DDGS Weekly Market Report February 28 th, 2014

Transcription

1 DDGS Weekly Market Report February 28 th, 2014 General Comments: INSIDE THIS ISSUE 1. Market Outlook 2. Additional Comments 2. DDGS Reference Prices 3. Ocean Freight Markets 4. Latest Export Figures 7. FOB US Gulf DDGS & Corn Prices 8. Council News Buyers of DDGS should note that a number of the ethanol plants have reduced their run time to about 65 percent of capacity. There is some competitive pricing among merchandisers for the containerized DDGS movement into Shanghai, but overall this week there was a consistent $10 per MT increase in spot prices for containerized DDGS. Domestic spot deliveries of DDGS by rail experienced greater price increases due to logistical constraints, which are largely related to harsh winter weather causing backlogs. Backlogs have the potential to ripple into future pricing, and are part of the reason for even greater increases in the cost of domestic DDGS delivered by rail one to two months out. Indeed, domestic rail delivered DDGS prices for April and May both increased by more than $20 per MT this week. This may have created somewhat of a pricing opportunity for foreign buyers of containerized DDGS which were $10 higher in the spot market, followed by a $5 increase for April and no increase for May. Buyers of DDGS should note that a number of the ethanol plants have reduced their run time to about 65 percent of capacity. This rate is as slow as they can go without fouling things up with their fermentation process or freezing due to the cold. Such reduced production is necessary because the slowing availability of rail cars and trucks is causing plants to get plugged up with ethanol. As well, the severe winter weather is causing natural gas prices to temporarily explode higher in some regions of the country. For example, one merchandiser reported that the price of natural gas that could be purchased at the beginning of the month at $4-5 per dekatherm traded today at $70 per dekatherm. Such extreme pricing is a temporary condition, but it can easily influence future DDGS prices. Another factor to consider is the declining prices of containerized DDGS into April and May (please see table). That pricing structure is exactly the opposite of the how corn futures are currently priced. Therefore, the assumption is that DDGS merchandisers are seeking to incentivize buyers of containerized DDGS to extend purchases into the future by offering a favorable pricing structure. 1

2 Additional Comments: The winter weather that has already caused some logistical delays may continue to influence ethanol deliveries for another week, but recent increased ethanol prices do not seem fully attributable to just transportation difficulties. Strong demand also appears to be an underlying factor. That notion is supported in part from the fact that total U.S. ethanol stocks for the week ending February 21 were 17 million barrels, down from the prior week s total stocks level of 17.2 million barrels. Some ethanol inventory could be waiting in railcars for transportation out of the Midwest to coastal regions, but a weekly decline in stocks of 200,000 barrels is hard to attribute to delayed logistics when production is increasing. Strong demand is also implied by the fact that there was a slight increase in weekly ethanol production to 905,000 bpd for the past week, but ethanol stocks remain more than 12 percent below the year-ago level. Having a weekly production level that is 11.5 percent above the year-ago level and a stocks level that is 12.1 percent below the year-ago level is an indicator of demand. The assumption of strong demand for ethanol is further validated by the consistent weekly increases in the differential between corn and co-product processing values across the Corn Belt. Differentials for this week ending February 28 are the following: Illinois differential is $5.36 per bushel, in comparison to $4.54 the prior week and $1.90 a year ago. Iowa differential is $3.27 per bushel, in comparison to $2.86 the prior week and $1.61 a year ago. Nebraska differential is $3.05 per bushel, in comparison to $2.78 the prior week and $1.93 a year ago. South Dakota differential is $3.67 per bushel, in comparison to $3.09 the prior week and $1.86 a year ago. DDGS reference prices as per survey report (current week): DDGS Price Table: February 28, 2014 (USD/MT) (Quantity, availability, payment and delivery terms vary) Delivery Point Quality Min. 35% Pro-fat combined Mar Apr May Barge CIF New Orleans FOB Vessel GULF Rail delivered PNW Rail delivered California Mid-Bridge Laredo, TX ft. Containers to South Korea (Busan) ft. Containers to Taiwan ( Kaohsiung ) ft. Containers to Philippines ( Manila ) ft. Containers to Indonesia ( Jakarta ) ft. Containers to Malaysia (Port Kelang) ft. Containers to Vietnam (HCMC) ft. Containers to Japan (Yokohama) ft containers to Thailand (LCMB) ft Containers to Shanghai, China KC & Elwood, IL Rail Yard (delivered Ramp) Source: WPI, *Prices are based on offer indications only; terms of delivery, payment and quality may vary from one supplier to another, impacting the actual value of the price. 2

3 Ocean Freight Market References: Bulk Freight Indices for HSS Heavy Grain, Sorghum and Soybeans* Route and Vessel Size Current Week Change from (USD/MT) Previous Report Remarks 55,000 U.S. Gulf-Japan $53.00 Unchanged Handymax at $54.00/MT 55,000 U.S. PNW- Japan $28.00 Unchanged Handymax at $29.00/MT 55,000 U.S. Gulf China $51.00 Unchanged PNW to China $26.00 Unchanged North China 25,000 U.S. Gulf- Veracruz, México $20.00 Unchanged 3,000 MT daily discharge rate 35-40,000 U.S. Gulf- Veracruz, $17.50 Unchanged Deep draft and 8,000 MT México per day discharge rate. 25/35,000 U.S. Gulf- East Coast $25.00 Unchanged West Coast Colombia at Colombia, Argentina $37.00 Unchanged $ ,000 U.S. Gulf - Guatemala $35.00 Unchanged Acajutla/Quetzal - 8,000 out 25-30,000 U.S. Gulf Algeria $43.00 Unchanged 8,000 MT daily discharge $45.00 Unchanged 3,000 MT daily discharge 25,000 U.S. Gulf-Morocco $45.00 Unchanged 5,000 discharge rate 55,000-60,000 MT 55,000 U.S. Gulf Egypt $38.00 Up $0.50 St. Lawrence to Egypt PNW to Egypt $39.00 Up $1.00 $ ,000 U.S. Gulf Europe Rotterdam Brazil, Santos China $23.00 Up $0.50 Handymax at +$1.50 more $42.00 $ ,000 Argentina-China $47.50 Upriver with Top-Off Source: O Neil Commodity Consulting *Numbers for this table based on previous night s closing values. Down $0.50 Down $0.50 Down $0.50 Latest Export Figures from GATS in Metric Tons (MT): ***DECEMBER 2013*** 54-58,000 Supramax- Panamax 60-66,000 Post Panamax Notes: 1. Data Source: Department of Commerce, U.S. Census Bureau, Foreign Trade Statistics 2. (*) denotes a country that is a summarization of its component countries. 3. Users should use cautious interpretation on QUANTITY reports using mixed units of measure. QUANTITY line items will only include statistics on the units of measure that are equal to, grouped commodities. Or are able to be converted to, the assigned unit of measure of the grouped commodities. 4. Product Group : BICO-HS10 3

4 COUNTRY 2010 YR 2011 YR 2012YR 2013YR % Change Net Change World Total 9,004,669 7,674,559 7,419,054 9,712, ,293,394 China 2,528,759 1,372,592 2,160,523 4,488, ,327,746 Mexico 1,650,908 1,774,457 1,498,544 1,284, ,033 Canada 1,042, , , , ,172 Korea, South 506, , , , ,775 Japan 217, , , , ,612 Vietnam 430, , , , ,294 Turkey 374,220 61, , , ,393 Thailand 291, , , , ,489 Taiwan 144, , , , ,128 Indonesia 251, , , , ,062 Ireland 275, ,045 89, , ,865 Israel(*) 162, , , , ,324 Egypt 80, ,840 97, , ,426 Morocco 133, , , , ,612 Colombia 78,027 87,797 87,556 93, ,171 United Kingdom 115, ,501-87,115 87,115 Costa Rica 89,737 93,493 82,166 70, ,741 Philippines 112, , ,794 61, ,083 Guatemala 71,413 78,271 81,732 51, ,173 Cuba 133, , ,548 50, ,360 Malaysia 38,060 59,912 61,836 47, ,304 Honduras 30,668 41,383 34,913 38, ,858 El Salvador 40,667 48,504 49,992 37, ,132 Jordan 33 6,286 9,537 20, ,282 Cambodia 4,877 7,826 11,806 19, ,852 United Arab Emira - 1,306 5,431 19, ,676 Jamaica 5,801 12,582 16,305 17, ,270 Bangladesh 6,046 5,217 6,422 16, ,655 Peru 5,015 11,938 10,820 14, ,426 Ecuador ,246 13,246 Spain 39, ,221 15,626 12, ,910 4

5 COUNTRY 2011 YR 2012YR Jan/Dec 2012 Jan/Dec 2013 % Change Net Change Panama 13,853 11,412 16,054 10, ,869 Chile 65,585 79,570 14,720 5, ,816 Oman , ,319 Nicaragua 5,445 13,422 10,103 2, ,475 Qatar ,507 2,507 Portugal 13,005 23,595 3,100 2, Dominican Repub 13,975 2, , ,244 Algeria ,368 1,368 Saudi Arabia - 16,115 10,730 1, ,715 Macau Hong Kong , ,344 Haiti Georgia Singapore 1,989 2, Ghana Sri Lanka Pakistan Bahamas, The Brunei Denmark(*) France(*) 7,346 59, India Italy(*) - 12, Kenya Kuwait Kosovo Lebanon Netherlands - 32, Nepal New Zealand(*) Russia 6, Switzerland(*)

6 3/1/2012 4/1/2012 5/1/2012 6/1/2012 7/1/2012 8/1/2012 9/1/ /1/ /1/ /1/2012 1/1/2013 2/1/2013 3/1/2013 4/1/2013 5/1/2013 6/1/2013 7/1/2013 8/1/2013 9/1/ /1/ /1/ /1/2013 1/1/2014 2/1/2014 3/1/2014 Dollars Per Metric Ton FOB U.S.A. Gulf DDGS & Corn prices (MT): FOB US GULF DDGS & CORN PRICES $ $ $ $ $ $ $ $50.00 $0.00 -$50.00 Corn FOB Gulf Spot Delivery DDGS FOB Gulf Spread FOB DDGS VS CORN Poly. (DDGS FOB Gulf) $ $ $ $ Date 6

7 Council News: Officially certified, 46 plants with Ministry of Agriculture Peoples Republic of China: Patriot Renewable Fuels, LLC Marquis Energy LLC Marquis Energy Wisconsin LLC Lincolnway Energy LLC (Hawk Gold) Platinum Ethanol LLC (Hawk Gold) Louis Dreyfus Norfolk, LLC 9 plants of Valero Renewable Fuels Company, LLC (including their plants in Albert City, Albion, Aurora, Bloomingburg, Charles City, Fort Dodge, Hartley, Linden, and Welcome) Big River United Energy, LLC (Hawk Gold) Big River Resources West Burlington, LLC (Hawk Gold) Big River Resources Boyceville, LLC (Hawk Gold) Big River Resources Galva, LLC (Hawk Gold) ADM Columbus, ADM Cedar Rapids Badger State Ethanol, LLC Homeland Energy Solutions, LLC One Earth Energy LLC (AgMotion) Illinois River Energy LLC (AgMotion) Bio-Nutrition International, Inc. USA Alltech Inc. USA Vitech Bio-Chem Corporation, USA Guardian Energy, LLC Golden Grain Energy, LLC NEW PLANTS below: AL-Corn Clean Fuel Glacial Lakes Energy ACE Ethanol Stanley Guardian Lima, LLC Aberdeen Energy 11 plants from POET (including their plants in Mitchell, Jewell, Ashton, Corning, Hanlontown, Gowrie, Groton, Hudson, Chancellor, Bog Stone, Emmetsburg) 7