Corn worth and Dry Distiller’s Grains have a tendency to maneuver in the identical path. There are years the place that is the exception, together with 2017 and 2020. When analyzing weekly Kansas Metropolis corn worth knowledge and 10% Dry Distillers Grain worth knowledge from Might 2006 to March 2022, the correlation between the 2 costs collection is 0.86, indicating DDG and corn costs have a tendency to maneuver in the identical path.
A regression evaluation utilizing the info was performed to seek out which worth collection indicated a relationship with DDG. Weekly excessive protein Kansas soybean meal worth, Kansas corn worth, a weekly variable indicating seasonality and a variable indicating 12 months had been included within the evaluation. The mannequin exhibiting the very best match, with 81% of the DDG worth variability defined included all of the variables. The outcomes point out that when Kansas Metropolis corn worth has a 1% change, the Kansas DDG worth will change by 0.77%. Subsequently, a $0.10 change in 2021 Kansas Metropolis corn worth per bushel ends in a $1.82 change in Kansas DDG worth per ton. These outcomes are related, though barely much less variable, to what Michael Langemeier discovered utilizing the Central Illinois costs.
Wanting ahead into 2023 to find out DDG costs requires utilizing projected corn and soybean meal costs.Utilizing Chicago Board of Commerce futures costs for 2023, corn costs might be between $6.25 and $7.00 per bushel, whereas soybean meal costs might be between $380 and $410 per ton.Outcomes from the regression mannequin point out that Kansas DDG costs might be between $250 and $280 per ton.
Understanding how these worth modifications have an effect on profitability requires an understanding of the displacement ratio between corn and DDGs.There are giant variations in these ratios, relying on location and complexity of diets. For instance, Kirk Klasing discovered that including 30% DDGs in beef diets displaces about 24% of corn within the weight-reduction plan within the excessive plains, however solely displaces about 2% of corn within the West the place diets differ. How a lot the variability in DDG worth impacts profitability will rely on the least value ration used.
The Markets
The November WASDE report might be launched on Wednesday, November 9. Buying and selling will possible sluggish in anticipation of the report. Corn harvest will possible be close to 85% within the afternoon Crop Progress Report on November 7. The largest situation is river visitors continues to have challenges transferring corn and soybeans.
Beef demand has been robust. Fed cattle costs began the week robust, with stay cattle contracts up. Packers want cattle. The Alternative beef cutout worth completed final Friday at $263.75, up $2.54 on the week. The estimated harvest whole final week was 667,000, and that was 1,000 head lower than the week prior. Feeder cattle quantity has decreased, particularly in these areas of the nation most impacted by drought.
Supply: College of Wisconsin-River Falls
