Transportation Costs, Slowdowns Pressure DDG Prices

Source: By  Mary Kennedy, DTN Basis Analyʥ Posted: Monday, November 1, 2021

DTN's weekly spot price for domestic distillers dried grains during the week ended Oct. 28 was down $1 on average versus one week ago. (DTN file photo)
DTN’s weekly spot price for domestic distillers dried grains during the week ended Oct. 28 was down $1 on average versus one week ago. (DTN file photo)

OMAHA (DTN) — The DTN average price for domestic distillers dried grains (DDG) from 33 locations reporting for the week ended Oct. 28 was $187 per ton, down $1 on average from one week ago. While the cash corn price has been rising the past week, DDG prices were steady to mixed, under pressure from an increase in plant production adding to supplies, while higher transportation costs are adding pressure as well.

At the annual Distillers Grain Symposium held this past week, there was no shortage of comments from buyers and sellers about poor logistics being problematic for moving product. Two modes that are problematic are rail and truck; buyers are having trouble finding enough trucks, and rail has been slow to move in some areas, while both modes have become expensive as well. One buyer also mentioned that he can’t buy containers right now because of the current shipping crisis, and sellers can’t guarantee arrival.

At the annual Distillers Grain Symposium held this past week, there was no shortage of comments from buyers and sellers about poor logistics being problematic for moving product. Two modes that are problematic are rail and truck; buyers are having trouble finding enough trucks, and rail has been slow to move in some areas, while both modes have become expensive as well. One buyer also mentioned that he can’t buy containers right now because of the current shipping crisis, and sellers can’t guarantee arrival.

Wednesday’s Energy Information Administration (EIA) report showed domestic ethanol inventories increased in the week ended Oct. 15 as production at nationwide plants held higher, rising 6.2% on the week to the highest level in more than two years. Overall production was once again higher, up 64,000 barrels per day (bpd) to 1.096 million bpd, the highest level since the first week of June 2019 and 20% above the same week in 2020. Midwest PADD 2 plant production jumped 64,000 bpd or 6.6% to 1.041 million bpd, a record high.

Based on the average of prices collected by DTN, the value of DDG relative to corn for the week ended Oct. 28 was 93.04%. The value of DDG relative to soybean meal was 56.51% and the cost per unit of protein for DDG was $6.93, compared to the cost per unit of protein for soybean meal at $6.97.

In its weekly DDGS export price update, the U.S. Grains Council said: “A wide bid-ask spread continues to characterize the DDGS export market and prices are largely steady with the prior two weeks. Barge CIF NOLA (New Orleans, Louisiana) offers are slightly lower this week while FOB Gulf offers are up $1-$2 per metric ton. Brokers report demand from Southeast Asia has been quiet, allowing offers for 40-foot containers to fall slightly.”

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