By Cheryl Anderson
DTN Staff Reporter
The long, downward fall in prices of dried distillers grains may indeed be ending, or at least slowing down, due to plentiful supplies, the falling corn board and the continuing absence of demand from China.
The DTN weekly DDG spot price average fell another $4 per ton in the past week, from $135 last week to $131 this week. This is the lowest point the average has reached since the first week of October 2010.
The average has now fallen for the past 15 weeks in a row, dropping a whopping $108 per ton during that time -- from $239 per ton during the first week of April to this week's average of $131 per ton.
Of the 37 Midwestern locations DTN collects spot prices from, 17 locations reported their prices had decreased between $5 and $10 per ton in the past week. Prices remained unchanged at 19 locations, while only one location reported a price increase of $5.
Merchandisers told DTN lower corn and soybean meal prices led to a slight drop in DDG prices, though most reported a slow week with not a lot of buying.
Also, decent weather and rain led to hopes for a plentiful harvest, which is keeping prices down.
However, the situation with China still has the market on edge. After China announced it would no longer issues permits for imports of U.S. DDG containing Syngenta's MIR 162 GMO trait, demand from China dropped considerably. Those decreases made a serious dent in U.S. DDG exports, as China is the U.S.' largest buyer. Consequently, DDG prices took an immediate and unprecedented nosedive.
Currently, existing permits are still being honored and contracts are still being written, but the lack of exports and China's more stringent inspections are still making the market uneasy as we await China's next move. China is still rejecting shipments of DDG containing the trait as well, forcing sellers to search for low-cost opportunities to re-route, and often at a lower price.
A bit of good news is that the lower prices have also renewed interest in DDG with livestock producers increasing inclusion rates and "using the heck out of it," as one merchandiser commented.
The value of DDG relative to corn this week was at about 97%, dramatically lower than the values that remained above 100%, sometimes rising as high as 140%, since April 2013. The value of DDG relative to soybean meal this week was about 35%.
The cost per unit of protein for DDG was at $5.24 this week, compared to the cost per unit of protein for soybean meal at $8.01.
Cheryl Anderson can be reached at email@example.com.
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