DDGS Comments: Although U.S. exports of DDGS to China are down, that country continues to offer a price premium for both DDGS and sorghum imports over shipments going to other markets. Still, protein feed markets are pressured – the latest factor being large supplies of Canola meal coupled with a weak Canadian dollar, complicated further by China’s ban on imports under the pretense of blackleg fungal disease. The ban comes concurrent with China’s effort to deal with its own surplus of rapeseed meal supply.
USDA’s Agricultural Marketing Service (AMS) reports that DDGS prices FOB domestic plants traded mostly steady last week with some locations down $5.00/MT. In a similar vein, the trade reports that export prices for DDGS were flat to down slightly. There were no changes in prices for April/May shipment to China, the Philippines or Japan, and the maximum decline was -$4/container for shipment to Thailand. The average change was -$1/container.
The one positive offset is that freight remains very inexpensive, which helps the DDGS netbacks versus corn. There may be some supply tightening as plants go through the normal amount of expected downtime for spring maintenance in March and April.
Ethanol Comments: The industry has had its heaviest grind for ethanol since averaging 1.003 million barrels per day (BPD) during the week of January 8. Consequently, the Energy Information Administration (EIA) reports that U.S. weekly ethanol output was up 21,000 BPD to a total of 999,000 BPD. However, use is also up as the agency reports that weekly ethanol stocks declined by 454,000 barrels resulting in overall stocks of 22.85 million barrels.Higher overall fuel use and higher gasoline prices should improve margins.
Separately, the U.S. Environmental Protection Agency and the Commodity Futures Trading Commission announced that they would begin sharing information on the generation of renewable identification numbers (RINs) using non-public, proprietary business information in an effort to ensure the sanctity of the market.
The margin between the corn price and the value of ethanol and coproducts was up in Iowa, Nebraska and South Dakota, but fell in Illinois. (see below).
- Illinois differential is $1.30 per bushel, in comparison to $1.36 the prior week and $2.04 a year ago.
- Iowa differential is $1.22 per bushel, in comparison to $1.20 the prior week and $1.67 a year ago.
- Nebraska differential is $1.38 per bushel, in comparison to $1.37 the prior week and $1.57 a year ago.
- South Dakota differential is $1.44 per bushel, in comparison to $1.34 the prior week and $1.88 a year ago.
Country News
China: Corn prices are falling precipitously, down $12.30/MT to an average $288.10/MT last week as the government unloads surplus stocks and cornstarch inventories continue to climb. (WPI)
India: A tender to import 240,000 tons of corn was cancelled due to higher expected domestic production and, notably, “questions about the availability of non-genetically modified corn as demanded.” (Reuters)
Turkey: The government increased the local value added tax on imported DDGS and corn gluten feed from 8 percent to 18 percent in order to protect the domestic soybean/sunseed crushers.
Zimbabwe: The World Food Program is seeking $220 million to supply corn and other staples to Zimbabweans suffering from the drought. (Bloomberg)