Sept. 4—As September began, the DDGS market rallied up to $25 per short ton in the New Orleans gulf export market. U.S. exporters had been betting that past-year Pioneer Herculex issues in Europe will be "grandfathered" in and that Syngenta's Agrisure issues will begin to show up as this year's crop is harvested. This increased demand, along with very strong barge freight values on the "Memphis south" portion of the Mississippi River versus upper Mississippi rates is keeping upper Midwest prices strong. All product that could have gone to the river did, and that picked up the local truck market and necessitated higher prices in California in order to compete.

Canadian demand continued to be unsurpassed, as more DDGS was traded to the north in July and August than there had been all of 2006. The Canadian dollar was strong, and competitive ingredients are expensive there. We expect a great deal of product to trade to the north this year, which will help support the deferred prices in the northern plains.

Asian business continues to pull hard from the plants that are near container yards or have on-site container loading. Container/loading facility availability has been the limiting factor in even more overseas DDGS trading.

Going forward, there is concern at the small amount of new crop product that has traded. Buyers still think that prices are too high, and some ask "What are you going to do with all of the DDGS?" Sellers are looking at some disappointing forward crush margins and have been reluctant to sell too far ahead.

The big question ahead is—what will happen after harvest?