June 28, 2016
BY Sean Broderick, CHS Inc.
Demand still is very acute in the nearby time frames, but the drop in prices has convinced buyers that waiting to buy still is the best thing to do. Ethanol margins have been satisfactory, incenting aggressive run times, and there are plants that have not had much of a forward book on that still need to sell, so the patient buyers are being rewarded.
Overseas demand still is strong, as delivered soymeal remains expensive. The intense Chinese buying of DDGS seen in years past has been tempered by the looming anti-dumping decision that folks expect to be announced soon, but demand from places like Indonesia, Thailand, and Vietnam has increased substantially. Container rates still are inexpensive as is bulk vessel freight. The amount of grain moving toward the river is limiting what DDGS can be put onto the river (an elevator can load eight grain barges in a day, versus one DDGS barge) so there has not been as much movement of bulk DDGS and all of the newer non-Chinese business has been via containers.
Domestically, on a versus-soymeal basis, the prices that feeders are paying is economical. As a percentage of corn, DDGS is nearer to the higher end of the range, but with river access being limited, local availability still is plentiful. There has not been as much talk lately about the Chinese anti-dumping decision, but with the current exports there of about 200,000 tons per month, the decision still will have a significant impact. And so will the corn crop conditions.
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DDGS Prices
Aug 2016 July 2016 Aug 2015
MN 135 135 120
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Chicago 165 168 157
Buffalo 165 160 160
CA 190 200 195
Florida 168 170 178
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