DDGS Comments: DDGS shipments in February to China were down 3.83 percent from January and the price is sliding along with volume. Meanwhile, U.S. hay exports to China hit a record in February (83,844 MT) and prices are rising. Traders report ample interest in DDGS in other Asian markets based on lower prices. Moreover, since DDGS pricing is a result of many factors including ethanol grind, corn prices and demand, some expect a correction back upwards. This is reinforced by increased demand in both the U.S. and Mexico as hog rations have shifted to maximum DDGS inclusion rates.
This week’s market survey of DDGS prices in 16 markets reinforces the aforementioned qualitative input from the trade. Indeed, the average of all markets shows a slight rise in prices, mostly due to larger increases in Lethbridge, Alberta; Laredo, Texas; and the Pacific Northwest offsetting smaller declines in Asian markets. The rally this week in the corn market no doubt has had some impact. The dynamics moving forward create uncertainty, particularly weather in South America.
Ethanol Comments: The Energy Information Administration (EIA) raised the estimated stocks of ethanol by 100,000 barrels to 22.3 million. The agency calculated a 38,000 barrel-per-day reduction in ethanol production down to 938,000 barrels-per-day.
The margin between the corn price and the value of ethanol and coproducts took a significant jump upwards in all four market basket states. (see below).
- Illinois differential is $1.60 per bushel, in comparison to $1.34 the prior week and $2.32 a year ago.
- Iowa differential is $1.53 per bushel, in comparison to $1.30 the prior week and $1.99 a year ago.
- Nebraska differential is $1.71 per bushel, in comparison to $1.50 the prior week and $1.89 a year ago.
- South Dakota differential is $1.90 per bushel, in comparison to $1.53 the prior week and $2.19 a year ago
Country News
Brazil: The Agriculture Ministry said it will ask to suspend a 10 percent tariff on imports of corn from non-Mercosur origins such as the United States due to prices hovering at record levels amid tight supplies. (Reuters)
China: Corn prices continued their slide with the government’s steady release of corn stocks, dropping another $1.50/MT down to an average of $276.50/MT. Meanwhile, Cargill’s Gert-Jan van den Akker said that it is "fifty-fifty" whether China would export its surplus of corn or turn it into ethanol. (Reuters) BMI says that China’s corn production will shift to a huge deficit in the coming years, going from a 5.2 MMT surplus in 2015 to a 6.4 MMT deficit by 2020.
France: The agriculture ministry (FranceAgriMer) reduced its estimate of 2015/16 ending stocks for barley by 31 percent to 1.1 MMT, and cut its estimate of surplus corn stocks by 7.6 percent down to 2.4 MMT. (Reuters)
South Africa: The corn crop is already down 40 percent from last year and now hitting the critical flowering stage. Hopes of importing 1.5 MMT of white corn has turned gloomy due to lack of supply and prices now at $350/MT. (WPI)
Ukraine: Corn planting has begun and area is expected to be 0.5-1.0 million hectares greater than last year due to the abandonment of wheat plantings last fall in a drought. By contrast, wheat and sunflower plantings will reduce corn area in Romania and Bulgaria by 3 percent.