DDGS Comments: DDGS merchandisers report that even when interest is expressed in barge shipment and there is active railcar delivery to Chicago for trans-loading, there presently seems to be no export demand. Thus, merchandisers are seeking to encourage foreign buyers to come to the table by extending reduced rates. In that regard, containerized rates declined on average by $10/MT. Meanwhile, spot rates to certain destinations – specifically Yokohama, Japan and Manila, Philippines – declined by $20/MT.
Please note that nearby spot market offers for October are lower than the more distant November and December time period for both foreign and domestic buyers. There was a small $1/MT decrease in the average domestic price for spot market DDGS, but that was primarily because of the influence of lower prices that are being offered for bulk purchases of DDGS by barge. The domestic price for DDGS being shipped by rail to the West Coast of the United States actually increased by $3-6/MT.
Ethanol Comments: Total U.S. ethanol stocks increased to 18.9 million barrels for the week ending September 18, 2015. This is a 3.3 percent increase from the prior week’s level of 18.3 million barrels.The increase occurred even though there was a modest decline in the average daily production rate of 938,000 barrels per day (bpd) from the prior week’s average daily rate of 961,000 bpd.However, the increase in stocks during a period of lesser production can be explained by ethanol imports at an average daily rate of 44,000 bpd.Thus, the build-up in stocks makes sense and is not necessarily a sign of weaker demand.
Demand for ethanol should actually increase if lower gasoline prices encourage more consumption: The retail price for gasoline has decreased for five weeks in a row.The U.S. Energy Information Administration reported the national average retail price of gasoline to be $2.327 per gallon on September 21, which is almost 5 cents below the prior week’s price and more than a $1.00 below the year-ago price.
U.S. ethanol export statistics will be published next week, September 30, and the results will be analyzed in this section. Further, weekly margin (differential) data will be published tomorrow, Friday September 25, and subsequently analyzed in next week’s report.
Country News
Brazil: Sergio Mendes, director of the cereals export association ANEC expresses concern that a strike by the Federal Agricultural Agents Union (Anffa) could adversely impact some corn exports. Brazil is likely to be the world’s number two corn exporter this year. (Reuters)
India: The latest Ministry of Agriculture/GOI estimate for the 2014/15 Kharif season corn crop places production at 15.5 MMT, down 5.43 percent from an earlier estimate, and overall coarse cereal production at 27.88 MMT, down 6.5 percent. Some believe that the faltering monsoon will have produced even less grain than currently estimated.
Romania: The corn harvest is 40 percent complete with production expected to be down 25 percent from last year due to an extremely hot and dry summer.
Ukraine: The unusually dry weather this summer places one private estimate of the current corn crop at 25 MMT, though other analysts say it could drop to 23 MMT. That would be 15 percent lower than USDA’s current forecast and a 20 percent reduction from corn production a year earlier.