DDGS outlook brighter with improved demand

International prices of DDGS seem to have bottomed out.

According to the U.S. Grains Council (USGC), prices of dried distillers grains with solubles (DDGS) were higher last week in the Midwest, helped along by strong truck demand. The recent cold snap across much of the nation’s midsection helped boost feed demand for DDGS, while the rally in soybean meal put some urgency into buyers, USGC said.

On a per-protein unit basis, DDGS was $1.00 cheaper relative to soybean meal than two weeks earlier. Domestic DDGS prices were higher this week, with FOB Gulf prices gaining $4 per ton and prices to the Pacific Northwest and California up $3 per ton.

“The DDGS outlook is looking brighter, with improved demand prospects and supply reductions likely ahead,” USGC noted. “While the latest export data show November exports were down from the prior year, lower CNF Gulf and container yard prices suggest ample opportunities to entice new export demand. Moreover, tightening ethanol margins will start to restrict production, commensurately reducing DDGS supply.”

Some merchandisers reported that international prices seem to have bottomed out. With DDGS near 60% of corn value, USGC said buyers are emerging and covering February through April positions. Sales to Southeast Asia have been noted, along with some to China.

“Now that China’s final ruling on tariffs for U.S. DDGS is known, traders will begin the process of adapting to new trade terms and pricing," USGC said. "Some buying interest is noted heading into China, but firm bids have yet to be established.”

Sale prices for DDGS to Southeast Asia have been mixed, with strength in Vietnam's and Philippines' bids and weakness in Malaysia, South Korea and Taiwan, USGC added.

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