DTN Weekly Distillers Grains Update
DDG Prices Likely to Remain Firm
Prices of dried distillers grains will likely remain firm until the back-up in railcar availability improves, according to a number of DDG merchandisers and market analysts.
Problems with logistics were initially triggered by a non-stop barrage of severe winter weather that caused delays in rail car deliveries. When the back-ups continued to snowball, ethanol plants were forced to slow down production as their storage tanks neared full capacity.
When plants curbed ethanol production, DDG production also fell behind, creating a tightness in DDG supplies that has pushed prices upward for almost two months.
The situation at plants is currently dire, not only from a lack of rail cars, but because a lack of corn and natural gas are putting plants even further behind in production, according to Joel Karlin, DTN contributing market analyst and commodity manager for Western Milling in Goshen, Calif.
"Trains to the West Coast have been delayed for over a month, and given the backlog of cars, winter is still not releasing its grip in the Midwest and Canada, even though some spring maintenance operations are already underway at a number of plants," Karlin said.
The situation is one that will not be resolved quickly, Karlin said.
"Rail shippers are saying it will take weeks, if not months, to get the backlog of cars going," he said.
Some in the industry are predicting that railcar availability will not improve until at least June.
Karlin predicts that until logistics improve, DDG prices will remain firm. He added that one of the reasons for the continued high DDG prices is because it is still very price competitive on a per-unit-of-protein ratio.
"High-protein meals such as soybean meal and canola meal are very expensive, and this makes distillers grains an affordable substitute, especially since it has about the same energy value as corn," he said. "The bitter cold winter in the nation's main feeding areas has also upped protein meal inclusion in the feed rations for maintenance purposes."
Domestic demand has remained very strong. Karlin said that since milk, beef and pork prices are at record highs, usage of DDG in feed rations continues to be robust. Livestock producers are feeding very high inclusion rates of DDG to increase weight gains and increase milk production.
Export demand remains very good, although strong export volumes have also limited supplies from entering the domestic market.
Karlin shared that overseas sales in January were more than 900,000 tons, down just slightly from December levels and 150% higher than seen the prior year. China has resumed buying large quantities of DDG, and the genetically engineered trait issue that slowed shipments late last year seems to have been worked out.
In coming weeks, Karlin said, he believes the market will remain firm from logistic issues, with good demand, strong exports and with some plant downtime.
He pointed out that those in feed ingredient markets will want to pay close attention to the USDA reports to be released on March 31, including the 2014 planting intentions report and the quarterly stocks report.
Karlin warned end users that prices may remain firm for some time.
"It does not appear that there will be any retrenchment in prices until the market can ascertain that good 2014 soybean and corn crops are in the offing, and that will not be at least until the beginning of the third quarter," he said. "Also, it will take time for the log-jammed railroads to sort out their car situation and that will continue to keep supplies very tight."
Karlin pointed out that good ethanol margins, along with tightness on both coasts, are leading to high prices.
"This is reason for plants to run hard, and even given the underlying profitable economics, DDG supplies are tight," he said. "Should ethanol margins turn south, then this could exacerbate the tight DDG supply situation."
Cheryl Anderson can be reached at cheryl.anderson@dtn.com.
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IN THE NEWS
Southeast Asian Demand for U.S. DDGS Grows
Efforts by the U.S. Grains Council to promote DDGS use in Southeast Asia are culminating in increased demand in that region.
By Cheryl Anderson
DTN Staff Reporter
Demand for U.S.-produced dried distillers grains with solubles in on the rise in Southeast Asia, according to an article by the U.S. Grains Council (http://bit.ly/…).
Southeast Asia's 2013 DDGS imports increased from 2012, totaling more than 1 million metric tons of DDGS from the U.S. It appears that 2014 is on track for even more gains, as January's 110,112 tons have already surpassed January 2013's 93,304 tons.
The gains are attributed in part to rising imports by Vietnam (more than 22,000 tons) and the addition of Myanmar (Burma) to the region's list of DDGS importers.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
The addition of Myanmar is attributed to the council's efforts beginning in a 2012 meeting with local feed millers and traders there to acquaint them with DDGS. Adel Yusupov, USGC regional director for South Asia, said that until that time, DDGS was an unknown product to the area.
A subsequent trip educated feed millers on feed technology and DDGS use in poultry and swine nutrition.
"We held seminars and one-on-one meetings to share information about DDGS use in animal nutrition, DDGS production, product qualities and trade," Yusupov was quoted in the article. "The result of these successful trips is that we're seeing exports of U.S. commodities pick up in markets such as Myanmar."
Cheryl Anderson can be reached at Cheryl.anderson@dtn.com.
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DTN WEEKLY DISTILLERS GRAIN SPOT PRICES
| CURRENT | PREVIOUS | ||||
| COMPANY | STATE | 3/21/2014 | 3/14/2014 | CHANGE | |
| Bartlett and Company, Kansas City, MO (816-753-6300) | |||||
| Missouri | Dry | $245 | $245 | $0 | |
| Modified | $125 | $125 | $0 | ||
| CHS, Minneapolis, MN (800-769-1066) | |||||
| Illinois | Dry | $255 | NO | ||
| Indiana | Dry | $260 | $270 | -$10 | |
| Iowa | Dry | $245 | $250 | -$5 | |
| Michigan | Dry | $260 | $260 | $0 | |
| Minnesota | Dry | $250 | $250 | $0 | |
| North Dakota | Dry | $250 | $240 | $10 | |
| New York | Dry | NO | NO | ||
| South Dakota | Dry | $240 | $235 | $5 | |
| Hawkeye Gold, IA (515-663-6413) | |||||
| Iowa | Dry | $235 | $220 | $15 | |
| Modified | $83 | $80 | $3 | ||
| MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253) | |||||
| Kansas | Dry | $240 | $240 | $0 | |
| United BioEnergy, Wichita, KS (316-616-3521) | |||||
| Kansas | Dry | $225 | $225 | $0 | |
| Wet | $95 | $95 | $0 | ||
| Illinois | Dry | $260 | $260 | $0 | |
| Nebraska | Dry | $225 | $225 | $0 | |
| Wet | $95 | $95 | $0 | ||
| Wisconsin | Dry | $230 | $230 | $0 | |
| U.S. Commodities, Minneapolis, MN (888-293-1640) | |||||
| Illinois | Dry | $240 | $240 | $0 | |
| Indiana | Dry | $220 | $220 | $0 | |
| Iowa | Dry | $225 | $225 | $0 | |
| Michigan | Dry | $225 | $225 | $0 | |
| Minnesota | Dry | $210 | $210 | $0 | |
| Nebraska | Dry | $225 | $225 | $0 | |
| New York | Dry | $240 | $240 | $0 | |
| North Dakota | Dry | $215 | $215 | $0 | |
| Ohio | Dry | $225 | $225 | $0 | |
| South Dakota | Dry | $210 | $210 | $0 | |
| Wisconsin | Dry | $220 | $220 | $0 | |
| Valero Energy Corp., San Antonio, TX (402-727-5300) | |||||
| Indiana | Dry | $255 | $255 | $0 | |
| Iowa | Dry | $230 | $230 | $0 | |
| Minnesota | Dry | $230 | $230 | $0 | |
| Nebraska | Dry | $240 | $240 | $0 | |
| Ohio | Dry | $260 | $260 | $0 | |
| South Dakota | Dry | $230 | $230 | $0 | |
| Western Milling, Goshen, California (559-302-1074) | |||||
| California | Dry | $355 | $350 | $5 | |
| *Prices listed per ton. | |||||
| Weekly Average | $236 | $234 | $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 | 3/20/2014 | $4.7850 | $170.89 | |
| Soybean Meal | 3/20/2014 | $466.50 | ||
| DDG Weekly Average Spot Price | $236.00 | |||
| DDG Value Relative to: | 3/21 | 3/14 | 3/7 | |
| Corn | 138.10% | 135.30% | 134.88% | |
| Soybean Meal | 50.59% | 52.05% | 51.05% | |
| Cost Per Unit of Protein: | ||||
| DDG | $9.44 | $9.36 | $9.36 | |
| Soybean Meal | $9.82 | $9.47 | $9.65 | |
| 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 (Mar 14, 2014)
| Dried | Modified | Wet | |
| FOB PLANT PRICES PER TON | |||
| Iowa | 225.00-250.00 | 80.00-120.00 | 50.00-65.00 |
| Minnesota | 240.00-250.00 | 85.00 | 90.00 |
| Nebraska | 230.00-242.00 | 100.00-115.00 | 60.00-72.00 |
| South Dakota | 230.00-245.00 | 88.00-100.50 | 65.00-70.00 |
| Wisconsin | 230.00-245.00 | 107.00-115.00 | NQ |
| Eastern Corn Belt | 230.00-265.00 | 90.00-105.00 | NQ |
| Kansas | 230.00-250.00 | NQ | 65.00-75.00 |
| Northern Missouri | 245.00-255.00 | NQ | 70.00 |
| DELIVERED PRICES PER TON | |||
| CIF NOLA | 280.00-320.00 | ||
| Pacific Northwest | 310.00-326.00 | ||
| California | 310.00-335.00 | ||
| Texas Border (metric ton) | 330.00-360 | ||
| Lethbridge AB | 280.00 | ||
| Chicago | 246.00-270.00 | ||
Dried Distillers Grain: 10% Moisture
Modified Wet Distillers: 50-55% Moisture
Wet Distillers Grains: 65-70% Moisture
CALIFORNIA WHOLESALE FEEDSTUFF PRICES (Tue Mar 18, 2014)
Distillers Dry Grains
FOB Truck 345.00 no comp
Rail Delivered California Points 343.00 up 11.00
PACIFIC NORTHWEST WEEKLY FEED (Tue Mar 18, 2014)
Offers for Distillers Dried Grains delivered by rail to feed mills in the Pacific Northwest were 322.00-335.00, 5.00 to 14.00 higher than week ago offers. Offers for distillers dried grains trans-loaded onto trucks and delivered to Willamette Valley dairies were 340.00-350.00, also 5.00 to 14.00 higher than last week's offers.
*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.) |
| 2/21/14 | 90043 | 9246 | 1712 | 101001 | 4713514 |
| 2/28/14 | 88949 | 9133 | 1691 | 99773 | 4656223 |
| 3/07/14 | 86461 | 8878 | 1644 | 96983 | 4526016 |
| 3/14/14 | 88650 | 9103 | 1686 | 99438 | 4640598 |
*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
*Distillers Grains Technology Council Inc.'s 16th Annual Distillers Grains Symposium
The Distillers Grains Technology Council will hold its 18th Annual Distillers Grains Symposium on May 14-15, 2014, at the Omni Mandalay at Las Colinas, Dallas, Texas. For information, contact the DGTC office at (502) 852-1575 or (800) 759-3448, or check the DGTC website (http://www.distillersgrains.org).
(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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