Prices pulled in several directions
March 5, 2009
BY Sean Broderick, CHS Inc.
Feb. 16—As the National Ethanol Conference approached, DDGS prices were getting pulled in many different directions. The container market, which had been steady for the past couple of months, ratcheted up approximately $25 per ton in the past three weeks, going from a low of $115 in Chicago to $140 for product available in the nearby slot. Plant issues at a container-focused facility also pushed exporters to scramble for supply out of the normal channels. Barge prices also charged higher, as ice jams on the Illinois River caused Gulf loaders to bid up for product. Corn prices have gotten high enough to make DDGS competitive in the world market.
Prices in the West Coast and panhandle market are higher, but not to the same degree as the export markets. The profitability of animal feeding, particularly the dairy sector, has many dealers concerned about credit, and trades that normally get done in three- to 12-month chunks are now short term, making the logistics management issues acute on a week-to-week basis.
Plants that are for sale are also the "elephant in the room." By press time, a lot of questions will have been answered with regard to the VeraSun Energy Corp. sale and several of the other plants that have slowed production or closed. Additional supply in the spring into summer market will weigh heavily on prices, which traditionally fall as the weather warms.
More operational plants will disrupt the current price equilibrium in the market. Futures and spring planting will definitely be a factor, but impending supply is going to be the feature in the next few weeks.
Prices in the West Coast and panhandle market are higher, but not to the same degree as the export markets. The profitability of animal feeding, particularly the dairy sector, has many dealers concerned about credit, and trades that normally get done in three- to 12-month chunks are now short term, making the logistics management issues acute on a week-to-week basis.
Plants that are for sale are also the "elephant in the room." By press time, a lot of questions will have been answered with regard to the VeraSun Energy Corp. sale and several of the other plants that have slowed production or closed. Additional supply in the spring into summer market will weigh heavily on prices, which traditionally fall as the weather warms.
More operational plants will disrupt the current price equilibrium in the market. Futures and spring planting will definitely be a factor, but impending supply is going to be the feature in the next few weeks.
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