China is still the big story in DDGS market

By Sean Broderick, CHS | August 27, 2014

As Labor Day approaches, there is still no approval to admit DDGS into China with Syngenta’s MIR 162 trait. Although the last date for departure under whatever “old terms” were was moved from July 24 to Aug. 18, it was announced that ports of entry should start more aggressively enforcing the date on the bill of lading. There are still a significant amount of tons that are on contract, but not yet shipped, and whose contracted value far exceeds today’s market value.  Shippers have been working with the Chinese General Administration of Quality Supervision, Inspection and Quarantine office to try and find resolutions.

After a more than 50 percent drop in price in July and August, DDGS rebounded a bit, with poultry and hog producers incorporating it more into diets. July and the first half August were also very poor months for barge logistics, which backed trucks up at the plants. But the river logistics have improved drastically since then and smaller pieces of bulk export business have shown up at the Gulf. Both of these events combined with the market being oversold to push prices higher. One thing that has not changed, however, is rail logistics. Cars are still moving slow.

Moving ahead, the freight situation is going to be a crucial part of pricing. Ethanol plants expect more reasonably priced corn with what looks to be a bumper crop both here in the U.S. and in most countries abroad.  There will be plenty of DDGS production, and, without China as a significant buyer, a lot of DDGS will need to move here in the U.S.

DDGS Prices ($/ton)    
LOCATION October 2014 September 2014 October 2013
Minnesota 120 95 215
Chicago 130 105 255
Buffalo, N.Y. 115 130 255
Central Calif. 167 163 273
Central Fla. 155 140 275