The DDGS market is still seeing good demand from the swine and poultry markets, but is being offset by increasing truck supply in the Midwest. The rail market was marred early in the summer by difficult to unload cars, which shifted excess availability to the local truck market away from the rail market. Also, the early season wet DDGS demand is down due to shifting cattle markets, and although ethanol producers would like to move more wet due to high natural gas prices, the market is saturated with all plants moving as much that way as possible.

Going forward, the rest of the summer and next crop year looks heavy relative to last year. With a lot of product having traded in the spot market last spring in the $120-135 rail delivered California, the $110-114 that is currently trading for old and new crop looks inexpensive. Canola and whole cottonseed that were extremely tight last year now look as though they will be much more competitively priced for 2004. Bakery meal and meat and bone meal are also pressing DDGS for places in the formulations.

The export market continues to pick up. With a relatively weak U.S. dollar, and extensive press regarding DDGS competitiveness in formulas, inquiries are coming in from the Pacific Rim and South America, with extensive business having been done recently into both areas. Mexican business has been steady. Next week, the U.S. Grains Council is having an International Grain Marketing Conference in Minneapolis, which will provide an opportunity to put faces to names for business already being done, as well as establish new contacts. EP