July 28, 2015
BY Sean Broderick, CHS
As August approaches, values in the DDGS market have rebounded a bit. Chinese cargoes, which last month looked to be a lot more at risk of getting executed, either did get shipped, or got rolled to a deferred month. Values dropped to the point that the domestic demand, which had previously been priced out of local rations, began to work their way back in. Container demand never dropped, so the lower prices created additional interest from other Southeast Asian destinations.
The month of July saw similar river conditions to that of the end June, which led to a tightness in barge availability, and increased prices in the gulf, which continued on throughout the course of the month. Given the large volume that had been sold for the second and third quarters to the bulk market, the river conditions were especially influential. Even with the business that rolled, or got delayed, there was still a lot of tonnage that loaded out in bulk.
Looking ahead, the biggest factor that is going to influence the price of DDGS in the U.S. is the price of corn and soymeal, and all eyes will be on crop conditions here. But the policies in China also bear watching as well. They have a burdensome amount of corn in storage, and a good crop on the way. How that supply issue gets solved is sure to impact their demand for U.S. DDGS.
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