DDG Prices Spike on Rumors of China Re-Entering Market – DTN

    Rumors that China may once again be importing U.S. dried distillers grains with solubles and increasing prices for competing protein feedstuffs caused prices of DDGS to spike between $5 and $30 per ton in some locations in the past week.

    Several distillers grains merchandisers told DTN Thursday that the rumors of China re-joining the market and buying U.S. DDGS are the primary reason for the hike in prices. There was even some speculation that China is already buying DDGS, possibly the cause for some tightness in supply this week.

    Joel Karlin, contributing DTN market analyst and commodity manager for Western Milling in Goshen, Calif., said China may have imported up to 500,000 tons of DDGS in recent weeks.

    Within the past month, DDG values have gone from 80% of the value of corn to levels near 100% or higher, suggesting some business deals, Karlin said. There could be several explanations for China’s decision to get back into the market.

    Karlin said he has heard that some Chinese feed companies that buy state corn reserves get a voucher that allows them to import a number of feed products, with the exception of U.S. corn.

    “The DDG supposedly imported may have been from corn processed that is not the MIR162 variety,” Karlin said. Another possible explanation is the sharp escalation of high-protein meal prices over the past two months. Soybean meal prices have increased 24% since September, making imports of DDGS more desirable.


    The conjecture about China beginning to accept shipments comes at the same time as reports that Turkey has rejected several shipments of U.S. DDGS because of changes in the country’s laws restricting certain strains of GMO corn, which would also be present in DDGS.

    The U.S. Grains Council posted a news release Thursday on its website announcing that Turkey will no longer accept imports of U.S. corn co-products due to stricter enforcement of laws restricting certain varieties of GM corn. As of Monday, three shipments of DDGS have been rejected, and one cargo en route was diverted from Turkey to another buyer, the council reports.

    Turkey has approved 16 corn trait events since 2011, but has also rejected six in that time. No new applications have been made for approval since February 2012, the Council reported, so any GM corn introduced since then has not been approved.

    The USGC said it alerted its members Monday that shipments of DDGS and other corn co-products are likely to be rejected. Options for quick recourse are limited, and the Council said it is working with contacts in Turkey and the U.S. Embassy in Ankara to find solutions and reopen the market.

    Turkey was the sixth-largest importer of U.S. DDGS from January to October 2014, importing a total of about 385,431 million metric tons at a value of about $98 million. In comparison, China, the largest importer during that same time period, imported 4.2 mmt at a value of $1.2 billion. Mexico, in second place, imported 1.3 mmt at a value of $315 million.


    The DTN spot price average for DDGS spiked $16 per ton in the past week, jumping from $124 per ton last week to $140 per ton this week. It’s the highest the average has reached since the first week in July. This also marks the eighth consecutive week of increases, rising from $97 per ton in mid-October.

    Of the 36 Midwestern locations DTN collects spot prices from, 28 locations reported their prices had increased in the past week between $5 and $30 per ton, though most increases were in the $5 to $20-per-ton range. No price decreases were reported in the past week, and only one location reported their price unchanged. Prices from seven locations were unavailable.

    The value of DDGS relative to corn this week saw a marked increase as well, jumping from about 84% last week to more than 100% this week. The value of DDGS relative to soybean meal increased, but to a lesser degree, from about 30% last week to about 34% this week.

    The cost per unit of protein for DDGS was about $5.60 this week, compared to the cost per unit of protein for soybean meal at $8.55. So, in spite of the rise in DDGS prices, it is still a good value compared to soybean meal as a protein source in livestock rations.

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