DDGS prices drop below 5-year average as US production rebounds

By Jane Byrne

- Last updated on GMT

© GettyImages/nespix
© GettyImages/nespix
DDGS prices in the US have finally dipped below the five-year average, a relief for the feed industry after three years of elevated prices around $200 per short ton, notes a report.

Production of Distillers Dried Grains with Solubles (DDGS) is now on track to reach pre-COVID five-year averages, as both ethanol and DDGS production recover from the pandemic's impact on output.

The increased supply of DDGS is easing pressure in the US feed market, according to the latest Rabobank North American agribusiness review. It highlighted the strain high corn and meal prices have placed on feed cost management.

US DDGS exports are also experiencing strong growth, rising by 15% from January to August compared to the same period last year, with Mexico remaining the largest buyer. Exports to Mexico expanded by 18% year-on-year, reinforcing its status as a critical market.

The drop in DDGS prices aligns with declines across other agricultural commodities, driven in part by higher ethanol production and its influence on related energy markets.

Soybean market faces challenges  

Meanwhile, the US soybean market, recently buoyed by its use in renewable diesel, faces new headwinds, reads the Rabobank report.

Overproduction of renewable diesel beyond compliance mandates began in 2023 and has intensified this year, resulting in a decline in Renewable Identification Numbers (RIN) values - the credits refiners earn under the US Renewable Fuel Standards (RFS) program for producing or importing biofuels - and a drop in demand for soybean oil.

Additionally, low-carbon-intensity (CI) alternatives like used cooking oil and tallow—primarily imported—are capturing a larger share of the renewables market.

Rabobank analysts also noted that the importance of the EU market for US soy and the US’s positioning as a climate-smart soybean producer was impacted by the EU's decision to delay the EU Deforestation Regulation (EUDR) at the request of the USDA and other stakeholders. This decision led to a drop in US meal prices, contrasting with more resilient spot prices in Brazil’s soybean meal market. The EU rules had helped bolster demand for US soy meal over South American supplies.

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