US DDGS prices slide in June as weak demand, rising supply pressure the market

The US dried distillers grains with solubles prices have fallen sharply since the start of June as weak export demand, improving supply availability and seasonally slower feed consumption have weighed on the market.

Platts CIF New Orleans DDGS prices have declined $24/short ton since the start of June, while Chicago truck prices have fallen $25/st and Union Pacific California rail prices have dropped $20/st over the same period.

Platts, part of S&P Global Energy, assessed CIF New Orleans DDGS barges for the June shipment period at $199/st on June 12, the Chicago DDGS truck market for the June delivery period was assessed at $171/st, and the South California rail market for the June delivery period was assessed at $222/st.

Market participants repeatedly pointed to the absence of export demand as the primary driver. "Exports don't exist right now," one trader said, while another said that "export demand is very weak right now. Everywhere."

The downturn has coincided with strong ethanol production and the end of the spring maintenance season, increasing product availability. "Production is high," the second trader said, while a broker added that supplies were increasing as plants returned to normal operating rates.

Demand has weakened both internationally and domestically. "Feed demand will stay down for a month here at least," a second broker said, citing summer feeding patterns.

The second trader added that "there is no international demand right now," forcing sellers to lower their prices to attract buyers.

The correction accelerated during the week ended June 12 as CIF values came under heavy pressure.

"Big time drop," the second broker said of the export market and described conditions more broadly as a "weaker tone on everything, not just DDGS."

Participants said lower corn and soybean meal prices have also made competing feed ingredients more attractive, reducing DDGS inclusion rates in some rations.

"We have to price this way to keep ration space," a third trader said.

Despite the bearish sentiment, some market participants believed values could eventually stabilize if lower prices stimulate buying.

"We have to find demand," the second trader said, while the second broker suggested the market could eventually "find some footing."