Export challenges weigh on DDGS industry

By Sean Broderick, CHS | October 27, 2016

As November approaches, the market is being influenced as much by governmental actions as it is about supply and demand. Since last month, China did come out with its countervailing duty to pair with the antidumping tariff previously announced, which now totals just over 44 percent of the CNF (delivered) price in China. This has decreased trade to China dramatically in the past month, although there are still small parcels being traded.  At its height this year, the U.S. exported around 360,000 metric tons in both June and July, so dropping the monthly totals to a much lower amount is going to affect values back here in the U.S.

At the same time, U.S.  exporters have been addressing challenges with Vietnamese shipments, which for some time now, have required fumigation, in an effort to address a Trogoderma beetle issue.  Oct. 17, the Vietnamese agriculture minister signed an order that as of Dec. 1, exporters must fumigate with methyl bromide that, with only a few exceptions, is not used in the U.S.  due to safety and its ozone depleting qualities. More problematic, the minister’s order says after Dec. 17, the import of DDGS will be temporarily suspended. The U.S. industry is working with APHIS to address the concerns of the Vietnamese and to find a solution. Shippers are doing what they can to ship early, which has tightened up the November market.

In the meantime, harvest is wrapping up with huge basis variances between the Eastern and Western Corn Belts, which is manifesting itself in the price of distillers grains as well.  DDGS does not usually fall below the price of corn for very long, and that looks to be the case for November and December as well.

 


Dec-16

Nov-16

Dec-15

MN

95

110

110

Chic

125

135

138

Buffalo

120

140

130

CA

164

175

170

Florida

155

151

145

 

        Dec 2016              Nov 2016              Dec 2015

MN        95                       110         110

Chic        125                   135         138

Buffalo    120                   140         130

CA          164                   175         170

Florida   155                    151         145