Home | Press | Events | Eshare
The price for DDGS delivered by barge to the Gulf of Mexico declined on average by $8/MT for nearby purchases and by $14/MT for the October to November time period. This pricing arrangement means that bulk DDGS are currently being offered into the future with a $3-$5/MT discount under the already inexpensive spot delivery. While bulk buyers were offered the largest discounts this past week, containerized rates also declined on average by $5/MT. Various Asian buyers may wish to consider these offers in conjunction with the fact that there is expected to be no General Rate Increase (GRI) on freight before November.
Domestic U.S. buyers of DDGS were also offered substantial price declines this past week that averaged $11/MT for spot delivery by rail, along with additional $1-2/MT discounts for rail delivered DDGS one to two months into the future. This composite of opportunities is presently being offered because DDGS merchandisers are anxious to sell their remaining inventory for the busy fourth quarter of calendar year 2015.
Ethanol Comments: The fact that total U.S. ethanol stocks of 18.6 million barrels are now only 1.7 percent larger than the year-ago stocks level of 18.3 million barrels strengthens the correlation of ethanol with the price action of RBOB gasoline contracts. Unfortunately, gasoline contracts have been in a constant decline since mid-summer. The cost of corn has also been in decline since the second half of July however that has not offset the price weakness of the co-products during the same time period.The result is that recent margins for ethanol producers have been relatively stable but consistently remain well below the year-ago level. The spot differential between the cost of corn and the co-products was the following for week ending August 21, 2015:
China: Chinese officials are requiring all imports of feeds such as barley, sorghum and distiller grains to be registered; the registration process with begin on September 1.China’s domestic buyers have increased imports of such feeds as an alternative to expensive state-held corn reserves and now the Chinese government intends to monitor those imports. Longer-term, China’s sizable domestic corn stocks seem likely to shrink because the Chinese government is reintroducing a 13 percent value added tax on all fertilizer imports as it seeks to curb what it calls “overuse.”The Chinese government intends to bring growth in commercial fertilizer use to zero by 2020, according to a story by Reuters.
France: French corn production could decline this season by up to 28 percent below last year’s record according to Reuters. Hot and dry weather has reduced corn yield potential and total production is estimated to be approximately 13.2 MMT. The weather did not have the same negative affect on French barley production, which is estimated to be slightly above last year’s production at 11.8 MMT.
Russia: While Russia is poised to produce its second largest grain harvest on record due to a favorable wheat crop, its corn crop is currently estimated to be 12 MMT and could be revised downward because of less-than-ideal weather in the nation’s southern regions, according to Reuters.
Ukraine: Ukrainian grain exports to China are 800,000 MT so far year and total corn exports to China are anticipated to reach 3 MMT this year, according to Reuters. Corn and barley are the primary grain exports from Ukraine to China.