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DDGS prices climbing in Western Canada

(Commodity News Service Canada) — Prices for dried distillers grains with solubles (DDGS), the byproduct of ethanol production, have been climbing higher of late, and the trend is expected to continue into 2011.

Ryan Slozka, senior commodity trader with Rycom Trading Ltd. at Kelowna, B.C., said the higher prices are because corn and barley prices have also been rising.

“DDGS were really quiet until a few weeks ago, and then barley made a big jump, right around the American Thanksgiving, and everyone came to the door and started buying,” Slozka said. “We saw DDGS climb by about C$15 per tonne, with barley up about C$10 per tonne.”

Good demand for DDGS has also been a factor in prices going higher.

“The feedlots across the Canadian Prairies are still using DDGS, and most are rationing at about 20 per cent, some guys as high as 30 per cent, so still some good volumes there,” Slozka said.

About 20 per cent is about normal as far as rations for livestock are concerned, he said.

While demand from the cattle sector has been quite strong, Slozka said, swine demand in central Alberta was lagging behind.

“Swine producers have pulled it out of their rations, and a lot of it has to do with their location,” he said. “They are mostly in central Alberta, and the barley and wheat tend to be a bit cheaper in those areas.”

Despite the lack of usage from swine producers in central Alberta, Slozka expects to see the price of DDGS increase as the winter continues.

“I think we are going to see more demand. January is one of the peak demand seasons in North America. As temperatures get colder, the animals get more feed, and I still think corn has some strength,” he said.

Slozka said DDGS were currently being sold for anywhere from C$195 to $225 per tonne across Western Canada.

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