Distillers Dried Grain

Mondo Visione  Feb 16  Comment 
CME Group, the world's leading and most diverse derivatives marketplace, today announced the launch of Distillers' Dried Grain agricultural commodity futures contracts, scheduled to begin trading April 26. These contracts are listed with, and...


Distillers’ Dried Grain (DDG for short) is a by-product of corn-ethanol production, and is typically sold as livestock feed. For ethanol producers, DDG is a waste product, yet it is an important part of the ethanol equation. For ethanol distillation to be cost effective, the price at which the ethanol AND distiller’s dried grain can be sold must be greater than the costs of corn plus distillation. In other words, it would be possible to run a profitable ethanol distillation outfit by losing money on ethanol sales, so long as DDG is selling sufficiently high in the spot market. The major hedgers in the market will be the ethanol distillers, corn growers, and livestock farmers. Expect DDG prices to be highly intertwined with the price of corn and/or meat such as live cattle and lean hogs.

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