.Distillers Dried Grains with Solubles (DDGS)
DDGS Comments: Like corn prices, DDGS prices are soft, falling an average $5 per 40-foot container over the past week. The cost for loaded U.S. rail fell the most followed by 40-foot containers to Asia (-$6). Containers destined for Vietnam fell the most while May shipments to the U.S. Gulf fell by just $1/container. There is a $45 spread between U.S. Gulf and the other side of the world, indicating shipping costs and product both remain values.
Ethanol Comments: The U.S. Energy Information Administration (EIA) reports that ethanol production hit a new record of 14.81 billion gallons in 2015, with 92.4 percent of it being blended into the U.S. gasoline supply. Importantly, low prices are finally spurring gasoline consumption, which should boost ethanol use. Discretionary blending is currently limited due to price relative to gasoline. With global petroleum production potentially leveling and demand increasing, this inverse could eventually be challenged except that the capacity to increase U.S. shale production places a cap on oil prices.
Platts reports that Brazilian ethanol stocks in the central south region are down as consumers prefer the lower cost of hydrous during the economic recession. Meanwhile, India’s chemical manufacturing sector is asking for a duty reduction on imports of ethanol. Domestically produced ethanol is predominantly sold to domestic fuel blenders at a higher price. Note that the manufacturers require denaturant content at 2 percent, versus the 0.9 percent in U.S. ethanol.
The margin between the corn price and the value of ethanol and coproducts pushed higher the prior week in Iowa and South Dakota and this past week it was higher in Illinois and South Dakota. It remains higher than a year ago in Nebraska (see below).
- Illinois differential is $1.45 per bushel, in comparison to $1.36 the prior week and $1.78 a year ago.
- Iowa differential is $1.27 per bushel, in comparison to $1.28 the prior week and $1.41 a year ago.
- Nebraska differential is $1.46 per bushel, in comparison to $1.47 the prior week and $1.28 a year ago.
- South Dakota differential is $1.55 per bushel, in comparison to $1.52 the prior week and $1.67 a year ago
Country News
China: After holding steady through February, the average price for corn fell by $3.00 to an average $303/MT; the price of corn starch fell by $4.60 to an average of $352/MT. (WPI)
India: A shipment of 40 KMT of non-GMO corn from Ukraine was blocked from being unloaded because its fumigation certificate originated from a third country. The fact that it has been certifiably fumigated should be sufficient but the result is that the supplier will have to pay for a second fumigation in India. (WPI)
Malawi: The state-owned grain marketing company ADMARC is importing 50 KMT of maize from Tanzania and 30 KMT from Zambia. (Reuters)
South Africa: Grain SA, the country’s largest grain company, says that the government’s expectation of 7.2 MMT in corn production is too optimistic. At this time, the company expects corn imports to reach 4.5 MMT, which is 30 percent more than the government is estimating. Some farmers switched to wheat production and there has also been a 5 percent loss in beef and port breeding herds.