With October nearly upon us, the DDGS market continues to move back down to the lower end of the spectrum as a percentage of corn.  Chinese buying, which moved the market up through the spring and early summer, has been on the sidelines for the past several months.  China’s recent absence, combined with the winding down of contracts booked earlier in the year, had put DDGS prices in a veritable no man’s land, with reduced Chinese demand, but also still at values that do not yet incentivize full-scale domestic buying.

U.S. cattle demand, which comprises more than half the DDGS that is sold domestically, does not normally kick in until around the beginning of November.  Prices should be around where poultry usage picks up, which would also happen closer to November.   Dairy margins have been poor out West, so that demand is more nearby than deferred purchases.   The hog sector in the Midwest is best situated to take advantage of falling prices, and have seen the best demand from them.

Looking ahead, China’s buying decisions will affect DDGS to the upside, but their lack of buying has been mostly priced into the market today.  The U.S. crop size is sure to affect demand, but currency and equity woes throughout the world will have the most impact on DDGS exports and pricing in the months to come.