DTN Distillers Grain Weekly Update

dtn-img

By Cheryl Anderson
DTN Staff Reporter

The direction of distillers dried grains prices in recent months has been dictated by the prices of corn and soybean meal. Both corn and soybean meal compete with DDG as a source of protein in livestock rations.

Prices of DDG followed an upward trend in corn and soybean meal prices between early April and mid-June. The DTN weekly spot price average rose a total of $48 per ton in that nine-week period, bringing DDG prices to the highest point since late May 2015. Then last week, the average suddenly took a downward turn, dropping $8 per ton in just one week. Not so coincidentally, corn and soybean meal prices dropped as well.

Thursday, merchandisers reported to DTN that DDG prices had fallen in many markets by $5 to $10 per ton. This pushed the DTN weekly spot price average down another $6 per ton, to $154.

Andy Lindsay, merchandiser for POET Nutrition in Sioux Falls, S.D., said, "Everything last week was based on what corn and soybean meal did."

Also factoring into the volatility to some degree was weather. Some areas were experiencing dry conditions, but some rains received in the last week or so seem to have improved the outlook on crops, Lindsay said.

Export demand in recent weeks has been fairly steady, Lindsay told DTN. Southeast Asian containers have been fairly steady. There has been some talk of bulk vessels going to China, as well as some containers; however, there are some indications that may drop off by the end of July.

Markets still seem to be hesitant, awaiting the outcome of China's DDG anti-dumping and countervailing duties investigation. Lindsay said there is talk that China may announce something more toward September.

Domestic demand has also been fairly steady, except for the slight seasonal dip caused by recent extreme heat, he said; cattle simply do not eat as much during hot weather.

Supplies are loosening up after some tightness in May and June, he said. Demand in May left supplies a little short. Also, a bump in exports in May took some nearby supplies out of the market, Lindsay said.

In the coming weeks, Lindsay said he expects DDG prices may remain flat or trend a little lower in August, depending on factors like exports, weather, etc. He added that DDG prices will largely depend on corn and soybean meal price trends.

Livestock producers looking to buy DDG may want to just buy hand-to-mouth until everyone sees where the markets go.

"I wouldn't go crazy," Lindsay said. "There may be a little better buys in August."

Cheryl Anderson can be reached at Cheryl.anderson@dtn.com

Follow Cheryl Anderson on Twitter @CherylADTN

-----------------------------------------------------------------------

NEWS IN BRIEF

Demand for Kosher Distillers Corn Oil Could Increase Market for Glycerin

Corn oil derived from distillers grains supplies almost a fifth of the U.S. biodiesel feedstock market and is increasing the amount of glycerin produced. But unless the distillers corn oil (DCO) produced during ethanol production is kosher, opportunities for the resulting glycerin in food markets may be limited, according to an article in Biodiesel Magazine (http://bit.ly/…).

The definition of kosher comes from laws from the Torah in the Old Testament and dictates what foods can or cannot be eaten according to Jewish law, as well as how they must be prepared.

Rabbi Abraham Juravel, the rabbinic coordinator of technical services for the Orthodox Union, spoke recently at the National Advanced Biofuels Conference & Expo in Milwaukee about the importance of certifying glycerin as kosher to expand market opportunities.

Glycerin is a food additive used in a wide variety of products. While crude vegetable oil is kosher, the refining process many times are not. The problem is that some plants refine both animal fats and vegetable oil, and there are no animal fats or edible tallows on the market that are kosher, Juravel said.

Many big companies -- including Proctor & Gamble, Cargill and Archer Daniels Midland -- produce kosher glycerin.

Juravel suggested that ethanol producers extracting DCO for biodiesel consider what demulsifiers they use in the extraction process, as some demulsifiers (which separate the oil from the distillers grains) come from animals or vegetables. He added there are several companies that produce demulsifiers that are kosher.

Cheryl Anderson can be reached at Cheryl.anderson@dtn.com.

(AG/BAS)