End users like dairy and livestock producers are finding new appeal in dried distillers grains as prices of soymeal are rising, according to an article by Agrimoney
The recent soymeal record prices are due largely to strong demand from both domestic and export markets that seek the high-protein feed ingredient. Also factoring in the equation is that world soybean supplies have been hit by drought-affected harvests last year in the U.S. and South America.
However, those high prices could send livestock producers, seeking for the least cost rations, back into the DDG market for better deals.
The price of soymeal continued to climb, reaching $520.80 per ton on Tuesday, pushing the value of DDG relative to soymeal to about 44%, presenting a definite value for end users.
When DDG hit record highs during August 2012, it priced itself out of some rations when its value relative to corn soared above 100% where it remained, other than occasional drifts downward, until three weeks ago, reaching 92% on Tuesday.
Merchandisers have reported to DTN there are ample amounts of DDG currently on the market, with some hesitant buying in recent weeks as buyers awaited last week’s holiday weekend and hoped for price declines. With the value of DDG so low for corn and soymeal, demand for DDG should spark as DDG recaptures its place in some rations.
Upward movement in the corn board and robust export demand served to push prices of dried distillers grains up once again in the past week.
The DTN weekly DDG spot price average rose $3 per ton this week. This marks the fifth consecutive week the average has increased, rising from $226 per ton the second week of May to this week’s average of $246 per ton. However, the last time prices were in the $230-per-ton level was June 2012.
Of the 29 Midwestern locations DTN collects prices from, 14 locations reported that their prices had increased between $2 and $5 per ton since last week. Prices at seven locations remained the same and only one location said it had a price decrease of $5 per ton. Prices from seven locations were not available this week.
Merchandisers told DTN this week that despite a dip in the corn board on Thursday, movement had been up early in the week. Although the increase on the board was the primary driver in the bump-up in DDG prices, a spurt of export demand on the Chicago container market was also an important factor.
The value of DDG relative to corn dipped back to about 98%, virtually the same level as early June, before a brief jump to 101% last week. The value of DDG relative to soybean meal rose slightly since last week, from about 51% to nearly 53%.
The cost per unit of protein for DDG from slightly this week, from $9.32 last week to $9.44 this week. The cost per unit of protein for soybean meal, however, fell from $9.53 last week to $9.38 this week.
Cheryl Anderson can be reached at Cheryl.anderson.
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The July contracts of corn and soybeans have picked up the baton of tight old-crop supplies after the May contracts expired strong earlier this week. Both July corn and soybeans closed higher on the week, making it clear strong domestic demand still continues for limited available supplies of corn and soybeans. Planting activity should have accelerated for corn in the western Midwest this week and for corn and spring wheat in the Dakotas. The hard red winter wheat crop received some rain in Oklahoma and the Texas Panhandle earlier this week, but the overall forecast for the Southern Plains remains dry for the next two weeks.