DDGS prices drop following crop report

DDGS Report
By Sean Broderick | April 16, 2013

April 1—After the flurry of DDGS trading done at the end of February, March slowed down quite a bit.  The available margins that caused all that trading went away pretty quickly, and with it, the DDGS that was being traded ahead.  There are more windows of opportunities still showing up in the October forward time slots, but those have been pretty brief.

Prices were steady for most of the month and dropped in late March with the crop report, which dropped the corn down the limit. Percentages of corn values were dropping into the low 90s before the report, after hovering  around 100 for the latter half of February and the first half of March.  Demand for containers remained strong in the Chicago market but barge bids fell.  Rising river levels have enabled normal barge movements to resume, which is a relief. But moving bulk DDGS to places like Asia is just not as competitive as moving it in containers. Domestically, demand has been pretty steady as well but feeding margins have been dissipating for the past couple months.  In the southeastern and southwestern U.S., feed wheat is a lot cheaper and is eating into ration space.

Today the volatility that we expect for the summer began with the crop report, which showed corn stocks to be more than the market expected.  Events like this will continue to provide those windows of opportunity to sell DDGS and create margins for plants. It will pay to be nimble.