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Market Matters Blog           05/20 10:40
Lower Mississippi River Still in Flood Stage; Barge Movements Remain Slow
DTN Weekly DDG Average Price Steady
US Surface Transportation Board Getting Back on Track
DTN Weekly DDG Average Price Falls Again
Mississippi River Still on a Rampage; St. Louis Harbor Shut to All Vessels
DTN Weekly DDG Average Price Lower Again
Second Crest Recorded for Mississippi River in St. Paul, Minnesota 
DTN Weekly DDG Average Price Down $6 Per Ton
If History Repeats, Sizable Rallies Could Be in Store
DTN Weekly DDG Average Price Down Five Cents

******************************************************************************
Lower Mississippi River Still in Flood Stage; Barge Movements Remain Slow

   The good news for the week was the reopening of the St. Louis Harbor to 
barge traffic, but it could close again as flooding continues with more rain 
expected to add to the misery there all the way down to New Orleans.

   The St. Louis Harbor reopened to barge traffic on May 16, but the latest 
predictions are that it could rise again and reach 38 feet on May 25-26. If 
that happens, the harbor would close from mile 179-184 with long-term 
projections saying it could last until June 5-9, according to American 
Commercial Barge Line (ACBL). Relentless rains in the Midwest and Delta region 
are creating havoc on the already swollen Mississippi River. Mississippi River 
forecasts are based on rainfall that has occurred and that which is forecast to 
occur over the next 48 hours, according to the National Weather Service.

   On the Upper Mississippi River, all closed locks and two bridges have been 
reopened. But long-term projections are showing the Champ Clark Bridge at 
Louisiana, Missouri, possibly closing again on May 20 as a result of the 
upcoming rain event and remaining closed until June 8-13, according to ACBL. 
Locks 16, 17, and 20 are also predicted to close again around May 20, and are 
expected to remain closed until June 6-8 if more flooding occurs.

   Farther north in St. Paul, Minnesota, they are hoping for more barges to 
show up now that the locks are open. The first tow of the season, pushing 12 
barges, arrived on April 24. The lock closures south of the St. Paul District 
have prevented any other tows from reaching St. Paul. That has been evident in 
weekly barge rates published by USDA in that there are no freight rates quoted 
for this portion of the river as of May 14. There have also been incidents of 
shoaling in the St. Paul District as water levels receded. Shoaling is a result 
of the flooding depositing silt, creating sandy elevations in channels, which 
could cause grounding of vessels unless dredged.  

   On the Illinois River, heavy rains have created several no-wake restrictions 
that will be in place until May 22, slowing transits in those areas until it is 
lifted. Current projections have the Hardin, Illinois, area closing again on 
May 24-25, with concerns of the river overtopping the levees, according to 
ACBL. In addition, tows coming off the Illinois River in to St. Louis are 
restricted to 12 barges.

   In Cairo, Illinois, the Ohio River was at 46.7 feet on Sunday, May 19, 
slightly below the moderate flood stage of 47 feet. The Mississippi River at 
Cape Girardeau is in moderate flood stage at 41.2 feet and forecast to slowly 
fall before rising next weekend, according to the NWS. The level at Thebes, 
Illinois, is currently in moderate flood stage at 39.6 feet and forecast to 
slowly fall before slightly rising next weekend. 

   LOWER MISSISSIPPI RIVER STILL FLOODING

   The Mississippi River at Vicksburg, Mississippi, continues to be above flood 
stage, and on Sunday, May 19, the river was at 49.8 feet, very close to major 
flood stage of 50 feet. Tows are only allowed to pass through the Vicksburg 
Bridge (LMR Mile 435) during the daylight to avoid any accidents. 

   In Baton Rouge, the second opening of the Bonnet Carre Spillway became the 
first time the spillway was opened twice during the same flood event. After 
heavy rains in the Mississippi and Ohio River valleys increased river stages, 
the USACE opened the spillway on Feb. 27, 2019, in order to keep the volume of 
the Mississippi River flows at New Orleans from exceeding 1.25 million cubic 
feet per second (cfs). On April 11, the spillway was closed, but river stages 
remained high. Heavy rains across the valley prompted a second opening of the 
spillway May 10 and by May 16, the USACE New Orleans District reported that 
there were 138 bays open and holding.

   While many cities along the river have come close to or have broken water 
level records, perhaps the biggest record to be broken will be in Baton Rouge, 
Louisiana. In 1927, the river stayed above flood stage in Baton Rouge for 135 
days, and on May 21, it will surpass this mark and become the longest ever on 
record that Baton Rouge has been in flood stage. In fact, current predictions 
have the Mississippi River staying above flood stage of 35 feet into at least 
early June. As of May 19, the river there was at 43.83 feet and is expected to 
crest this week at 44 feet.

   In its weekly Grain Transportation Report, USDA noted that, as of May 11, 
calendar-year-to-date grain barge tonnages through the locking portions of the 
Mississippi, Ohio and Arkansas rivers, were 8.8 million tons. This is 32% below 
the three-year average and 24% lower than last year. 

   "For most of 2019, above-average rainfall has caused high water conditions 
that have disrupted traffic. Typically, by mid-May, there is continuous barge 
traffic (both up and down river) on the Mississippi River between 
Minneapolis/St. Paul, Minnesota, and the Gulf of Mexico. This year, navigation 
has been blocked by the closure of several locks above St. Louis and by low 
bridge clearances in certain areas due to high water," said USDA.

   Now, imagine what this has meant for farmers who rely on the rivers to move 
their soybeans and corn to market. They are already feeling the negative 
financial effects of the long trade war between China and the U.S. The dispute 
has created a loss of U.S. exports to China, causing farmers to have to store 
more of their grain, especially soybeans, longer than they normally do. This 
means that marketing opportunities have been lost and some of the stored 
soybeans have gone out of condition, downgrading the quality.

   As the flooding continues to hamper or slow river terminals from loading 
barges to head down to the Gulf for export, some farmers are unable to haul 
grain to their river elevators. It has also stopped barges from moving to the 
north -- barges that would normally be bringing fertilizer to farmers for 
spring planting. Many farmers have said that not only is this causing a rise in 
fertilizer prices, but many suppliers who can't get more product are rationing 
supplies.

   It's been a rough year so far for all ag-related businesses, and it isn't 
over yet, according to the current river forecasts.

   Here is a link to the NWS north-central river forecast: 
https://www.weather.gov/ncrfc/ 

   Here is a link to the NWS Lower Mississippi River forecast: 
https://www.weather.gov/lmrfc/ 

   Mary Kennedy can be reached at mary.kennedy@dtn.com  

   Follow her on Twitter @MaryCKenn

******************************************************************************
DTN Weekly DDG Average Price Steady

   OMAHA (DTN) -- The domestic distillers dried grains (DDG) average spot price 
from the 40 locations DTN contacted was steady on average this week versus the 
prior week, at $121 per ton for the week ended May 16. Prices were mixed and 
the strength in the corn market at the end of the week was supportive.

   DDG prices may find pressure if the corn market reverses lower as ethanol 
plant production continues to rise while demand slows. However, with delays in 
corn planting continuing as heavy rain falls on already soaked fields in 
Midwest over the next seven days, it is unlikely corn prices will fade. 

   The EIA said Wednesday that during the week ended May 10, ethanol plant 
production ramped up 15,000 barrels per day (bpd), or 1.4%, to 1.0151 million 
bpd, the fourth highest weekly output rate in 2019, while 7,000 bpd less than a 
year ago.

   Based on the average of prices collected by DTN, the value of DDG relative 
to corn for the week ended May 16 was at 89.39% and is below the five-year 
average. The value of DDG relative to soybean meal was at 40.08%. The cost per 
unit of protein for DDG was $4.48, compared to the cost per unit of protein for 
soybean meal at $6.36. 

   The flooding along the Mississippi River has been plaguing sellers who ship 
DDGS for export on the river down to the Gulf. The St. Louis Harbor opened on 
May 16, along with most of the locks above there that had been closed because 
of flooding. The USACE in St. Paul has noted shoaling is creating problems 
above mile 615, closing parts of the river to be dredged. The Lower Mississippi 
River in to the Gulf is still in flood stage, and expectations are this will 
continue in to June, as more rain this weekend will add to the high water.


ALL PRICES SUBJECT TO CONFIRMATION             CURRENT        PREVIOUS  CHANGE
COMPANY       STATE                           5/16/2019       5/9/2019
Bartlett and Company, Kansas City, MO (816-753-6300)
              Missouri              Dry          $130           $130      $0
                                    Wet          $68            $70       -$2
Show Me Ethanol LLC, Carrollton, MO (660-542-6493)
              Missouri Subject      Dry          $130           $130      $0
                                    Wet          $60            $60       $0
CHS, Minneapolis, MN (800-769-1066)
              Illinois              Dry          $130           $125      $5
              Indiana               Dry          $130           $125      $5
              Iowa                  Dry          $115           $110      $5
              Michigan              Dry          $135           $130      $5
              Minnesota             Dry          $115           $110      $5
              North Dakota          Dry          $120           $115      $5
              New York              Dry          $145           $140      $5
              South Dakota          Dry          $110           $105      $5
MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253)
              Kansas                Dry          $120           $115      $5
POET Nutrition, Sioux Falls, SD (888-327-8799)
              Indiana               Dry          $125           $130      -$5
              Iowa                  Dry          $125           $120      $5
              Michigan              Dry          $120           $125      -$5
              Minnesota             Dry          $125           $125      $0
              Missouri              Dry          $130           $125      $5
              Ohio                  Dry          $130           $130      $0
              South Dakota          Dry          $125           $125      $0
United BioEnergy, Wichita, KS (316-616-3521)
              Kansas                Dry          $115           $125     -$10
                                    Wet          $45            $55      -$10
              Illinois              Dry          $131           $135      -$4
              Nebraska              Dry          $115           $125     -$10
                                    Wet          $45            $55      -$10
U.S. Commodities, Minneapolis, MN (888-293-1640)
              Illinois              Dry          $120           $120      $0
              Indiana               Dry          $120           $120      $0
              Iowa                  Dry          $115           $115      $0
              Michigan              Dry          $120           $120      $0
              Minnesota             Dry          $110           $110      $0
              Nebraska              Dry          $110           $110      $0
              New York              Dry          $140           $140      $0
              North Dakota          Dry          $120           $120      $0
              Ohio                  Dry          $130           $130      $0
              South Dakota          Dry          $110           $110      $0
              Wisconsin             Dry          $115           $115      $0
Valero Energy Corp, San Antonio Texas     (210-345-3362)     (210-345-3362)
              Indiana               Dry          $120           $125      -$5
              Iowa                  Dry          $115           $120      -$5
              Minnesota             Dry          $105           $110      -$5
              Nebraska              Dry          $110           $110      $0
              Ohio                  Dry          $135           $135      $0
              South Dakota          Dry          $120           $125      -$5
              California            Dry          $177           $175      $2
Western Milling, Goshen, California (559-302-1074)
California    Dry                   $190         $190            $0
*Prices listed per ton.
              Weekly Average                     $121           $121      $0
The weekly average prices above reflect only those companies DTN
collects spot prices from. States include: Missouri, Iowa, Nebraska,
Kansas, Illinois, Minnesota, North Dakota, South Dakota, Michigan,
Wisconsin and Indiana. Prices for Pennsylvania, New York and
California are not included in the averages.

   **


VALUE OF DDG VS. CORN & SOYBEAN MEAL
Settlement Price:                         Quote Date     Bushel    Short Ton
Corn                                      5/16/2019      $3.7900   $135.36
Soybean Meal                              5/16/2019      $301.90
DDG Weekly Average Spot Price             $121.00
DDG Value Relative to:                                   5/16      5/9
Corn                                                     89.39%    98.34%
Soybean Meal                                             40.08%    42.41%
Cost Per Unit of Protein:
DDG                                                      $4.48     $4.48
Soybean Meal                                             $6.36     $6.01
Notes:
Corn and soybean prices take from DTN Market Quotes. DDG price
represents the average spot price from Midwest companies
collected on Thursday afternoons. Soybean meal cost per unit
of protein is cost per ton divided by 47.5. DDG cost per unit
of protein is cost per ton divided by 27.

   Mary Kennedy can be reached at mary.kennedy@dtn.com 

   Follow her on Twitter @MaryCKenn

******************************************************************************
US Surface Transportation Board Getting Back on Track

    Since Oct. 1, 2017, the U.S. Surface Transportation Board (STB) has been 
looking lean, with only two commissioners on hand. When President Donald Trump 
took office, he nominated Commissioner Ann D. Begeman, a Republican, to become 
acting chairman, with former chairman, Democrat Dan Elliot, becoming vice 
chairman. At that time, the STB consisted of three commissioners: Begeman and 
Elliot, along with Democrat Ann Miller. 

   On Sept. 30, 2017 after former STB chairman and then STB member Dan Elliott 
resigned, only two members remained. While there is no quorum requirement for 
voting at the STB, meaning Begeman and Miller could continue to decide cases, a 
voting tie would be considered a negative result. However, at the NGFA 
Transportation conference in July 2018, Begeman told participants that 
rulemaking issues were on hold until the new members are confirmed, because 
they "need to be decided by all five members, not just two." The 2015 Surface 
Transportation Board Reauthorization Act created two new seats to make the STB 
a five-person agency, but since that time there have been no White House 
nominations under Obama or Trump to fill the extra two vacancies.

   In March 2018, President Trump did nominate two Republicans to be on the 
Board: Patrick Fuchs, a senior staff member of the Senate Commerce Committee 
and Michelle Schultz, associate general counsel for the Southeastern 
Pennsylvania Transportation Authority (SEPTA). On July 6, 2018, President Trump 
nominated Martin J. Oberman, a Democrat and attorney from Chicago. All were 
awaiting review and confirmation by the Senate.

   On Jan. 1, 2019, the day after former Commissioner Deb Miller's term 
expired, Begeman became the only commissioner on the STB. Then, on Jan. 3, the 
Senate confirmed two new STB commissioners, Fuchs and Oberman, but the Senate 
did not advance the nomination of Schultz, thus leaving the STB with only three 
commissioners. 

   NEW BOARD GETS TO WORK ON UNFINISHED BUSINESS

   There have been many issues left hanging for years as the STB went through 
changes. One of them, the rail rate case process, has been under discussion 
since late 2013. Begeman spoke at the July 25, 2018, National Grain and Feed 
(NGFA) Ag Transportation Summit in Washington, D.C, and said that most shippers 
are painfully aware that the current methodology used to challenge freight rail 
rates is unreasonable, time consuming and extremely costly for a shipper to 
file. 

   In Jan. 2018, Chairman Ann Begeman formed a rail rate reform task force to 
recommend improvements to the STB's existing rate review processes and to 
propose new rate-review methodologies that are more attuned to the realities of 
the current transportation world. Sixteen months later, on April 29, 2019, the 
task force completed a staff report providing its recommendations for possible 
changes to the rate review methodologies and processes used by the STB. 

   The STB simultaneously made the report available to the public: 
https://www.stb.gov/__85256593004F576F.nsf/0/A35993C296D44A93852583EB0050D594?Op
enDocument

   The National Grain and Feed Association (NGFA) issued a press release 
commending the STB for issuing the completed staff report of its rail rate 
reform task force. "Based upon an initial review, the NGFA believes the task 
force has produced a thoughtful, succinct and good-faith document that contains 
an accurate portrayal of the systemic problems with each of the STB's existing 
methodologies and procedures available to rail customers to exercise their 
legal right to challenge unreasonable rail rates." 

   The NGFA said it is "evident from the report that the task force listened 
and earnestly evaluated comments and input made by the NGFA and other rail 
stakeholders during its year-long process of reaching out to rail customers and 
carriers alike." 

   The NGFA also commended Chairman Begeman, who in an April 29 statement 
accompanying the release of the task force report, cited rail rate reform as 
her "top priority" and further stated that the "only option not on the table is 
one where we (the STB) do nothing," something that the NGFA wholeheartedly 
agreed with.

   The NGFA also commended the task force for recognizing the statutory 
constraints imposed by Congress on railroads' ability to "differentially price" 
their traffic by charging higher rates to some customers of similar traffic 
compared to others, once the carriers attain revenue adequacy.

   The NGFA in 2011 had developed and proposed to the STB a new, simplified 
rate-challenge methodology intended to be workable for agricultural shippers 
and receivers. NGFA said it looks forward to participating fully in future STB 
forums that are expected to be organized to solicit feedback on its task force 
report and ways to refine, build upon and pursue its recommendations. NGFA said 
it would provide additional reaction, input and recommendations concerning the 
task force report at that time.

   Another issue, reciprocal switching, has been brewing since July 2016 and is 
perhaps the most contentious among the industry. Reciprocal switching refers to 
situations in which a Class I railroad that has physical access to a specific 
shipper's facility switches traffic from the facility to another railroad that 
does not have physical access, in exchange for compensation in the form of an 
access fee/switch charge. "This is a complicated issue," Begeman said at the 
2018 NGFA Transportation Summit. "We need to make sure we know what we're doing 
so there are no unintended consequences."

   Begeman added, "I want good rail service to where a shipper wants to go for 
the price they are willing to pay and don't have to worry about reciprocal 
switching costs."

   "Shippers can contact my office at any time through the STB Rail Customer 
and Public Assistance Program," said Begeman. "This program solves problems in 
ways ranging from a simple answer to a telephone inquiry to lengthy informal 
mediation efforts." Topics include questions on rates and other charges, 
railroad-car supply and service issues, claims for damage, interchange issues, 
employee complaints and community concerns. Begeman said that this program has 
been "successful for shippers." 

   Here is a link to more information on the STB Rail Customer and Public 
Assistance Program: https://www.stb.gov/stb/rail/consumer_asst.html

   "We can't fix everything," Begeman said, "but we sure will try."

   Here is a link to the STB website where you will find links to all of the 
current issues the STB is working on: https://www.stb.gov/stb/index.html

   Mary Kennedy can be reached at mary.kennedy@dtn.com 

   Follow her on Twitter @MaryCKenn

******************************************************************************
DTN Weekly DDG Average Price Falls Again

   OMAHA (DTN) -- The domestic distillers dried grains (DDG) average spot price 
from the 40 locations DTN contacted moved lower again this week versus the 
prior week, down $4 at $121 per ton for the week ended May 9. Many prices 
ranged from unchanged to down $3 per ton, to a few prices down $15 per ton.

   In the past four weeks, the DTN average DDG price has dropped a total of $18 
per ton. DDG prices are under pressure from continued losses in the corn 
market, along with an increase in ethanol plant production ahead of lower 
seasonal demand. The EIA said Wednesday that during the week ended May 3, 
ethanol plant production ramped up by 12,000 barrels per day (bpd) or 1.2% to 
1.036 million bpd, the third highest weekly output rate in 2019.

   Based on the average of prices collected by DTN, the value of DDG relative 
to corn for the week ended May 9 was at 98.34% and remains below the two-year 
average. The value of DDG relative to soybean meal was at 42.41%. The cost per 
unit of protein for DDG was $4.48, compared to the cost per unit of protein for 
soybean meal at $6.01. 

   In its weekly DDGS price report, the U.S. Grains Council noted, "DDGS 
indications were mostly down this week; containers to Southeast Asia were down 
$6 per metric tons on average. Markets are working to buy demand and keep DDGS 
competitive against soymeal."

   The U.S. Census Bureau said Thursday that U.S. exports of DDGS totaled 
956,828 metric tons (mt) in March, up from 686,005 mt in February and up 6% 
from a year ago. Turkey was a new top destination in March, taking 17% U.S. 
exports and followed by the familiar list of Mexico, South Korea, Vietnam and 
Indonesia. In the first three months of 2019, U.S. exports of DDGS were down 7% 
from a year ago.


ALL PRICES SUBJECT TO CONFIRMATION            CURRENT        PREVIOUS   CHANGE
COMPANY    STATE                              5/9/2019       5/3/2019
Bartlett and Company, Kansas City, MO (816-753-6300)
           Missouri                 Dry         $130           $130       $0
                                    Wet         $70            $70        $0
Show Me Ethanol LLC, Carrollton, MO (660-542-6493)
           Missouri Subject         Dry         $130           $135      -$5
                                    Wet         $60            $70       -$10
CHS, Minneapolis, MN (800-769-1066)
           Illinois                 Dry         $125           $126      -$1
           Indiana                  Dry         $125           $125       $0
           Iowa                     Dry         $110           $115      -$5
           Michigan                 Dry         $130           $135      -$5
           Minnesota                Dry         $110           $115      -$5
           North Dakota             Dry         $115           $120      -$5
           New York                 Dry         $140           $150      -$10
           South Dakota             Dry         $105           $120      -$15
MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253)
           Kansas                   Dry         $115           $120      -$5
POET Nutrition, Sioux Falls, SD (888-327-8799)
           Indiana                  Dry         $130           $130       $0
           Iowa                     Dry         $120           $120       $0
           Michigan                 Dry         $125           $125       $0
           Minnesota                Dry         $125           $125       $0
           Missouri                 Dry         $125           $140      -$15
           Ohio                     Dry         $130           $135      -$5
           South Dakota             Dry         $125           $135      -$10
United BioEnergy, Wichita, KS (316-616-3521)
           Kansas                   Dry         $125           $130      -$5
                                    Wet         $55            $60       -$5
           Illinois                 Dry         $135           $140      -$5
           Nebraska                 Dry         $125           $130      -$5
                                    Wet         $55            $60       -$5
U.S. Commodities, Minneapolis, MN (888-293-1640)
           Illinois                 Dry         $120           $125      -$5
           Indiana                  Dry         $120           $120       $0
           Iowa                     Dry         $115           $115       $0
           Michigan                 Dry         $120           $120       $0
           Minnesota                Dry         $110           $120      -$10
           Nebraska                 Dry         $110           $115      -$5
           New York                 Dry         $140           $140       $0
           North Dakota             Dry         $120           $130      -$10
           Ohio                     Dry         $130           $133      -$3
           South Dakota             Dry         $110           $125      -$15
           Wisconsin                Dry         $115           $120      -$5
Valero Energy Corp, San Antonio Texas    (210-345-3362)     (210-345-3362)
           Indiana                  Dry         $125           $125       $0
           Iowa                     Dry         $120           $125      -$5
           Minnesota                Dry         $110           $115      -$5
           Nebraska                 Dry         $110           $110       $0
           Ohio                     Dry         $135           $135       $0
           South Dakota             Dry         $125           $130      -$5
           California               Dry         $175           $182      -$7
Western Milling, Goshen, California (559-302-1074)
           California               Dry         $190           $195      -$5
*Prices listed per ton.
           Weekly Average                       $121           $125      -$4
The weekly average prices above reflect only those companies DTN
collects spot prices from. States include: Missouri, Iowa, Nebraska,
Kansas, Illinois, Minnesota, North Dakota, South Dakota, Michigan,
Wisconsin and Indiana. Prices for Pennsylvania, New York and
California are not included in the averages.

   **


VALUE OF DDG VS. CORN & SOYBEAN MEAL
Settlement Price:                         Quote Date     Bushel    Short Ton
Corn                                      5/9/2019       $3.4450   $123.04
Soybean Meal                              5/9/2019       $285.30
DDG Weekly Average Spot Price             $121.00
DDG Value Relative to:                                   5/9       5/2
Corn                                                     98.34%    96.68%
Soybean Meal                                             42.41%    42.75%
Cost Per Unit of Protein:
DDG                                                      $4.48     $4.63
Soybean Meal                                             $6.01     $6.16
Notes:
Corn and soybean prices take from DTN Market Quotes. DDG price
represents the average spot price from Midwest companies
collected on Thursday afternoons. Soybean meal cost per unit
of protein is cost per ton divided by 47.5. DDG cost per unit
of protein is cost per ton divided by 27.

   Mary Kennedy can be reached at mary.kennedy@dtn.com 

   Follow her on Twitter @MaryCKenn

******************************************************************************
Mississippi River Still on a Rampage; St. Louis Harbor Shut to All Vessels

   At midnight, May 2, the Mississippi River in St. Louis, Missouri, was closed 
as levels rose to 38 feet, close to major flood stage of 40 feet. The closure 
by the U.S. Coast Guard effectively has stopped all traffic from mile marker 
179 to 184. The Coast Guard said it would lift the restrictions "as soon as 
conditions improve." The river there is expected to crest at 41.27 feet on May 
6 and start the slow descent to below 38 feet on May 9 or May 10. 

   Upriver from St. Louis, there are still 11 locks closed between Lock and Dam 
(L&D) 12 and L&D 22. In my blog titled "Second Crest Recorded for Mississippi 
River in St. Paul, Minnesota," posted on April 29, I wrote that when there are 
lock closures, the U.S. Army Corps of Engineers (USACE) St. Paul District 
operates the river in an "open river" state. This means that the dam gates are 
removed from the water and the river is acting as it would without the lock and 
dam system in place. 

   Here is a link to the blog:

   
https://www.dtnpf.com/agriculture/web/ag/blogs/market-matters-blog/blog-post/201
9/04/29/second-crest-recorded-mississippi-st

   Heavy rains over the Illinois River have also impacted barge traffic headed 
to and from Chicago, with very limited to no barge movements from mile markers 
(MM) 231 to 291 because of lock closures. The areas restricted begin at Starved 
Rock L&D at North Utica, Illinois, through to Lockport L&D, Lockport, Illinois. 
In addition, if any barges make it off the Illinois River, they will be unable 
to enter St. Louis due to the closure there.

   In a May 5 update on the 2019 flood, the USACE St. Louis District said that 
Upper Mississippi River L&D 24 in Clarksville, Missouri, and L&D 25 Winfield, 
Missouri, remained closed. L&D 27, also known as the Chain of Rocks Locks on 
the southern end of Chouteau Island near Granite City, Illinois, across the 
river from St. Louis, along with Melvin Price L&D (about 17 miles north of 
Saint Louis, Missouri,) also remained closed until further notice due to high 
water.

   Because of the flooding on the Illinois River and the closure of the 
Mississippi River at St. Louis, the Chicago Board of Trade sent a press release 
on May 2 stating:

   "Effective immediately and until further notice, pursuant to The Board of 
Trade of the City of Chicago, Inc. ("CBOT" or "Exchange") Rules 701. 
("Declarations of Force Majeure") and 703.C.G.(8) ("Barge Load-Out Procedures 
for Corn, Soybeans, and SRW Wheat..."), CBOT is hereby declaring a condition of 
Force Majeure due to load-out impossibility at a majority of corn and soybean 
regular shipping stations on the Illinois and Mississippi rivers. Such shipping 
stations are unable to load due to high water levels and/or flooding." 

   A force majeure clause is a contract provision that relieves the parties 
from performing their contractual obligations when certain circumstances beyond 
their control arise, making performance inadvisable, commercially 
impracticable, or impossible.

   Tom Russell, Russell Marine Group told me on May 2, ahead of the river 
closure, that St. Louis Harbor authorities were allowing small harbor tugs to 
shuttle barges presently fleeted in the Harbor to a staging area at the lower 
end of the Harbor. "The shuttle tugs can move only one barge at a time during 
daylight. This will allow some tows to be assembled for southbound towage to 
the Gulf. The process will be slow and limited."

   Russell added that the New Orleans and Baton Rouge harbors will "hover above 
the 16 feet level" throughout May and into June. All safety protocols will 
remain in place, which includes daylight-only transit and reduced tow sizes 
until water levels there drop below 16 feet.

   Tom Heinold, the chief of operations for Rock Island's Army Corps of 
Engineers, told OurQuadCities.com, "What moves on this river has a very 
profound effect on our economy, and usually this time of year there are 
petroleum products, cement, and fertilizer for our farm fields," Heinold said. 
"That's all waiting down in St. Louis. That should be up here by now and 
getting out on the farm fields to support America's agriculture. We feed the 
world from right here in America's bread basket and that stuff is costing us 
money just sitting on barges." 

   The Rock Island District oversees 11 locks on the Mississippi River from 
Dubuque, Iowa, down to Saverton, Missouri. Close to 25 million tons of cargo 
that includes mainly agriculture products, such as soybeans, corn and DDG, pass 
through the locks in the Quad Cities every year. 

   In addition, liquid asphalt for roads and roofing is shipped down-river from 
the Twin Cities oil refineries. Canadian potash is transferred from rail to 
barge and carried to locations where it is distributed for use as fertilizer, 
according to the National Park Service. Other down-bound commodities besides 
those mentioned earlier include sunflower oil, molasses and flyash. Because of 
the flooding forcing lock and/or river closures in Iowa, Illinois and Missouri, 
tows normally moving empty and/or loaded barges north of the Rock Island 
District up to St. Paul, Minnesota, this time of year may be delayed, noted the 
USACE recently.

   "The impacts of having the barges not moving on the river will eventually 
make it to all of our back pockets," added Heinold. "It's not clear how much 
money is at stake; that still depends on how long the locks will be closed.

   As I have mentioned in nearly every flood story I have written recently, 
river forecasts can and will change depending on rainfall. In a weekend blog 
"Flooding and Wet Forecasts Threaten Both Corn Acreage and Yield Loss," written 
by DTN Senior Ag Meteorologist Bryce Anderson, he noted that the upcoming week 
to 10-day period suggests more rain ahead. DTN precipitation forecast maps on 
May 3 placed all but the northern Midwest -- north of Interstate 90 -- with a 
high chance of half an inch to 2 inches total rainfall, with the middle and 
lower Mississippi Valley areas, along with the Ohio Valley, possibly to exceed 
2 inches in total rainfall. 

   Here is a link to the entire blog:

   
https://www.dtnpf.com/agriculture/web/ag/blogs/ag-weather-forum/blog-post/2019/0
5/04/flooding-wet-forecasts-threaten-corn-2

   I have been writing about flooding on the U.S. River system since January, 
and I have a feeling this won't be the last story I write about it in the 
coming months. It has been a volatile and financially stressful year for grain 
shippers and especially farmers. They need a break. Frankly, so do all of the 
people and towns still affected by the relentless river flooding.

   Here is a link to the NWS River Forecast:

   https://water.weather.gov/ahps/forecasts.php

   Mary Kennedy can be reached at mary.kennedy@dtn.com 

   Follow her on Twitter @MaryCKenn

******************************************************************************
DTN Weekly DDG Average Price Lower Again

   OMAHA (DTN) -- The domestic distillers dried grains (DDG) average spot price 
from the 40 locations DTN contacted moved lower again this week versus the 
prior week, down $3 at $125 per ton for the week ended May 2. 

   In the past three weeks, the DTN average DDG price has dropped a total of 
$14 per ton. DDG prices are under pressure from lower soymeal and corn prices, 
along with an increase in ethanol plant production ahead of lower seasonal 
demand.

   Based on the average of prices collected by DTN, the value of DDG relative 
to corn for the week ended May 2 was at 96.68% and is currently below the 
two-year average. The value of DDG relative to soybean meal was at 42.75%. The 
cost per unit of protein for DDG was $4.63, compared to the cost per unit of 
protein for soybean meal at $6.16. 

   In its weekly DDGS price report, the U.S. Grains Council noted: "DDGS 
indications saw another week of downward correction, with last-half May 
delivery becoming hard to realize, the nearby month moves to June and FOB 
vessel U.S. Gulf indications are at $191 per metric ton (mt) for that month. 
Further, U.S. rail rates saw a significant downward correction from last week 
to this week. Merchandisers report steady business from international buyers, 
including in Vietnam and Indonesia; 40-foot containers to Southeast Asian 
destinations are down $5/mt, on average." 

   USDA reported March production of distillers dried grains with solubles 
(DDGS) was 1.86 million tons during March 2019, up 10% from February 2019 but 
down 4% from March 2018. "Flood related complications during that timeframe 
likely pulled down that figure and the market is not anticipating 
year-over-year production to slip lower that far going forward," noted Informa 
Economics.

   River conditions this week have worsened as floodwaters continue to rise and 
will hamper container movement to the Gulf. There are now 12 locks closed on 
the Mid Upper Mississippi River between Lock and Dam (L&D) 11 and L&D 22. 
Reopening dates are currently between May 2 and May 14, but that can change as 
the river continues to rise. 

   The Mississippi River at Davenport, Iowa, broke a previous record high of 
22.63 feet set during the historic flooding of July 1993, after briefly rising 
to 22.7 feet on May 2. The St. Louis Harbor closed on May 3 due to the water 
rising above 38 feet, effectively stopping traffic from coming into and out of 
the Harbor. The river stage there is currently forecast to crest at 42.5 feet 
on May 6. The Mel Price Lock, which is 17 miles above St. Louis was expected to 
close late on May 2, along with Chain of Rocks Lock and Dam (L&D 27) which is 
near St. Louis.


ALL PRICES SUBJECT TO CONFIRMATION            CURRENT        PREVIOUS   CHANGE
COMPANY    STATE                              5/3/2019       4/25/2019
Bartlett and Company, Kansas City, MO (816-753-6300)
           Missouri                 Dry         $130           $137       -$7
                                    Wet         $70             $72       -$2
Show Me Ethanol LLC, Carrollton, MO (660-542-6493)
           Missouri Subject         Dry         $135           $130       $5
                                    Wet         $70             $70       $0
CHS, Minneapolis, MN (800-769-1066)
           Illinois                 Dry         $126           $132       -$6
           Indiana                  Dry         $125           $130       -$5
           Iowa                     Dry         $115           $120       -$5
           Michigan                 Dry         $135           $130       $5
           Minnesota                Dry         $115           $120       -$5
           North Dakota             Dry         $120           $120       $0
           New York                 Dry         $150           $135       $15
           South Dakota             Dry         $120           $120       $0
MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253)
           Kansas                   Dry         $120           $130      -$10
POET Nutrition, Sioux Falls, SD (888-327-8799)
           Indiana                  Dry         $130           $135       -$5
           Iowa                     Dry         $120           $125       -$5
           Michigan                 Dry         $125           $125       $0
           Minnesota                Dry         $125           $130       -$5
           Missouri                 Dry         $140           $145       -$5
           Ohio                     Dry         $135           $140       -$5
           South Dakota             Dry         $135           $140       -$5
United BioEnergy, Wichita, KS (316-616-3521)
           Kansas                   Dry         $130           $140      -$10
                                    Wet         $60             $60       $0
           Illinois                 Dry         $140           $148       -$8
           Nebraska                 Dry         $130           $140      -$10
                                    Wet         $60             $60       $0
U.S. Commodities, Minneapolis, MN (888-293-1640)
           Illinois                 Dry         $125           $125       $0
           Indiana                  Dry         $120           $120       $0
           Iowa                     Dry         $115           $115       $0
           Michigan                 Dry         $120           $120       $0
           Minnesota                Dry         $120           $120       $0
           Nebraska                 Dry         $115           $115       $0
           New York                 Dry         $140           $140       $0
           North Dakota             Dry         $130           $130       $0
           Ohio                     Dry         $133           $133       $0
           South Dakota             Dry         $125           $125       $0
           Wisconsin                Dry         $120           $120       $0
Valero Energy Corp, San Antonio Texas    (210-345-3362)     (210-345-3362)
           Indiana                  Dry         $125           $120       $5
           Iowa                     Dry         $125           $130       -$5
           Minnesota                Dry         $115           $123       -$8
           Nebraska                 Dry         $110           $105       $5
           Ohio                     Dry         $135           $135       $0
           South Dakota             Dry         $130           $135       -$5
           California               Dry         $182           $180       $2
Western Milling, Goshen, California (559-302-1074)
           California               Dry         $195           $208      -$13
*Prices listed per ton.
           Weekly Average                       $125           $128       -$3
The weekly average prices above reflect only those companies DTN
collects spot prices from. States include: Missouri, Iowa, Nebraska,
Kansas, Illinois, Minnesota, North Dakota, South Dakota, Michigan,
Wisconsin and Indiana. Prices for Pennsylvania, New York and
California are not included in the averages.

   **


VALUE OF DDG VS. CORN & SOYBEAN MEAL
Settlement Price:                         Quote Date     Bushel    Short Ton
Corn                                      5/2/2019       $3.6200   $129.29
Soybean Meal                              5/2/2019       $292.40
DDG Weekly Average Spot Price             $125.00
DDG Value Relative to:                                   5/2       4/25
Corn                                                     96.68%    103.14%
Soybean Meal                                             42.75%    41.83%
Cost Per Unit of Protein:
DDG                                                      $4.63     $4.74
Soybean Meal                                             $6.16     $6.44
Notes:
Corn and soybean prices take from DTN Market Quotes. DDG price
represents the average spot price from Midwest companies
collected on Thursday afternoons. Soybean meal cost per unit
of protein is cost per ton divided by 47.5. DDG cost per unit
of protein is cost per ton divided by 27.

   Mary Kennedy can be reached at mary.kennedy@dtn.com 

   Follow her on Twitter @MaryCKenn

******************************************************************************
Second Crest Recorded for Mississippi River in St. Paul, Minnesota 

    As the Mississippi River in St. Paul, Minnesota, began to move closer to 
minor flood stage around April 15, a snowstorm on April 11 -- followed by heavy 
rains on April 17 -- caused the river to change course and head back above 
major flood stage. Finally, on April 24, it hit a second crest of 17.64 feet, 
not quite as high as the March 31 crest of 19.83 feet.

   The U.S. Army Corps of Engineers (Corps) St. Paul District said they were 
currently operating the river in an "open river" state. This means that the dam 
gates are removed from the water and the river is acting like it would without 
the lock and dam system in place. Corps officials do this when there is enough 
water to maintain the congressionally mandated 9-foot navigation channel. "The 
lock and dam system is not designed to reduce flood risk," noted the Corps. "It 
was developed exclusively to maintain the needed water depths for navigation."

   As of April 29, the river was at 16.1 feet, but as the water continues to 
flush south from St. Paul, high water is causing all of the locks between Lock 
11 (Mile Marker 583) and Lock 22 (MM 301) to either close again or prepare to 
close by April 30. At Lock 20 (MM 343), current expectations are that this lock 
will be closed the longest, possibly until May 8, according to the American 
Commercial Barge Line. If that holds true, no vessels will be able to come up 
from St. Louis any farther than Lock 20.

   In St. Louis, the river is above minor flood stage at 30.66 feet on April 29 
and is expected to fall below minor flood stage at 29.7 feet on May 2 and then 
rise again to 31.4 feet by May 5. Safety protocol, such as tow size reductions 
and daylight movement only, in the St. Louis Harbor are in effect. "The Lower 
Mississippi River had been on a very slow fall but given the wet May forecast, 
it is again expected to start making a slow rise during the upcoming weeks," 
said Tom Russell, Russell Marine Group. "Snowmelt and rain from Upper Miss will 
keep pushing water down the Lower Miss. The good news is the Ohio River that 
feeds the majority of water to Lower Miss is not expected to have abnormally 
high amounts of rain."

   Currently though, the Ohio River at Cairo, Illinois, is above moderate flood 
stage at 48.4 feet but is on a steady descent. Until conditions improve, tow 
sizes between Cairo and the Gulf have been reduced from 40 barges to 25 or less 
per tow. The Mississippi River at Vicksburg, Mississippi, however, is still 
rising and is currently in moderate flood stage at 47.25 feet, with a crest 
expected at 48 feet on May 7. Tows are restricted to daylight only hours under 
the Vicksburg bridge.

   In New Orleans the sustained nasty weather over past few months improved 
during the last couple of weeks, noted Russell. "That has allowed 
elevators/terminals to finally make a dent in line ups. Anchorage space in the 
Port is starting to open up and the queue of ships waiting entry into the Port 
has been eliminated.

   "However, the water levels have not fallen and conditions remain dangerous 
at a stage in NOLA, hovering around 16 feet. During the upcoming weeks, the 
water levels in the Harbor will see a slow rise and may again reach flood stage 
of 17 feet. The river has not been at this sustained level since 1983. 

   Flood stage protocols are in effect until the NOLA gauge drops below 16 feet 
and high water protocols are in effect until water drops below 12 feet. 
Additionally, all vessel traffic is restricted to daylight only from mile 90 
NOLA to mile 233 Baton Rouge. Substantial extra port costs for ocean vessels 
moving through these mile points will be incurred. The river current is strong 
and fast increasing the possibilities of accidents," concluded Russell.

   In their weekly Grain Transportation Report, the USDA noted that for the 
week ended April 13, barge grain movements totaled 428,581 tons, 15% lower than 
the previous week and 31% lower than the same period last year.

   For the week ended April 13, 265 grain barges moved down river, 65% less 
barges than the previous week and 524 grain barges unloaded in New Orleans, 12% 
higher than the previous week. For the week ended April 18, 32 ocean-going 
grain vessels were loaded in the Gulf, 14% less than the same period last year.

   A LIGHT AT THE END OF THE TUNNEL

   As the Mississippi River remained at flood stage, the wait continued in St. 
Paul for the first tow of the season to open the 2019 shipping season. 

   On April 21, after some of the locks in the middle Upper Mississippi River 
temporarily opened, the first commercial vessel of the season -- the Motor 
Vessel Aaron F. Barrett -- passed Lock and Dam 10, in Guttenberg, Iowa. "She's 
headed to St. Paul with nine loads and three empty barges, and could reach the 
Port of St. Paul in the coming days, pending river conditions," said the Corps 
on Facebook on April 22. "Flows look to close Lock and Dam 4 to all navigation 
for a short period, and a lockage could only happen in daylight hours for 
safety considerations."

   Then, the wait was over. After Lock and Dam 4 reopened, the Motor Vessel 
Aaron F. Barrett was locked through Lock and Dam 2, near Hastings in the early 
morning hours of April 24.

   The Corps considers the first tow to arrive at Lock and Dam 2 as the 
unofficial start of the navigation season, because it means all of its locks 
are accessible to commercial and recreational vessels. "However, this spring's 
high flows continue to force lock closures in Iowa, Illinois and Missouri and 
could lead to additional lock closures within the St. Paul District, leading to 
delays in other tows reaching St Paul," said the Corps.

   According to the Corps, the earliest date for an up-bound tow to reach Lock 
and Dam 2 was March 4, in 1983, 1984 and 2000. The average start date of the 
navigation season is March 22. Historic flooding in 2001 delayed the arrival of 
the first tow until May 11. The first tow to reach Lock and Dam 2 in 2018 was 
the Motor Vessel Michael Poindexter, on April 11, the latest arrival date 
unrelated to flooding. 

   For those of us "river rats" who were born and raised in St. Paul, this was 
a banner day for us to see the opening of the 2019 shipping season. As the 
Corps noted above, it may be a few weeks until we see any more tows and barges 
enter St. Paul, but at least the very first one of the year fought its way here 
and christened the official start to spring on the Upper Mississippi River.

   Here is a link to the NWS north central river forecast: 
https://www.weather.gov/ncrfc/

   Here is a link to the NWS Lower Mississippi River forecast: 
https://www.weather.gov/lmrfc/

   Mary Kennedy can be reached at mary.kennedy@dtn.com

   Follow her on Twitter @MaryCKenn

******************************************************************************
DTN Weekly DDG Average Price Down $6 Per Ton

   OMAHA (DTN) -- The domestic distillers dried grains (DDG) average spot price 
from the 40 locations DTN contacted took another hit this week, down $6 at $128 
per ton for the week ended April 26, versus the prior week. In the past two 
weeks, the DTN average DDG price has dropped $11 per ton. 

   Spot DDG truck prices were lower with continued pressure coming from 
continued weakness in the corn market. In addition, plants have continued to 
show a rise in production, with the weekly EIA report showing ethanol 
production moved up to a 14-week high during the week ended April 19.

   Based on the average of prices collected by DTN, the value of DDG relative 
to corn for the week ended April 26 was at 103.14%. The value of DDG relative 
to soybean meal was at 41.83%. The cost per unit of protein for DDG was $4.74, 
compared to the cost per unit of protein for soybean meal at $6.44. 

   In its weekly DDGS price report, the U.S. Grains Council noted that 
indications are down this week compared to last, especially for international 
container rates. 

   "40-foot containers to Southeast Asian destinations are down $8 per metric 
ton (mt), on average, while 40-foot containers to Japan saw the sharpest drop 
from this week to last and stand at $228/mt for May delivery. Merchandisers 
have reported increased interested and buying from South Korean and Vietnamese 
buyers, among others." 

   CIF barge rates in New Orleans fell $7/mt and FOB vessel U.S. Gulf 
indications were down $5 per metric ton for nearby delivery, to $198 per metric 
ton. River conditions have not improved this week and actually worsened, as 
more lock closures occurred between Lock 11 (UM Mile 583) and Lock 22 (UM Mile 
301), while ongoing flood conditions have reduced tow sizes between Cairo and 
the Gulf by one-two strings (10-15 barges). The max tow size has been reduced 
from 40 barges to 25 or less per tow, noted ACBL. 


ALL PRICES SUBJECT TO CONFIRMATION            CURRENT        PREVIOUS   CHANGE
COMPANY    STATE                             4/25/2019       4/18/2019
Bartlett and Company, Kansas City, MO (816-753-6300)
           Missouri                 Dry         $137           $140       -$3
                                    Wet         $72             $75       -$3
Show Me Ethanol LLC, Carrollton, MO (660-542-6493)
           Missouri Subject         Dry         $130           $135       -$5
                                    Wet         $70             $75       -$5
CHS, Minneapolis, MN (800-769-1066)
           Illinois                 Dry         $132           $137       -$5
           Indiana                  Dry         $130           $135       -$5
           Iowa                     Dry         $120           $125       -$5
           Michigan                 Dry         $130           $135       -$5
           Minnesota                Dry         $120           $125       -$5
           North Dakota             Dry         $120           $125       -$5
           New York                 Dry         $135           $140       -$5
           South Dakota             Dry         $120           $125       -$5
MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253)
           Kansas                   Dry         $130           $130       $0
POET Nutrition, Sioux Falls, SD (888-327-8799)
           Indiana                  Dry         $135           $140       -$5
           Iowa                     Dry         $125           $130       -$5
           Michigan                 Dry         $125           $130       -$5
           Minnesota                Dry         $130           $130       $0
           Missouri                 Dry         $145           $150       -$5
           Ohio                     Dry         $140           $140       $0
           South Dakota             Dry         $140           $140       $0
United BioEnergy, Wichita, KS (316-616-3521)
           Kansas                   Dry         $140           $140       $0
                                    Wet         $60             $60       $0
           Illinois                 Dry         $148           $148       $0
           Nebraska                 Dry         $140           $140       $0
                                    Wet         $60             $60       $0
U.S. Commodities, Minneapolis, MN (888-293-1640)
           Illinois                 Dry         $125           $130       -$5
           Indiana                  Dry         $120           $125       -$5
           Iowa                     Dry         $115           $125      -$10
           Michigan                 Dry         $120           $125       -$5
           Minnesota                Dry         $120           $125       -$5
           Nebraska                 Dry         $115           $125      -$10
           New York                 Dry         $140           $150      -$10
           North Dakota             Dry         $130           $140      -$10
           Ohio                     Dry         $133           $140       -$7
           South Dakota             Dry         $125           $130       -$5
           Wisconsin                Dry         $120           $130      -$10
Valero Energy Corp, San Antonio Texas    (210-345-3362)     (210-345-3362)
           Indiana                  Dry         $120           $140      -$20
           Iowa                     Dry         $130           $135       -$5
           Minnesota                Dry         $123           $130       -$7
           Nebraska                 Dry         $105           $135      -$30
           Ohio                     Dry         $135           $145      -$10
           South Dakota             Dry         $135           $136       -$1
           California               Dry         $180           $190      -$10
Western Milling, Goshen, California (559-302-1074)
SUBJECT    California               Dry         $208           $208       $0
*Prices listed per ton.
           Weekly Average                       $128           $134       -$6
The weekly average prices above reflect only those companies DTN
collects spot prices from. States include: Missouri, Iowa, Nebraska,
Kansas, Illinois, Minnesota, North Dakota, South Dakota, Michigan,
Wisconsin and Indiana. Prices for Pennsylvania, New York and
California are not included in the averages.

   **


VALUE OF DDG VS. CORN & SOYBEAN MEAL
Settlement Price:                         Quote Date     Bushel    Short Ton
Corn                                      4/25/2019      $3.4750   $124.11
Soybean Meal                              4/25/2019      $306.00
DDG Weekly Average Spot Price             $128.00
DDG Value Relative to:                                   4/25      4/18
Corn                                                     103.14%   104.66%
Soybean Meal                                             41.83%    44.19%
Cost Per Unit of Protein:
DDG                                                      $4.74     $4.96
Soybean Meal                                             $6.44     $6.38
Notes:
Corn and soybean prices take from DTN Market Quotes. DDG price
represents the average spot price from Midwest companies
collected on Thursday afternoons. Soybean meal cost per unit
of protein is cost per ton divided by 47.5. DDG cost per unit
of protein is cost per ton divided by 27.

   Mary Kennedy can be reached at mary.kennedy@dtn.com 

   Follow her on Twitter @MaryCKenn

******************************************************************************
If History Repeats, Sizable Rallies Could Be in Store

   Certainly the 2018-19 crop year is a one of a kind phenomenon. First came 
the "trade war" with China, where the U.S. -- and the Trump administration in 
particular -- attempted to level the playing field with China -- the largest 
soybean importer in the world. That playing field was comprised of not only 
agricultural issues, but many other products, including intellectual property 
issues, forced technology transfers and even investment by U.S. companies in 
China. But make no mistake, the hardest hit sector was undoubtedly the U.S. ag 
sector, in particular soybean farmers and exporters, as the U.S was coming off 
a few years of record yields on both corn and soybeans. 

   As negotiations began in July of 2018, and are still ongoing, China turned 
to other exporting nations, most notably Brazil and Argentina, to secure 
supplies that would normally come from the U.S. As the U.S. and China imposed 
tariffs on each other, U.S. soybeans lost its biggest market and Brazilian soy 
sales benefited. As the negotiations were/are said to be nearing the "end 
game," China made token soybean purchases from the U.S. a few months ago in 
hopes of reaching an agreement. Thankfully, other nations imported nearly 10 
million metric tons (mmt) of U.S. soybeans than they had in the previous year, 
which lessened the blow. However, U.S. soybean export sales, in the face of 
what will be a record large U.S. carryout of near 900 million bushels (mb), 
were still lagging badly from year-ago levels, and still are, with sales down 
17% and shipments down 26% from a year ago. 

   Then, to make matters worse, the dreaded and heretofore relatively unknown 
"African swine fever" showed up in China and decimated pig herds, along with 
the resulting demand for feed that those herds require. African swine fever has 
now been found in every province in China, with more than 120 cases reported 
thus far, and it is still not contained; it has even spread to neighboring 
countries Vietnam and Cambodia. The disease is fatal to pigs, and China is well 
known to have by far the largest pig herd in the world. The toll on Chinese 
feed (and soy demand) is difficult to assess and USDA expects China's soybean 
imports to drop from 94.1 mmt in 2017-18 to 88.0 mmt in 2018-19. The jury is 
still out on the ultimate Chinese soy demand and some say it could go lower. 

   As if that weren't enough, Brazil and Argentina have had very favorable 
weather -- and in the throes of harvest -- look to have bumper soybean and corn 
crops again. The latest estimate for combined South American soy crops is 11 
mmt to 12 mmt more than the previous year and as much as 30 mmt to 31 mmt more 
corn compared to last year. That will lead to not only record soybean ending 
stocks in the U.S., but also in the world -- and it means plentiful and cheaper 
corn supplies from major U.S. competitors. Even though China has not been a big 
buyer of corn and wheat in the past few years, the larger South American corn 
crops -- and a recently revised U.S. corn carryout of over 2 billion bushels 
(bb), along with a 1 bb U.S wheat carryout -- has pressured crop prices lower. 

   The widely-watched managed futures funds jumped on the bearish news above 
and built record large net-short positions. As of last Tuesday (April 16), 
funds held a combined 601,000 net-short position in corn, the soybean complex 
and all three U.S. wheat futures contracts. That surpassed the old record of 
487,000 net shorts back in January 2018. The net effect of fund selling has 
sent spot soybean and wheat futures 54 cents lower since the end of March and 
corn futures 38 cents lower in the same time. 

   Although the 2018-19 crop year is unique as explained above, with a host of 
bearish inputs, such large fund short positions are a risky proposition. The 
managed funds appear confident that we are unlikely to see a China trade 
resolution any time soon and they are confident that -- with undersold U.S. and 
South American farmers likely awaiting the same resolution -- there will be 
plenty for sale when they do choose to exit their shorts. Weather is the only 
other primary input that can foil such a plan to remain short ahead of perhaps 
the most volatile period of the year. A look at history tells us that this 
plan's success can be short-lived. 

   What happened in 2018 when funds last held record net shorts? July corn went 
from $3.62 on Jan. 12, 2018, to $4.03 on March 13, 2018, -- that's 41 cents in 
just two months and went on to a high of $4.12 in late May of 2018. New-crop 
December corn rose from $3.80 on January 12 to $4.12 on March 14 -- a gain of 
32 cents, and added another 27 cents in mid-May of 2018. Likewise, July 
soybeans went from $9.65 on Jan. 12, 2018 to $10.90 per bushel by March 2, 
2018, -- a gain of $1.25 per bushel in just seven weeks. In that same time 
period, new-crop November futures rallied 80 cents per bushel. The managed 
funds had flipped their position from a combined net-short of 487,900 contracts 
on Jan. 16, 2018, to a net combined long of 529,600 contracts on March 13, 
2018. In other words, the funds bought over 1 million contracts combined in 
less than two months, adding to the market rally.

   A look back at 2016 shows a similar pattern when the funds built a sizable 
combined net-short position. On March 1, 2016, the managed funds held a short 
of 427,800 contracts, and by June 14, 2018, had flipped that to a net combined 
long of 513,800 contracts. In effect, they had bought 941,000 contracts during 
that period. July corn moved from $3.59 on March 3, 2016, to $4.07 on April 21, 
2016, -- up 48 cents in just six weeks, but rallied up to a high of $4.39 on 
June 18, 2016, when they reached their peak long. July soybeans moved from 
$8.62 on March 2, 2016, to a high of $12.08 on June 10, 2016, -- a rally of 
$3.46. In that very same time frame, new-crop December corn moved 76 cents 
higher and new-crop November soybeans rallied $3.18 per bushel.

   I know this paints a bearish landscape: a record large ending stocks, major 
gains in competitor production, a China trade war, a demand-stealing swine 
disease and lots of speculative money that seems convinced we are headed even 
lower. This year is certainly an exception to the other years -- we have more 
of a cushion for crop losses, we have unknown bearish demand forces at work and 
we have a trade deal ongoing, with the final conclusion an unknown. If a trade 
deal is consummated, and if it does include corn, its byproducts and wheat, the 
aftermath could be much more powerful. Managed futures funds seem confident 
there is no resolution in sight. However, history has shown that funds will 
eventually buy their contracts back, and when they do, sizeable rallies can 
occur. 

   No one can guarantee how 2019 will turn out, but the first half of this 
story has been seen before. Stay tuned for how the second half turns out.

   Dana Mantini can be reached at dana.mantini@dtn.com

   Follow Dana Mantini on Twitter @Mantini_r 

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DTN Weekly DDG Average Price Down Five Cents

   OMAHA (DTN) -- The domestic distillers dried grains (DDG) average spot price 
from the 40 locations DTN contacted was down 5 cents at $134 per ton for the 
week ended April 18, versus the prior week. Spot DDG truck prices were lower as 
demand has slowed, along with added pressure coming from continued weakness in 
the corn market.

   Based on the average of prices collected by DTN, the value of DDG relative 
to corn for the week ended April 18 was at 104.66%. The value of DDG relative 
to soybean meal was at 44.19%. The cost per unit of protein for DDG was $4.96, 
compared to the cost per unit of protein for soybean meal at $6.38. Soymeal 
prices have been moving lower most of the week as the soybean futures fell to 
their lowest price in 2019 at midweek.

   The U.S. Census Bureau said Wednesday that U.S. exports of distillers dried 
grain with solubles (DDGS) totaled 686,005 metric tons (mt) in February, down 
from 806,615 mt in January and down 18% from a year ago. Mexico was the top 
destination in February, taking 24% of U.S. exports, followed by the usual list 
of South Korea, Indonesia, and Vietnam. In the first two months of 2019, U.S. 
exports of DDGS were down 14% from a year ago.


ALL PRICES SUBJECT TO CONFIRMATION       CURRENT     PREVIOUS CHANGE
                                                      4/11/
COMPANY       STATE                     4/18/2019      2019
Bartlett and Company, Kansas City, MO (816-753-6300)
              Missouri           Dry       $140        $145    -$5
                                 Wet       $75         $78     -$3
Show Me Ethanol LLC, Carrollton, MO (660-542-6493)
              Missouri Subject   Dry       $135        $145    -$10
                                 Wet       $75         $80     -$5
CHS, Minneapolis, MN (800-769-1066)
              Illinois           Dry       $137        $142    -$5
              Indiana            Dry       $135        $140    -$5
              Iowa               Dry       $125        $130    -$5
              Michigan           Dry       $135        $140    -$5
              Minnesota          Dry       $125        $130    -$5
              North Dakota       Dry       $125        $130    -$5
              New York           Dry       $140        $145    -$5
              South Dakota       Dry       $125        $130    -$5
MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253)
              Kansas             Dry       $130        $145    -$15
POET Nutrition, Sioux Falls, SD (888-327-8799)
              Indiana            Dry       $140        $145    -$5
              Iowa               Dry       $130        $135    -$5
              Michigan           Dry       $130        $130     $0
              Minnesota          Dry       $130        $130     $0
              Missouri           Dry       $150        $150     $0
              Ohio               Dry       $140        $140     $0
              South Dakota       Dry       $140        $140     $0
United BioEnergy, Wichita, KS (316-616-3521)
Kansas        Dry                $140      $140         $0
                                 Wet       $60         $60      $0
              Illinois           Dry       $148        $148     $0
              Nebraska           Dry       $140        $140     $0
                                 Wet       $60         $60      $0
U.S. Commodities, Minneapolis, MN (888-293-1640)
              Illinois           Dry       $130        $135    -$5
              Indiana            Dry       $125        $130    -$5
              Iowa               Dry       $125        $130    -$5
              Michigan           Dry       $125        $130    -$5
              Minnesota          Dry       $125        $130    -$5
              Nebraska           Dry       $125        $145    -$20
              New York           Dry       $150        $155    -$5
              North Dakota       Dry       $140        $150    -$10
              Ohio               Dry       $140        $145    -$5
              South Dakota       Dry       $130        $140    -$10
              Wisconsin          Dry       $130        $135    -$5
Valero Energy Corp, San Antonio Texas (210-345-3362) (210-345-3362)
Indiana       Dry                $140      $140         $0
Iowa          Dry                $135      $140        -$5
Minnesota     Dry                $130      $130         $0
Nebraska      Dry                $135      $150        -$15
Ohio          Dry                $145      $145         $0
South Dakota  Dry                $136      $140        -$4
California    Dry                $190      $195        -$5
Western Milling, Goshen, California (559-302-1074)
              California         Dry       $208        $215    -$7
*Prices listed per ton.
              Weekly Average               $134        $139    -$5
The weekly average prices above reflect only those companies DTN
collects spot prices from. States include: Missouri, Iowa, Nebraska,
Kansas, Illinois, Minnesota, North Dakota, South Dakota, Michigan,
Wisconsin and Indiana. Prices for Pennsylvania, New York and
California are not included in the averages.

             VALUE OF DDG VS. CORN & SOYBEAN MEAL
               Settlement Price: Quote Date   Bushel Short Ton
                            Corn   4/18/2019 $3.5850   $128.04
                    Soybean Meal   4/18/2019 $303.20
   DDG Weekly Average Spot Price     $134.00
                      DDG Value Relative to:  4/18     4/11
                                        Corn 104.66%   108.11%
                                Soybean Meal  44.19%    45.25%
                   Cost Per Unit of Protein:
                                         DDG   $4.96     $5.15
                                Soybean Meal   $6.38     $6.47
Notes:
Corn and soybean prices take from DTN Market Quotes. DDG price
represents the average spot price from Midwest companies
collected on Thursday afternoons. Soybean meal cost per unit
of protein is cost per ton divided by 47.5. DDG cost per unit
of protein is cost per ton divided by 27.

   Mary Kennedy can be reached at mary.kennedy@dtn.com

   Follow her on Twitter @MaryCKenn

   

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