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DDGS Market Still Solid, But Demand Easing

Prices for dried distillers grains with soluble (DDGS) have been holding steady and in most cases trending higher, but high prices are pushing down demand for the ethanol byproduct.

Lower cattle numbers in the country have meant less DDGS being used, especially in Alberta, said Ryan Slozka, senior commodity trader with Rycom Trading Ltd. in Kelowna, B.C.

“Demand in Alberta has been slow,” he said. “Cattle numbers aren’t what we expected. A lot of feedlots didn’t get in as many cattle as they had anticipated. Some of the cattle were a bit on the lighter side, so it’s taking longer for them to finish out and they can’t start on their heavy diets until later on.”

Producers have been finding other, and more affordable ways to feed their livestock, said Jerry Klassen of GAP Grains in Winnipeg.

“With the high corn prices, DDGS have been trading at a significant premium to barley, and so it (barley) is much more competitive,” Klassen said.

Current prices DDGS in Alberta is about $252 per metric ton in Alberta, which compares to values around $165 per metric ton for western barley, said Slozka.

With the uncertainty in the corn market, Slozka said he wouldn’t be surprised to see DDGS continuing their trend higher for the next little bit, which would likely continue to deter cattle producers from buying.

“Right now, patience is being kind to the seller, as there is too much unknown on the corn side,” he said. “We are still seeing very low ending corn stocks. They have predicted an increase in acres, but it has not been planted – or harvested, for that matter – yet.”

Klassen echoed that statement, saying, “As long as corn is up at these higher levels, DDGS will be as well.”

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