DDGS Comments: Domestic DDGS prices have increased on average by almost $20/MT in the past two weeks, and foreign containerized DDGS are up by more than $5/MT.The price increases are attributable to reductions in surplus stocks, better logistics and corn futures closing in the upper end of the trading range. Corn futures could still trade somewhat higher if next Tuesday’s WASDE report is considered bullish. If so, DDGS prices would presumably also increase.However, a positive note for buyers is that DDGS prices are flat for the December-February time period.
The general assumption is that the bottom is in for corn prices in the present 2014/15 season. That fact is causing more market participants to express interest in DDGS. That growing interest is resulting in better ways to include DDGS in feed rations. For example, U.S. cattle producers have learned that mixing a small amount of calcium oxide, CaO, in with DDGS product can result in better digestive performance.It was research from Purdue University that showed including limited amounts of this natural and harmless supplement with DDGS has a positive effect.As well, studies at Iowa State University have shown that DDGS can be used to replace a portion of more expensive fish meal in aquaculture diets on fish farms.DDGS merchandisers can work with buyers in gathering such materials to assist in improving feeding programs.
Ethanol Comments: The U.S. ethanol industry is finishing out the 2014 season in good financial health and most industry participants seem to be optimistic about market conditions going into 2015. The latest figure showed total U.S. ethanol stocks at 17.3 million barrels. This is a slight increase from the prior week’s level of 17.1 million barrels. Ethanol stock could slowly continue to increase because the cool weather at this time of year is ideal for ethanol production. Stocks are presently about 15 percent above the year ago level.
The daily average production rate fell back to 962,000 barrels per day (bpd) for week ending November 28. That is a decline from the prior week’s level of 982,000 bpd. The ability to produce at this rate has been facilitated by ethanol exports and a story by Reuters on Wednesday relays an opinion that recent declines in crude oil prices is expected to significantly reduce the ethanol export pace.
Returns from ethanol production vary from plant to plant but the differential between the cost of corn and the return for the co-products of ethanol and DDGS are at levels that seem to imply consistent profitability for all producers. The differentials in the various regions are as follows for the week ending Friday, December 05, 2014.
- Illinois differential is $3.92 per bushel in comparison to $4.40 the prior week and $4.81 a year ago.
- Iowa differential is $3.58 per bushel in comparison to $4.18 the prior week and $4.32 a year ago.
- Nebraska differential is $3.65 per bushel in comparison to $3.61 the prior week and $4.19 a year ago.
- South Dakota differential is $3.83 per bushel in comparison to $4.34 the prior week and $4.48 a year ago.
Country News
Australia: Corn and sorghum production is anticipated to reach a five-year low in 2014/15 following an extended period of poor precipitation to total 3.19 MMT, according to Reuters. Corn and sorghum are used mostly as feedstock in Australia.
Canada: Canadian barley production is set to total 7.1 MMT, which is slightly smaller than earlier forecasts had predicted, reports Reuters.
Russia: Russia''s National Association of Exporters of Agricultural Products, a grain industry lobbying group, has requested that the government not curb exports as it could hurt the country’s agricultural sector, according to Bloomberg News. This request comes following an announcement from the government’s Veterinary and Phytosanitary Surveillance Service that it would introduce new regulations that could cause grain exports to drop.