Plethora of market issues impact DDGS

January 12, 2009

Dec. 19—As Christmas approached, DDGS prices were affected by a number of influences. On one hand, prices trended with corn futures, creating movements of $10 to $15 in as short of a time span of 10 days. In the week after Thanksgiving, prices for UP rail delivered to California traded as low as $141. Ten days later, cars traded at $160. As of Dec. 19, they traded at $150 and were seemingly headed lower. Cooler weather played a part in this, as winter storms across the Midwest drove feed demand higher, and late arriving cold temperatures in Texas, Oklahoma and New Mexico drove buyers—who seemingly waited as long as possible—into the market to fill pipelines before the holidays.

In the export markets, the demand for containers remains quite strong, but at lower prices. Container shipments out of Chicago seem to be the most competitive, as a preponderance of containers seems to be getting emptied there, and shippers going overseas have cut rates drastically in order to get them headed back to the Pacific Rim. West
Coast loadings have dropped significantly as shippers skip loading them on the way back to the producers that provide the primary revenue. It will be interesting to see how these moves evolve as the U.S. economy struggles.

Going ahead, DDGS supply will be affected by the economics of ethanol production, but demand will be affected by the availability of feed ingredients internationally, particularly feed wheat.

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