Jan. 20—As the last half of January began, DDGS continued its rollercoaster ride. After going up non-stop with the Chicago Board of Trade in December, and trading at greater than 100 percent the value of corn, it began to abate in January. While DDGS is generally at its strongest, relative to corn prices, in the December/January time period, this year was marked by strength due mainly to delayed plant starts and short covering.

Export demand for DDGS remains extremely strong, ostensibly due to the weak dollar, but also due to decreasing ocean transportation costs for all commodities. Bulk rates from the U.S. Gulf of Mexico to Asia are down almost 30 percent from the November high. This has created more distillers grains demand and trading volume in the Gulf and is expected to lead to a portion of bulk cargo being shipped to Asia. Demand from Canada remains extremely strong, but could be tempered by declining feeding margins in the northern market. Asian container business continues to be brisk and limited by container availability. Cash soymeal prices have taken a dramatic drop as crush economics favor maximum soybean processing, which weighs on DDGS in diets that favor it as a protein.

Going ahead, DDGS prices will be affected mainly by CBOT prices, but will also be impacted by the ability of sellers to keep up with the increasing supply in a summer market that is normally marked by substantially lower feed demand.