TMR mixing

by Amanda Smith, Associate Editor

Most by-product feed markets tend to track corn and soybean meal prices. Producers, therefore, saw little urgency to secure supplies as the price of corn fell during the summer months. But, while corn continued its descent, many by-products reversed course and, in some cases, rose dramatically. John Kappelman, a former dairy farmer and now a trader with Cereal Byproducts Company, explained why some by-products have bucked this trend.

Corn gluten feed: New crop corn gluten feed prices were falling ahead of sagging corn prices. The market rose rapidly as some wet millers pulled all feed offers off the market and others boosted pellet prices to $230 per ton. Wet millers reduced their daily grind of corn 60 to 70 percent as the demand for high fructose corn syrup declined, replaced by sugar. But supplies may loosen as export demand is filled.

Canola: For much of summer, canola meal was offered at $100 to $110 on a per-ton basis under the fall and winter CME soybean meal market. Due to Canadian rail strikes and shortage of rail cars to ship product, the canola market has become extremely short. The basis price has strengthened with growing soybean meal export demand.

Cotton: The fall cotton harvest was 26 percent smaller than in 2012. The crop was geographically skewed with much less available in the Midsouth region with normal supplies in the Southeast and Texas. This has posed large transportation problems for this year's cottonseed crop.

Distillers: Chinese exports of DDG will likely hit record highs this year, potentially growing by almost 60 percent. Distribution is also disrupted by rail car shortages to move product west and has grown the demand for truck freight.

For more of Kappelman's insight on the by-product markets and the implications on U.S. soil, read page 49 of your January 25, 2014, issue.

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