COMMODITIES REPORT DDGS Report By Sean Broderick, CHS Inc.
Dollar’s strength impacts overseas trade Oct. 20—Distillers grains, along with every other market, has had its share of volatility in the past couple of weeks. After hitting a high of $190 delivered to California in the second half of September, we are now seeing $175 delivered with little to no premium for November and December. As Halloween approached, distillers grains has appreciated from the low 60s to the high 80s as a percentage of the price of corn, which is an impressive move in a year where the fall temperatures have been relatively mild. The potential that ethanol plants may slow, or even shut down, production is keeping buyers concerned about supply, and the old-crop corn basis is keeping it in the rations.
At press time, the International Distillers Grains Conference and Trade Show was ongoing in Indianapolis. Exports are going to continue to be an important feature of the distillers grains market, and there have been some interesting things going on in this arena. First, the strength in the U.S. dollar is not only curtailing trade overseas, but is also directly influencing trade with Canada and Mexico. Last week, the dollar appreciated more than 10 percent against the Canadian dollar. That hasn’t helped trade to the north, especially when the Canadian wheat and barley harvest was much better than past years’ averages. EP
Regional Ethanol Prices (Monthly averages in cents per gallon)
REGION
SPOT
BULK TRUCK (rack)
RETAIL
West Coast
280.724
217.67
247.574
Midwest
197.803
210.69
237.902
East Coast
206.901
----
242.280 SOURCE: OPIS
Regional Gasoline Prices (Monthly averages in cents per gallon)
REGION
SPOT
RACK
RETAIL
West Coast
252.902
269.804
356.094
Midwest
249.335
258.743
339.963
East Coast
229.796
253.815
350.605 SOURCE: OPIS
DDGS ($/ton) LOCATION
OCT. 2008
SEPT. 2008
Minnesota
130
140
95
California*
172
188
140
Chicago
125
120
105
Buffalo, N.Y.
150
147
114
Central Florida
150
176
126
*Central Valley
SOURCE: CHS Inc.
Corn Futures Prices DATE
Ethanol Report By Sean Broderick, CHS Inc.
(December corn, $/bushel)
HIGH
LOW
Sept. 19, 2008
4.27 3/4
4.06 1/2
4.11
Aug. 19, 2008
5.64 1/2
5.35 1/2
5.58 1/2
Sept. 19, 2007
3.68 1/2
3.59
CLOSE
3.64 1/4
Demand questions loom large Oct. 17—The world changed with the meltdown on Wall Street following the failures of a string of big investment houses. Just as suddenly, worry over a weakening global economy helped slash crude oil prices as fears of faltering fuel demand took center stage at home and abroad. In that environment, which generated crude futures losses to less than half its summer peak and cut nearmonth RBOB prices more than 30 percent from mid-September to midOctober, ethanol markets generally put buyers in the driver’s seat. Chicago ethanol trading on either side of $1.70 per gallon for near-term deals by late October ran nearly 44 cents cheaper than it left September. Ethanol blending economics faltered some, but remained well in
positive territory. Ethanol production continued expanding to record highs, and there was growing concern that gasoline demand—down by doubledigits on a year-on-year basis by some marketer estimates—could weigh on ethanol blending growth. Anecdotal signs included ethanol backing up at some terminals as blending slowed and some credit issues that stunted trading. The U.S. DOE cut its projected growth for biofuel blending next year, assuming a softer economy. Also, weekly DOE data had conventional gasoline blended with ethanol down 7.6 percent week-to-week, at 3.151 million barrels per day. While still 45 percent more than one year ago, it was the lowest level since late August. EP
SOURCE: FCStone
Cash Sorghum Prices ($/bushel) OCT. 17, 2008 SEPT. 19, 2008 OCT. 25, 2007 3.08 3.03 3.19 3.23 3.15 1.03
Superior, Neb. Beatrice, Neb. Sublette, Kan. Salina, Kan. Triangle, Texas Gulf, Texas
4.47 4.42 4.54 4.58 4.57 5.44
3.66 3.54 3.32 3.71 3.33 4.21 SOURCE: Sorghum Synergies
Natural Gas
($/MMBtu)
OCT. 2008
SEPT. 2008
OCT. 2007
NYMEX
6.83
7.50
7.37
N. Ventura
6.21
6.19
6.89
Calif. Border
4.90
5.70
7.03
SOURCE: U.S. Energy Services Inc.
U.S. Ethanol Production Output July 2008
614,000*
June 2008
585,000
July 2007
421,000
*all-time monthly high
ETHANOL PRODUCER MAGAZINE DECEMBER 2008
OCT. 2008
(barrels/day)
SOURCE: U.S. energy Information Administration
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