Sept. 30—As October approaches, DDGS prices are still reflective of the nearby tightness in old crop corn. While the inverse of old crop DDGS prices to new crop is not as severe as a month ago, the price drop from the beginning to the end of October is still about $15 per ton. The strong demand being seen from bulk and container exports is creating values of corn percentages of more than 110 percent for a lot of plants. This type of value is expected now through the first and second quarters of 2014 and is creating a lot of reformulation in the diets of domestic animals that are being fed.  

Part of this phenomenon is due to the price of protein throughout the world and the value of it in the DDGS. Or, it could be due to fact that there is not a quota on DDGS in China like there is in corn and the value-added tax, and cost of freight in containers is lower. Also, overseas buyers have had advantages in buying smaller parcels at near bulk rate prices. All of these are the reasons that export DDGS demand is driving the price.

At some point, domestic demand will drop even more than it has the past couple of months. Buyers either can’t, or won’t, pay the premiums that export buyers have been doing. Feeding animals has not been consistently profitable for any of the U.S. meat and milk producers for years and DDGS is seeing more competition from things like corn gluten feed and canola meal. The percentage of corn price strength looks to continue through the first quarter of next year, especially given both the propensity of DDGS to drop more slowly in price and the expected drop in the price of cash corn.  Exports are in the driver’s seat, for now.