Going into July 4, the demand from China, which had been keeping DDGS prices well above the levels that worked into U.S. rations, has dropped off. And, so have prices.  Since last month, values are off about 25 percent, to the point where it is being more widely considered for inclusion by U.S. feeders that effectively had kicked it out.

Chinese soymeal availability is widely considered to be the reason for the decreased demand, as South American soybean boats, some of which were late to ship, began arriving in earnest in the late spring.   Like they do here in the U.S., feeders there were presented with the cheaper per-unit-of protein soymeal, and DDGS, which was being primarily being used for its protein content, fell out of favor as a ration staple.  Couple that with the delivery of several bulk DDGS vessels at the same time, and suddenly protein supply in China was no longer an issue.  Prices in the U.S. went from 130 percent plus the value of local corn down to 115 percent in a very short period of time as shipments were delayed and, or cancelled.

Eventually, Chinese soymeal will be consumed and DDGS demand from there will pick up again. There is already interest for fourth quarter shipments, albeit at lower values than what is being quoted today, and the lower percentage of corn values are incenting domestic demand.  The question is whether Chinese sales that are on the books will actually end up shipping, or being re-sold back in the U.S.   Normally, this time of the year, corn crop conditions influence DDGS prices as well.  But this year, is all about China.

DDGS Prices ($/ton)
LOCATION	July 2015	June 2015	July 2014
Minnesota

120

160

160

 

Chicago

157

185

185

 

Buffalo, N.Y.

160

175

180

 

Central Calif.

195

214

217

 

Central Fla.

178

204

190