DTN Weekly Distillers Grains Update

DDG Price Correction Begins Amidst Slight Improvements in Logistics

Prices of dried distillers grains are still high, and while a big price decrease is likely not in store, the coming weeks may see some price relief as logistics continue to improve.

The market is seeing the first glimpses that rail car availability may be improving after harsh weather and snow caused huge snags in deliveries for most of the winter.

The warmer spring weather is starting to improve logistics, according to Steve Knier, merchandiser for U.S. Commodities in Minneapolis.

"It certainly seems like the pipeline is freeing up a little more," Knier told DTN. "That's why we are starting to see a little weakness on prices."

Buyers who had bought up product with rail problems and impending spring shutdowns will luckily now see a bit of correction in DDG prices.

"We were trading at such a high percentage of corn, it just makes more sense for prices to now move down rather than up," Knier said.

Domestic demand has remained steady, even though some buyers have fallen away due to prices. Demand may get even more of a boost if rumors of alfalfa winterkill in some Midwestern and Northern states prove to be true, forcing livestock producers to search for alternative feed sources.

"High-protein sources are so scarce and expensive," he said. "Depending on the locale, DDG still makes sense in rations."

Exports of DDG offered a nice support for the market in recent months, but export demand has been strained as values have been trading higher.

"We are now trading above where export interest is at," Knier said. "So, the pinch is on. Rail issues and spring maintenance shutdowns have now helped us leapfrog to the next echelon of pricing."

Supplies of DDG are improving steadily after being extremely tight for most of 2014, when plants had to ration out DDG and many times were running out of product by the end of the week, Knier said.

"It seems like we are moving toward the market having a healthier supply and not so much of a pinch," he said.

Knier said that some ethanol plants have already begun their spring maintenance shutdowns, choosing to finish them while the railcar situation was so bad. Shutdowns will continue throughout the spring, as they are usually spread over about a two-and-a-half month timeframe.

Knier said there has been some cooperation between plants to coordinate shutdowns to avoid all plants in one area shutting down at the same time.

The market will be interesting in coming weeks, he said, as export interest has been falling off in deferred months and trade has been inverted.

"A lot of people like distillers," he said. "It seems like the market could go either way."

He advised the livestock producers needing to buy product should just buy week-to-week for now, until everyone sees what the market does.

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

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IN THE NEWS

Neb. Senator Joins Fight to Exempt DDG From Livestock Feed Regulations

U.S. Sen. Mike Johanns, R-Neb., is joining other industry organizations in asking the Food and Drug Administration to revise a proposed rule regarding distillers grains and other coproducts, according to a press release Johanns released Tuesday (http://1.usa.gov/…).

Johanns wrote a letter to FDA asking that distillers grains be exempt from a proposed rule that would add costly new requirements for brewers and ethanol plants producing distillers grains. According to the Beer Institute, complying with such regulations could cost large breweries as much as $13.6 million per year, forcing those unable to finance such measures to either dump the brewers grain in a landfill or burn them.

The proposed rule, which deals with guarding the safety of the food chain and requires distillers grains meet human health standards, is also sometimes a duplication of efforts. Brewers grain already meets human food grade standards, since their product is consumed by humans. Groups representing the livestock industry, such as the National Dairy Producers Federation, have been active in fighting the regulations, arguing that cattle have different digestive systems which do not require the same safety standards required to those for human food.

All those opposed also argue that feeding distillers or brewers grains to cattle has been going on for centuries and that there has never been a health concern associated with the practice. The new rule would also make it more difficult for livestock producers to obtain distillers grains.

In his letter to FDA, Johanns wrote, "As currently drafted, these new requirements would be illogical and could bring a safe, mutually-beneficial system to a screeching halt. The proposal would increase costs, and create massive amounts of landfill waste -- without any improvements to food safety."

Johanns praised FDA for agreeing to revise the proposed rule and issue a new public comments period.

He ended his letter: "Food safety is a concern for all of us, but measured regulatory discretion is needed here. When FDA proposes a new animal food rule with a new comment period, I urge you to exempt raw agricultural commodities and these byproducts, which reach the animal food supply through a unique set of circumstances that does not warrant their inclusion in this rule."


Substitute Co-Products for Forage

Although it is still too early to identify signs of alfalfa winterkill in some northern states, there are options for livestock producers who may have some winterkill in their fields, according to an article by Farm and Ranch Guide (http://bit.ly/…).

Farmers have several options, including replanting or feeding more co-product to offset some of their hay needs. In additional to distillers grains, products might also consider wheat midds, barley malt sprout pellets, beet pulp or grain screenings, according to Karl Hoppe, an area extension specialist for livestock systems at the North Dakota State University Carrington Research Extension Center.

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Hoppe also suggested harvest corn as corn silage, or baling straw, corn stover and crop aftermath for forage.

Although such forages are typically low in quality, university researchers have found

that distillers grains work extremely well with low quality forages. Distillers grains not only add much-needed nutrition to the forage, but make it more palatable for cattle as well.

Hoppe stressed the importance of testing forage to find the protein, energy and mineral content.

"It's a low price to pay to know the feeding value of your forage," Hoppe said. "Cow herd nutritional issues are usually a result of a feed not actually being as good as expected, and then ration isn't adjusted to offset the poorer feed quality."

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

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DTN WEEKLY DISTILLERS GRAIN SPOT PRICES

CURRENT PREVIOUS
COMPANY STATE 4/18/2014 4/11/2014 CHANGE
Bartlett and Company, Kansas City, MO (816-753-6300)
Missouri Dry $252 $252 $0
Modified $125 $125 $0
S
CHS, Minneapolis, MN (800-769-1066)
Illinois Dry $240 $240 $0
Indiana Dry $240 $240 $0
Iowa Dry $230 $235 -$5
Michigan Dry $240 $245 -$5
Minnesota Dry $220 $225 -$5
North Dakota Dry $210 $225 -$15
New York Dry $265 $265 $0
South Dakota Dry $215 $215 $0
Hawkeye Gold, IA (515-663-6413)
Iowa Dry $225 $230 -$5
Modified $85 $88 -$3
MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253)
Kansas Dry $235 $240 -$5
United BioEnergy, Wichita, KS (316-616-3521)
Kansas Dry $245 $245 $0
Wet $100 $100 $0
Illinois Dry $265 $265 $0
Nebraska Dry $245 $245 $0
Wet $100 $100 $0
Wisconsin Dry $235 $235 $0
U.S. Commodities, Minneapolis, MN (888-293-1640)
Illinois Dry $245 $245 $0
Indiana Dry $240 $240 $0
Iowa Dry $230 $230 $0
Michigan Dry $240 $240 $0
Minnesota Dry $215 $215 $0
Nebraska Dry $240 $240 $0
New York Dry $255 $255 $0
North Dakota Dry $215 $220 -$5
Ohio Dry $245 $240 $5
South Dakota Dry $215 $220 -$5
Wisconsin Dry $230 $230 $0
Valero Energy Corp., San Antonio, TX (402-727-5300)
Indiana Dry $235 $250 -$15
Iowa Dry $225 $225 $0
Minnesota Dry $220 $225 -$5
Nebraska Dry $225 $230 -$5
Ohio Dry $235 $250 -$15
South Dakota Dry $215 $220 -$5
Western Milling, Goshen, California (559-302-1074)
California Dry $335 $340 -$5
*Prices listed per ton.
Weekly Average $234 $236 -$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 4/17/2014 $4.9475 $176.70
Soybean Meal 4/17/2014 $488.30
DDG Weekly Average Spot Price $234.00
DDG Value Relative to: 4/18 4/11 4/4
Corn 132.43% 131.83% 133.84%
Soybean Meal 47.92% 49.22% 49.78%
Cost Per Unit of Protein:
DDG $9.36 $9.44 $9.56
Soybean Meal $10.28 $10.09 $10.11
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 (Apr 11, 2014)

Dried Modified Wet
FOB PLANT PRICES PER TON
Iowa 220.00-245.00 85.00-110.00 60.00-68.00
Minnesota 225.00-240.00 90.00 85.00
Nebraska 230.00-250.00 89.00-120.00 62.00-71.00
South Dakota 220.00-245.00 92.00-104.50 70.00-75.00
Wisconsin 225.00-250.00 105.00-125.00 NQ
Eastern Corn Belt 232.00-265.00 90.00-105.00 NQ
Kansas 250.00-265.00 NQ 65.00-82.00
Northern Missouri 235.00-240.00 125.00 72.00
DELIVERED PRICES PER TON
CIF NOLA 255.00-275.00
Pacific Northwest 300.00-315.00
California 300.00-315.00
Texas Border (metric ton) 340.00
Lethbridge AB 250.00
Chicago 245.00-265.00

Dried Distillers Grain: 10% Moisture
Modified Wet Distillers: 50-55% Moisture
Wet Distillers Grains: 65-70% Moisture

CALIFORNIA WHOLESALE FEEDSTUFF PRICES (Tue Apr 15, 2014)

Distillers Dry Grains 
  FOB Truck                          332.00-353.00  dn 8.00-up 13.00
  Rail Delivered California Points   340.00-345.00  unch
PACIFIC NORTHWEST WEEKLY FEED (Tue Apr 15, 2014)

Offers for Distillers Dried Grains delivered in April by rail to feed mills in the Pacific Northwest were 315.00, steady with week ago offers. Offers for distillers dried grains trans-loaded onto trucks and delivered during April to Willamette Valley dairies were 330.00-333.00, also steady with week ago 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.)
3/21/14 88053 9041 1674 98769 4609348
3/28/14 91734 9419 1744 102898 4802056
4/04/14 89148 9154 1695 99996 4666640
4/11/14 93426 9593 1776 104795 4890597

*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

http://ncga.com/…

*Iowa Corn

http://www.iowacorn.org/…

Nebraska Corn Board

http://www.nebraskacorn.org/…

*Renewable Fuels Association - Ethanol Co-Products

http://www.ethanolrfa.org/…

*American Coalition for Ethanol

http://www.ethanol.org/…

*U.S. Grains Council

http://www.grains.org/…

*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

http://www.ddgs.umn.edu

*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

http://beef.unl.edu/…

*University of Nebraska Extension

http://ianrpubs.unl.edu/…

*Iowa Beef Center - Iowa State University

http://www.iowabeefcenter.org/…

*University of Missouri - Byproducts Resource Page

http://agebb.missouri.edu/…

*South Dakota State University - Dairy Science Department - Dairy cattle research

http://dairysci.sdstate.edu/…

(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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