Over the last several weeks, Distillers (DDGS) have shown slight price strengthening. Ongoing Covid Delta concerns and the spread of the new Omicron variant have foreshadowed a weaker pulse for oil demand.
If we see travel curbed, then oil demand will weaken further and in turn Distillers pricing will move higher.
However, OPEC is complicating the situation with the oil exporters' group announcing last week the continuation of previously agreed plans to raise oil production by 400,000 barrels per day in January. This news suggests that OPEC sees demand increasing, not decreasing.
OPEC’s next scheduled meeting will be on January 4 and will give us an important reading on the near-term pulse of pricing in the Distillers market.
Actionable insight: Watch for news of decreased travel or decreased oil demand, either of which will signal a move upwards in Distillers pricing. And, keep a lookout for OPEC news during that first week of 2022.
