Container, truck logistics drive DDGS market dynamics

Dec. 23—As Christmas approached, logistics were the primary market driver in the DDGS market. Whether in railcar turn times, empty container availability or even truck availability to move the product, transportation is affecting prices. Destination rail markets are very strong because of the reduced velocity of railcars, especially when buyers have been running a “just in time” pipeline. For those plants that do have cars available, they have been able to get some great netbacks by selling into those markets on both coasts, and into the Southwest and Mexico.

Container markets had been the price driver the past couple of months, but we have seen supplies of them slow as of late. The holiday rush is behind us, and the reduced velocity of railcars slows movements to the container ports. Truck availability had been an issue all fall, which hampered product movement into container yards when containers were actually available, and now that containers are tight, we have seen local truck markets weaken again. There has been some slowing of plants as ethanol movements have slowed as well, and plants got full, but that is impacting supply of DDGS only in select markets.

Buyers have been using DDGS primarily for its protein value, as worldwide, protein meals have been expensive. What the new year brings in the protein world is sure to affect DDGS pricing, which, as a percentage of corn, is at the highest levels of recent years.