DDGS Report
November 1, 2007
BY Sean Broderick, CHS Inc.
Oct. 1—With the recent Chicago Board of Trade run-up, DDGS has been rallying. The initial move was in the export markets as shippers tried to front-run the ability to ship old crop product that doesn't contain genetically modified Agrisure corn. This was followed by strong demand from domestic buyers as destination markets realized that transit time logistics would force them to buy earlier than they would have liked. After having been primarily viewed as an energy source for the majority of the year, the soymeal price escalation is valuing DDGS as a protein source in a lot of rations.
Demand is coming from all sectors of the market. Canadian demand is the biggest increase year-over-year, due to increased barley and wheat prices, and the extreme strength of the Canadian dollar. Mexican business and the Asian container market are also pushing prices up. Both are expected to remain strong.
Between new plant openings getting delayed and downtime for fall maintenance, product will stay tighter than buyers originally thought fall would bring. Margins are looking rough past the fourth quarter, and there are some plants talking about slowing down. The low amount of tonnage traded for the new crop year should keep things pretty tight, but available at a price.
Demand is coming from all sectors of the market. Canadian demand is the biggest increase year-over-year, due to increased barley and wheat prices, and the extreme strength of the Canadian dollar. Mexican business and the Asian container market are also pushing prices up. Both are expected to remain strong.
Between new plant openings getting delayed and downtime for fall maintenance, product will stay tighter than buyers originally thought fall would bring. Margins are looking rough past the fourth quarter, and there are some plants talking about slowing down. The low amount of tonnage traded for the new crop year should keep things pretty tight, but available at a price.
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