Commodities: DDGS affected by tangled logistics, export increases

By Sean Broderick, CHS | April 24, 2014

The month prior to Easter was pretty quiet and the weather is just now abating enough to have folks thinking about planting in the near future in the Midwest. The focus for DDGS prices is still on logistics and the slow movement of both ethanol tankers and hopper cars affecting plant run times. There’s still a discount for spot trucks versus railcars as a result of this but the river opening up for barge traffic is starting to temper that spread.

The biggest story has been the volume of exports. The January, February amounts increased about 50 percent from 2013 with 80 percent plus increases to South Korea and Vietnam and a 200 percent plus increase to China! Those numbers are pretty impressive and look to continue well into the second quarter. Empty container supplies are becoming more available and the weather issues that slowed everything in the Midwest looks to be in the past.

Domestically, local truck buyers are still very “hand to mouth,” as that has netted them the best values throughout the winter. If railcars start to move better this spring, that should change, but both cattle and hogs are profitable in the Midwest, and dairy is very profitable on the West Coast, so buyers are content to wait to see what happens. Most plants have a pretty good book of DDGS sold for the second quarter. 

Exports, and in particular the political and economic dynamics in China, will shape what happens with prices this summer. The corn and meal markets may affect it a bit as well.

June  2014    May  2014       June   2013

MN              225             240                220

Chicago       255                260             238

Buffalo        270                260             230

CA              318                330             280

Florida        280                292             258