's refusal to accept U.S. corn.
Many farm groups are advocating proper stewardship of biotech traits not approved in key export markets, asking U.S. farmers to ensure grain with unapproved traits is channeled into appropriate marketing so as not to further damage trade, since it only takes a few kernels of corn with an unapproved trait to result in the rejection of an entire shipment.
A Syngenta spokesperson called the claims from Cargill and Trans Costal "without merit," and claimed the company's rush to bring MIR 162 to market was to help recoup its costs of $200 million in developing the seed.
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Trans Coastal's lawsuit states, "Syngenta's motivation in prematurely releasing Viptera corn is greed. If not stopped, Syngenta is going to continue to destroy U.S. exports of corn and DDGS to China."
The case is Trans Coastal Supply Company v. Syngenta AG et al, U.S. District Court, Central District of Illinois, No. 14-2221.
U.S. DDGS Exports Soar
Exports of U.S.-produced dried distillers grains with solubles hit record levels in July, according to an article by the U.S. Grains Council (http://bit.ly/…).
The surging DDGS exports brought this marketing year's total exports to 7.2 million metric tons, a 48% increase over the same time period in 2013.
Alvaro Cordero, USGC manager of global trade, said, "In 2006, U.S. DDGS exports were only 1 million tons for the entire marketing year. Now we are barely over halfway through this marketing year and exports are already seven times larger than they were eight years ago. That rate of growth is incredible."
Much of the success of the burgeoning DDGS export market is because the council continues to provide educational seminars and feeding trials, as well as end-user contact and support.
The council allocated more than $1.8 million to further develop U.S. DDGS worldwide, including support for feeding trials in Southeast Mexico and seminars and meetings in Southeast Asia. The council also will work with Saudi Arabia to help remove trade barriers for DDGS.
Cheryl Anderson can be reached at Cheryl.anderson@dtn.com.
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DTN WEEKLY DDG SPOT PRICES
| CURRENT | PREVIOUS | ||||
| COMPANY | STATE | 9/19/2014 | 9/12/2014 | CHANGE | |
| Bartlett and Company, Kansas City, MO (816-753-6300) | |||||
| Missouri | Dry | $120 | $120 | $0 | |
| Modified | $65 | $65 | $0 | ||
| CHS, Minneapolis, MN (800-769-1066) | |||||
| Illinois | Dry | $120 | $120 | $0 | |
| Indiana | Dry | $120 | $120 | $0 | |
| Iowa | Dry | $125 | $125 | $0 | |
| Michigan | Dry | $120 | $125 | -$5 | |
| Minnesota | Dry | $105 | $105 | $0 | |
| North Dakota | Dry | $100 | $100 | $0 | |
| New York | Dry | $132 | $155 | -$23 | |
| South Dakota | Dry | $100 | $100 | $0 | |
| Hawkeye Gold, IA (515-663-6413) | |||||
| Iowa | Dry | NO | NO | ||
| Modified | NO | NO | |||
| MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253) | |||||
| Kansas | Dry | $110 | $110 | $0 | |
| POET Nutrition, Sioux Falls, SD (888-327-8799) | |||||
| Indiana | Dry | $115 | $130 | -$15 | |
| Iowa | Dry | $120 | $115 | $5 | |
| Michigan | Dry | $130 | $140 | -$10 | |
| Minnesota | Dry | $115 | $115 | $0 | |
| Missouri | Dry | $135 | $135 | $0 | |
| Ohio | Dry | $120 | $130 | -$10 | |
| South Dakota | Dry | $105 | $105 | $0 | |
| United BioEnergy, Wichita, KS (316-616-3521) | |||||
| Kansas | Dry | $100 | $105 | -$5 | |
| Wet | $35 | $35 | $0 | ||
| Illinois | Dry | $105 | $120 | -$15 | |
| Nebraska | Dry | $100 | $105 | -$5 | |
| Wet | $35 | $35 | $0 | ||
| U.S. Commodities, Minneapolis, MN (888-293-1640) | |||||
| Illinois | Dry | $105 | $115 | -$10 | |
| Indiana | Dry | $105 | $115 | -$10 | |
| Iowa | Dry | $100 | $105 | -$5 | |
| Michigan | Dry | $105 | $115 | -$10 | |
| Minnesota | Dry | $95 | $100 | -$5 | |
| Nebraska | Dry | $100 | $105 | -$5 | |
| New York | Dry | $150 | $135 | $15 | |
| North Dakota | Dry | $95 | $105 | -$10 | |
| Ohio | Dry | $105 | $115 | -$10 | |
| South Dakota | Dry | $95 | $105 | -$10 | |
| Wisconsin | Dry | $100 | $100 | $0 | |
| Valero Energy Corp., San Antonio, TX (402-727-5300) | |||||
| Indiana | Dry | $100 | $110 | -$10 | |
| Iowa | Dry | $115 | $110 | $5 | |
| Minnesota | Dry | $105 | $105 | $0 | |
| Nebraska | Dry | $110 | $110 | $0 | |
| Ohio | Dry | $115 | $115 | $0 | |
| South Dakota | Dry | $95 | $100 | -$5 | |
| Western Milling, Goshen, California (559-302-1074) | |||||
| California | Dry | $185 | $183 | $2 | |
| *Prices listed per ton. | |||||
| Weekly Average | $109 | $113 | -$4 | ||
| 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 | 9/18/2014 | $3.3825 | $120.80 | |
| Soybean Meal | 9/18/2014 | $328.80 | ||
| DDG Weekly Average Spot Price | $109.00 | |||
| DDG Value Relative to: | 9/19 | 9/12 | 9/5 | |
| Corn | 90.23% | 95.37% | 98.41% | |
| Soybean Meal | 33.15% | 26.48% | 27.35% | |
| Cost Per Unit of Protein: | ||||
| DDG | $4.36 | $4.52 | $4.72 | |
| Soybean Meal | $6.92 | $8.98 | $9.08 | |
| 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 (Sep 12, 2014)
| Dried | Modified | Wet | |
| FOB PLANT PRICES PER TON | |||
| Iowa | 108.00-135.00 | 40.00-60.00 | 20.00-32.00 |
| Minnesota | 100.00-120.00 | 45.00 | 50.00 |
| Nebraska | 95.00-118.00 | 40.00-58.00 | 30.00-42.00 |
| South Dakota | 90.00-105.00 | 47.00-52.00 | 23.00-25.00 |
| Wisconsin | 115.00-130.00 | 50.00-60.00 | NQ |
| Eastern Corn Belt | 119.00-150.00 | 65.00-71.00 | NQ |
| Kansas | 120.00-130.00 | NQ | 40.00-50.00 |
| Northern Missouri | 120.00-135.00 | NQ | 38.00-42.00 |
| DELIVERED PRICES PER TON | |||
| CIF NOLA | 165.00-180.00 | ||
| Pacific Northwest | 163.00-170.00 | ||
| California | 165.00-180.00 | ||
| Texas Border (metric ton) | 200.00-215.00 | ||
| Lethbridge AB | 155.00 | ||
| Chicago | 105.00-125.00 | ||
Dried Distillers Grain: 10% Moisture
Modified Wet Distillers: 50-55% Moisture
Wet Distillers Grains: 65-70% Moisture
CALIFORNIA WHOLESALE FEEDSTUFF PRICES (Tue Sep 16, 2014)
Distillers Dry Grains
Rail to California Points 180.00-185.00 up 10.00-5.00
FOB Truck to California Points 180.00-195.00 unch-up 5.00
PACIFIC NORTHWEST WEEKLY FEED (Tue Sep 16, 2014)
Offers for Distillers Dried Grains delivered in September by rail to feed mills in the Pacific Northwest were 3.00 to 4.00 lower, from 176.00-185.00. Offers for distillers dried grains trans-loaded onto trucks and delivered during September to Willamette Valley dairies were also 3.00 to 4.00 lower, from 194.00-200.00.
*All prices quoted per ton unless otherwise noted.
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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.) |
| 8/22/14 | 90224 | 9327 | 1727 | 101279 | 5371209 |
| 8/29/14 | 91015 | 9409 | 1742 | 102166 | 5418273 |
| 9/05/14 | 91608 | 9470 | 1754 | 102832 | 5453571 |
| 9/12/14 | 92003 | 9511 | 1761 | 103275 | 5477103 |
*Information from 2010 Weekly U.S. Fuel Ethanol/Livestock Feed Production report (http://www.ethanolrfa.org/…)
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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) 364-2183-1527, or e-mail cheryl.anderson@dtn.com.
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