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Container shortages in Chicago impact DDGS on coronavirus delays

New York — Container shortages in Chicago are imposing a premium for nearby deliveries of dried distillers grains with solubles (DDGS) but pressuring the deferred deliveries, as the market sees product will bottleneck in the rail yards, sources said.

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Despite the expectations of lower production, FOB Chicago in-trucks bids for DDGS February delivery were Monday at $164/st while March delivery bids were at $159/st, as the market is already seeing the lower inbounds of containers to the Chicago area rail yards.

There has been a significant delay in the delivery of containers into the US owing to idling of container vessels outside Chinese ports following the coronavirus outbreak. With vessels laid up outside ports waiting for crew, and with delays associated with the slow return to work from Lunar New Year, the export demand from China has been sluggish to say the least this year.

Despite the cyclical nature of these delays from the container market owing to Lunar New Year, there has been a marked fall in 2020, pushing back the date at which the market is expecting rates to recover.

"The coronavirus is giving endless headaches to the market at this point and rates are super bearish right now," a source told S&P Global Platts.

This general feeling has spread over all ex-North Asia trade lanes, with rates falling alongside volumes, and has prompted carriers to bring in last-minute void sailings to try and stymie the fall in rates going forward and preserve vessel utilization rates.

Despite this bearishness, container rates have been holding fairly firm at this stage, with carriers largely anticipating the falling rates; however it is the outlook that is pessimistic from a carrier perspective.

Platts Container Rate 13 -- North Asia to West Coast North America -- was assessed at $1,350/FEU Tuesday, down from $1,450/FEU at the start of the month. "Mid-month we could be as low as $1,200/FEU to West Coast North America," said a source.

DDGS are a co-product of ethanol production and are used for livestock feed.