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DDGS Comments: Domestic DDGS prices declined on average another $5.00/MT on offers for the October-December time period. The only positive domestic price was for deliveries to Mid-Bridge Laredo, TX. Offers on containerized DDGS averaged down an additional $9.00/MT for that same time period. The desire by merchandisers to move product is evidenced by the fact that the spot prices for both domestic and containerized exports are on average $3.00/MT lower for December.
Market reports vary from merchandisers and seem to indicate that sales activity is presently inconsistent but picking up. An example of the different ends of the spectrum is presented by a merchandiser in one region reporting that prices increased $5 to $10 /MT, while a merchandiser in a different region indicated that demand was still soft. Further investigation leads to the conclusion that the difference between these regions has a lot to do with their mix of clientele. Domestic buyers are becoming more aggressive than are their foreign counterparts. Many of the domestic buyers have facilities located in the Corn Belt, and their increased buying activity seems to indicate that they perceive a bottom is presently taking shape in the corn market.
Ethanol Comments: Data indicates that ethanol producer margins were impacted hard this past week as the delivered ethanol prices declined by up to 27 cents per gallon. Such a substantial one-week decline caused the differentials between ethanol and the co-products to fall well below last week and year-ago levels. Difficulties are compounded by the fact that ethanol stocks increased in one week by 4.4 percent to 18.8 million barrels. This stock level is 16.2 percent above the year ago. It would be preferable for weekly production to decline under conditions of building stocks, but that is not the case. Weekly production increased from a prior weekly average of 927,000 barrels per day (bpd) to 931,000 bpd for the week ending 12 September.
There was a large decline in the differential between the price of corn and prices for ethanol co-products in all four of the reporting regions for the week ending 19 September 2014:
EU: All indications are that a record corn crop is being produced in the European Union. Some forecasters are predicting that total EU corn production could top 70 MMT, reports Reuters. France is the largest corn producer in the EU and is expected to produce more than 17 MMT.
Israel: Israel imports almost all of its feed grain for the country’s domestic poultry and dairy operations. Current price levels within the global market have encouraged private Israel buyers to enter the market. The following purchases were recently completed: 80,000 MT of corn and another 50,000 MT of feed wheat from Ukraine for shipment in November 2014 through January 2015 (per a WPI report)..
South Korea: South Korea is also shopping around in global corn markets, with a purchase order of more than 200,000 MT by Nonghyup Feed Inc. (NOFI). This company is South Korea’s largest feed maker. The South Korean Corn Processing Industry Association (KOCOPIA) is also in the market for corn, reports Reuters.