Transportation issues hamper DDGS shipment

By Sean Broderick, CHS | January 23, 2017

Midway through January, it has been an interesting month, already. The new year started with cold weather in the Midwest and heavy rain and snow on the West coast. Avalanches and rail washouts slowed train traffic headed that way, as did vessel loading delays due to rain.

At the same time, trains moving to Mexico came to a standstill at some of the border crossings, due to demonstrations the Mexican people were having to protest the ending of a governmental gasoline subsidy.  Both of these situations hampered normal DDGS movement, which in turn, backed up product into Midwest markets, depressing local prices.

Domestically, most buyers have DDGS in at maximum inclusion rates. The logistical challenges pushed prices to well below recent historical relationships vs local corn, which incented those that had not yet fully utilized it, and mid-January when the weather and rail issues moderated, prices were quick to push off of their lows.

Export demand is still weak. The Chinese anti-dumping tariff is almost 100 percent of the landed price, which is choking demand there, and Vietnamese fumigation questions have negated them as a destination.  The strong US dollar is affecting the peso and the loonie, so two of our better export customers are more challenged to buy increased U.S. goods. Trade policy will be important, but our currency strength will affect our markets even more.

 

                   Mar 2017           Feb 2017       Mar 2016

MN​               90                       95                  110

Chicago.      105​                      110                  140

Buffalo​         105        ​             120                  130

CA​                160                     159                  178

Florida​          148                     152                  153