In the latest edition of the Parlor to Plate dairy podcast from Ever.Ag Insights, our all-star panel delves into the current state of the dairy markets. How will expanding cheese processing capacity impact supply? What challenges are producers facing. How might lower feed costs affect future milk production? Our panelists discuss this and much more.

Join host Kathleen Wolfley and panelists Natalie McCarty, Ryan Yonkman and Brian Fletcher for a spirited discussion.

Questions or comments? Topics you’d like to hear us discuss? Contact us at [email protected].

(Transcript auto-generated)

Future trading involves risk and is not suitable for all investors. Content provided in this segment is meant for educational purposes and is not a solicitation to buy or sell commodities.

00;00;08;25 – 00;00;32;00

Hello! Welcome to Parler to Play, a weekly podcast from Ever AG Insights, dedicated to offering listeners enlightening discussion and actionable intelligence about dairy markets. I’m your host, Kathleen Wolf. We are excited to have you along. If you like what you hear, please like us. Subscribe and tell a friend or two to timestamp today’s recording. It is Wednesday, October 9th around 1 p.m. central time.

00;00;32;03 – 00;00;54;28

Here’s a quick rundown in the markets CME block cheddar closed at $1.93, down $0.10 on the week, or finish at $1.88, down $0.27. Spot butter closed at 265 $0.03 lower, and the nonfat dry milk market finish at $1.36, unchanged on the week. Now for the grain markets. December corn is trading around 421 per bushel. November soybeans at 1021 per bushel.

00;00;54;28 – 00;01;17;08

And the December soybean meal contract is trading around 321 per ton. It’s a new week, and another star studded panel from the ever AG Financial Services team, helping commercial clients manage risk out of our Chicago office. We have Brian Fletch Fletcher. He’s a Michigan dairyman based in the heart of Chicago. Ryan Jackman works with dairy producers across the country to manage milk price risk and for the real treat.

00;01;17;09 – 00;01;27;05

We have a longtime listener, first time caller today with us, Natalie McCarty. Natalie is based out of California and works with livestock producers to manage feed risk. Hey, how are we today?

00;01;27;09 – 00;01;29;24

I’m great. Kathleen. All right. How are you?

00;01;29;25 – 00;01;49;27

I’m doing okay. I actually have a question for you guys. It’s getting a little chilly here in Western New York. And as I’m sitting here in my home office, freezing, very cold hands. I’m just curious, what is the over under on when to turn the heat on in your house? Is it 60 degrees? Is it 55 degrees? Is it when you notice that your children’s teeth are chattering?

00;01;49;28 – 00;02;07;15

Well, from my perspective, I’m probably the wrong person to ask because I prolong the AC as long as we can. So I, you know, I would say well, under 60 degrees outside before you even think about it. I don’t turn the heat until we run out of blankets. Kathleen.

00;02;07;17 – 00;02;17;02

Oh, yeah. I’m in the same camp too, as to why my hands are frozen. Natalie, you’re in California, so you probably don’t even have to worry about 60 degrees or 55 degrees outside.

00;02;17;04 – 00;02;20;14

We’re just excited we’ve broken the triple digits here. Finally, this.

00;02;20;14 – 00;02;38;13

Week, we’ll send some of that heat. This way I could just use a little smidge more of that heat. All right, well, let’s get into it today. Guys. We are rounding the corner toward 2025. And I’m just kind of curious what’s everybody’s take on the state of the dairy economy? Let’s start with you. How are the commercials feeling right now?

00;02;38;15 – 00;03;00;03

Well, I’ll get into kind of the overall demeanor, if you will, in a second. But first element I want to touch on is the state of the processing community is the tipping point of a new era of expansion. At the end of this month, there’s a notable brand new plant that is supposed to be running water, and then later milk.

00;03;00;03 – 00;03;29;14

That’s going to be bringing more cheese into the US market by the end of this year. There’s another expansion going on, and then the first quarter of next year there’s another brand new plant running additional mozzarella. So I think we’ve been alluding to this growth for all year long. And now we’re finally here. I think over the course of the next several months or years of, say, six months or so, we’re going to be adding close to 6% more cheese capacity into the system.

00;03;29;14 – 00;03;56;19

So we’re here and it’s happening. I think we’re kind of going to the demeanor or the state of the processor, if you will, for cheese processors over the course of this year, with most cheese being priced off of the block market and the bloc market trading a discount to the barrel market most of this year, that really means that the input cost of cheese manufacturing relative to the revenue, has been upside down the majority of the year.

00;03;56;19 – 00;04;21;05

So I don’t know that, at least at the processing community, people are looking at 2024 as necessarily a good year at all. I think there’s another element that’s pending, and that’s a new federal order system that eliminates the barrel. So we’re 3 to 4 weeks away from from seeing the final recommendation there. That can really change the dynamics of that underlying price risk.

00;04;21;05 – 00;04;46;14

So to take it away and sum it up, I’d say that we’re really crossing into all this new processing capacity coming online and also at a big transition, just in terms of the underlying federal order infrastructure. So definitely growing, which is great and really good to see. But we’re also at a state of regulatory change to adopt. The market should be operating in within the next few months.

00;04;46;20 – 00;05;02;03

So amidst that change, particularly as we look at the new processing capacity side of things, one big question I know we’ve been talking about a lot is what’s happening at the farm level. And Ryan, I guess I’ll kick it to you to talk about how are producers feeling right now.

00;05;02;09 – 00;05;20;08

Yeah, and kind of decent timing for this. I just got back from kind of a peer group meeting where we had some lenders, accountants, dairymen in the room. And I think the best set up kind of come to you on this is, look, 2022 is a banner year for most dairies, probably the best year in their history. But 2023 last year was breakeven or lose a pretty good show.

00;05;20;09 – 00;05;37;11

So you get to this year, right? As we wind up in the first half, a lot of dairies continue to lose money. We’ve talked a lot in our segments about, you know, did you have class for exposure or not? You know, at least half this country’s milk typically does not. So you’re talking about an 18 month stretch there where guys were surviving, treading water off 22 gains.

00;05;37;11 – 00;05;55;19

Right. And so I sit here today and say, where’s the state of the industry? I think you’ve got a chunk of the industry in the last two years is has a nice run. But I think the lion’s share, 50% or so is just kind of in that space of comfortability. Like it’s okay the way this year’s closing, it’s going to help, but it’s not like we’re coming off a banner year.

00;05;55;19 – 00;06;15;08

And so then you get back to your like cheese plant. In the milk production conversations, we sat around the table and with the cost of money still being high barrier entry, talk about cost of building still very high. I think the headwinds for massive expansion alongside yes, heifers are tight. Even if heifers weren’t tight. I guess my takeaway is there wasn’t a strong feeling.

00;06;15;08 – 00;06;29;09

There’s a huge appetite to see dairies below and go here with Greenfield sites, and we clearly know today we’re not seeing a ton of that anyway. So I think the proof is in the pudding, but I don’t think it’s just because heifers are expensive. As you said, the health of the economy here for dairies. I think we’re in this okay spot.

00;06;29;09 – 00;06;36;28

And naturally that has led to, you know, not on a lot of new greenfield sites being built, even though we’ve got three new big plants coming at us.

00;06;36;28 – 00;06;48;16

One, I guess you talked about headwinds. One thing that I see as a potential tailwind is the fact that feed costs are pretty low by historical standards. Natalie, you want to talk a little bit about what’s going on in the feed side?

00;06;48;20 – 00;07;08;15

Yeah, I think you hit the nail on the head there when you said, you know, that prices are at historical low prices, so it’s a good time on the feed side of things. We have seen a run up in the futures over the course of the last couple of weeks, but we have started to take some of those gains back.

00;07;08;15 – 00;07;34;09

The run up was based on dryness in South America, and another key component to the rally was the managed money or the speculators in the market buying back their short positions. They just don’t like to be short when there’s a lot of uncertainty out there, like the weather in Brazil, like an upcoming election. So they did buy back in those positions and definitely have become less short.

00;07;34;15 – 00;07;47;26

So that’s the run up. It’s nice to finally see the break backs coming. I think it’s important for dairymen to work with your feed advisor and get targets in place and working with suppliers because the market is moving fast.

00;07;47;29 – 00;07;58;02

So from a bases standpoint, certainly we’ve seen futures come down, but his base is coming down right alongside or his base is staying relatively high as we’re kind of in the midst of harvest right now.

00;07;58;02 – 00;08;23;20

So harvest right now. On Monday, the government reported that we’re at 30% harvested on corn and 47% harvested on soybeans. We have started with especially on the beans side of things. With that harvest progress, we’ve seen basis come down. Corn as well has seen some slight reductions. I think as harvest continues to ramp up and should be a good week for harvest this week, I think we’ll continue to see pressure there.

00;08;23;20 – 00;08;43;00

So we’re seeing the pressure in the Midwest that hasn’t 100% transposed to the far reaches of the market. The rail markets like California, for example. You know, it takes a little while to go from the Midwest to either coast or down to Texas or Arizona. So we’re hoping for those basis breaks to translate over.

00;08;43;05 – 00;09;12;10

So I guess, Ryan, to circle back to you, thinking about, okay, feed prices are lower. Obviously, you talked about several different headwinds ahead. Do you think that feed situation, the higher milk prices okay, maybe stalls out on some of the potential for greenfield expansion. But do you think that there’s a potential that we could see producers take the possible revenues on the table as we go into late 2024 and invest that into cow comfort in 2025, and that helps to grow some milk production along the edge.

00;09;12;12 – 00;09;32;00

Yeah, I think that’s probably the obvious call out. And I would take that to be true. Right? I mean, we can look back at history and we have and when we get a milk to feed relationship set up the way it is, milk always follows. So even though yes, the heifer situation things very real barrier of entry is very high, I do think that probably puts the focus back into the dairy.

00;09;32;00 – 00;09;48;14

You’ve got, you know, whether it’s building another small barn or a wing or as you mentioned, cow comfort. I’d like to think dairies. We’re looking at that all the time anyway. So maybe there’s a little extra focus on that this go round because at the moment, right. We’re not about to see a probably a bunch of big new dairies try to get built as we head into winter across most of this country.

00;09;48;14 – 00;10;00;25

So that seems to be the obvious spot, right? We know we’re walking hopefully out of avian for a lot of the country. There’s, I think, obvious room for growth there just in recovering from this virus, which we know has got a pretty long tail on it. After you’ve gone through that.

00;10;00;25 – 00;10;18;07

So to tie it back to you, Fletch. Okay, maybe we don’t get big greenfield investments. Maybe we see a little bit of growth in milk production on some some weaker year over year comps in some of those gains in milk supply along the edges. Or how does that impact the commercials as we go into 2025? What if the milk just isn’t out there?

00;10;18;14 – 00;10;53;05

Yeah. Well, I think looking back at this year, we’re trying to answer those questions even for this year. For example, if you look back at this year’s cream market in general, this would be considered a tight milk supply. We had year over year growth in negative for the longest consecutive stretch. It’s been over a year, I believe. And however, if you look at the components of the milk that we’re still seeing, you know, continual growth with components and protein and also fat, and I think it’s been really interesting to see look at the cream market, considering the low milk production growth that we’re in.

00;10;53;05 – 00;11;19;04

And it’s been trading in the West and also Midwest, either at par or lower than where we were last year. So it is one of those things that even though milk supply in general has been at lower growth rates, we are seeing components have an influence on the market. I would imagine that trend continues. But with that said, I think that general takeaway is right now we can’t expect a rapid growth rate and really alluded to that.

00;11;19;04 – 00;11;50;03

I think the heifer supply situation is real, absolutely broader than that. We’re seeing relative dairy prices and supply regions larger than the U.S. trade at higher prices than the US. So as long as Europe is trading a premium, then that simply raises the floor of US dairy prices in general. And if for whatever reason, the US market goes to an extreme discount to Europe, then we’re likely to export so much that we could run into a domestic shortage down the road.

00;11;50;03 – 00;12;03;07

So I think we are at a situation as we approach next year where we’re looking at higher relative prices, at least for now, unless we see a big dynamic change across the pond in Europe and see a large correction over there.

00;12;03;10 – 00;12;17;12

It sure seems like there’s tremendous amount of uncertainty going into next year, just given all the variables. And I would say that these are arguably some pretty massive variables compared to what we’ve seen in the last couple of years. And I’d say the same is true on the feed side.

00;12;17;12 – 00;12;43;27

Absolutely. And I think, you know, the uncertainty that Ryan and Fletch have talked about, you know, it’s important to manage that risk. And I think that’s what the average team brings to the table, is managing that risk, both on the dairy side and now we have our feed side as well. So we have a feed foundations program, which is the group that I’m where where we can help you do some of the same great things you’ve been doing to manage risk on dairy, to manage your feed side as well.

00;12;43;27 – 00;12;45;21

We’d love to talk with you about it. Well, a.

00;12;45;21 – 00;13;07;04

Huge thanks to Natalie, Fletch, and Ryan for joining me on today’s episode and sharing your insights with our listeners. Thank you, as always, to our media team for mixing and mastering. And thank you to you, the listener, for joining us today. If you like what you hear, subscribe on your favorite app. And if you’d like to learn more about how we help people manage risk, contact us at insights at Evercore AG.

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In our weekly series From the Furrow, host Phil Plourd and fellow grain geeks shed light on current market conditions and how grain producers can take action to manage their risk.

This week, Phil is joined by Steve Ring, Senior Advisor with Ever.Ag. How are US crops faring after an ideal growing season? What might this week’s WASDE report hold? And how are grain markets moving? Phil and Steve discuss those topics and a whole lot more.

Questions or comments? Topics you’d like to hear us discuss? Contact us at [email protected].

(Transcript auto-generated)

00;00;00;13 – 00;00;16;24

Futures trading involves risk and is not suitable for all investors. Content provided in the segment is not for educational purposes and is not a solicitation to buy or sell commodities. Opinions and statements of guests not affiliated with every egg of their own, and do not reflect the views of the brand. The accuracy of their statements can not be guaranteed by a Barack.

00;00;16;27 – 00;00;38;04

Hello and welcome to From the Furrow, brought to you by Ever AG Insights. Each week we talk with subject matter experts about news and topics affecting the grain markets. I’m your host, Phil Plourde, to get us started today. Let’s take a quick look at the markets. It’s Tuesday, October 8th at about 10:30 a.m.. Nearby corn trading at 422 per bushel, down about $0.04 on the day.

00;00;38;05 – 00;00;57;20

Soybeans $10.16, down 18 from yesterday. And yesterday was not a great day for the soybean market. So soybeans taking it on the chin a little bit. We’ll talk about soybeans and more with Steve Ring. We’re excited to have him along for a conversation today. Steve is senior advisor in the Ever AG Livestock group, working with clients on livestock and grain risk management.

00;00;57;21 – 00;01;15;25

Steve, thanks for joining us today. You know, saw yesterday that harvest is running ahead of schedule. The weather has been really good for harvest and is from my in expert position. It’s like the first year in a while that we’re getting a look at what yields can be and what’s been a pretty perfect environment right past couple years.

00;01;15;25 – 00;01;28;12

We’ve had drought issues or, you know, there’s been like a lot of fits and starts with the growing season. This year was pretty close to perfect. So how do these great seeds do in pristine conditions? We know they’re good and bad conditions. How good are they in pristine conditions?

00;01;28;12 – 00;02;01;22

You hit a spot on. We’re seeing yields that are surpassing, I’m guessing, some of the greatest expectations by these seed companies. A lot of yields, record farm yields record field yields yields 300 plus bushels. And even 260 to 290 is not an unusual yield in the good states. Iowa, Illinois, Missouri is one that has had the best rating, and I’m anxious to see how they end up shaking out because they’ve had some 280 to 290 bushel yields in soil that’s not quite as fertile as Illinois and Iowa.

00;02;01;24 – 00;02;02;18

Absolutely.

00;02;02;21 – 00;02;04;24

I mean, that’s unheard of right in Missouri now.

00;02;04;24 – 00;02;22;00

So it’s going to be interesting to see how we shake. The only thing I would just follow up on is we had challenges throughout the growing season. We had pockets that had too much rain early in northern Iowa, southern Minnesota, and then late in the season we turned dry. And that’s going to be interesting to see how we finish early.

00;02;22;00 – 00;02;44;11

Yields have been really good, and we’re going to see in the areas that missed showers how those come out. Because the other thing that we’re seeing is a quick dry down on some of this grain. In fact, you’ve got beans coming in at, you know, 10% or lower. So the farmers are losing yield in the field because you can take 13 to 13 a half percent moisture beans without any discount.

00;02;44;11 – 00;03;06;24

So when you’re down at 1,011% moisture, you’re missing out on some of that yield. So it’s a good start. If I were going to handicap right now based on the yields that I’ve seen, I think Iowa could very well be too low. I think Illinois looks reasonable at 222, and I wouldn’t have guessed that earlier in the growing season, with some downs that we’ve seen throughout the growing season.

00;03;06;26 – 00;03;13;25

And like I mentioned on Missouri, with them having the best overall crop rating throughout the year, how good they’re you’ll see come in.

00;03;14;00 – 00;03;34;01

So overall though yeah pocket of this and that. They’ll be some you know hey look at this. 300 bushel corn is something to get excited about. Sometimes we don’t get the bad news isn’t right away, but overall seems pretty spectacular on the crop. The last time around, USDA put yield at 183.6 bushels per acre. That’s the price to the upside.

00;03;34;01 – 00;03;39;29

If I recall correctly, this Friday we get another crack at it. What are you seeing out there in terms of estimates and what are your own opinions?

00;03;40;00 – 00;04;03;23

Yeah, the trade estimates, as you’ve noted, came in slightly below their 183 four and got a range from 181 6 to 184 five. My biases. While we may not see it on this report, I think we could possibly see it a little bit higher than that, because how good the yields have been in some of these areas. On the soybean side, USDA was at 53 two in September.

00;04;04;00 – 00;04;27;05

The trade guess guesses 53 one. The one thing with the lack of moisture in some of these areas and a little bit smaller seeds, I wouldn’t be surprised if we don’t come in a little bit below that, because we are 47% through harvest on been, so there’s been quite a few yields already reported. And the other thing is we had over 13 million acres that went in in mid-June or beyond.

00;04;27;05 – 00;04;45;11

So you don’t often get great yields planting that late. So I think that could be one thing that could still pull down. And maybe I don’t think it’ll show up on Friday, but I could see a small downtick and then maybe a little bit smaller yields as we move into this one or as USDA releases future reports.

00;04;45;11 – 00;04;49;19

But anything in the 53 neighborhood is going to be a record. Right. For beans.

00;04;49;19 – 00;05;13;15

Yes, absolutely. 52 seven, I think is the previous record. So yeah, anything 53 or above, we will have an increase carryout. In fact, the trade guess is for about 549 million bushel carryout on soybeans. And the USDA, with their grain Stocks report are showing a current of about 342 million. So we’re a gain a little over 200 million bushels at this pace.

00;05;13;18 – 00;05;17;06

And that’s with still relatively healthy export market.

00;05;17;09 – 00;05;35;05

And just for the record, corn all time high, 170 7.3 bushels per acre, I believe last year. So 183 and change would be a pretty significant uptick in that regard. So Steve, the yield numbers are fine. The production numbers are fun. When the report lands at 11 a.m. central time on Friday morning, where’s your eye going to go first.

00;05;35;05 – 00;05;41;09

Is it stocks production exports. Talk about first for corn and then for beans. And talk about the implications certainly.

00;05;41;09 – 00;06;09;00

So I always look at the carryout number. That’s ultimately what’s going to drive prices is what do we have projected carryout. The USDA had 2.057. That was in the September was the and the trade guess is to be below 2 billion or something psychological about, you know, 2 billion or greater, although 1.9 would still be a large carryout as long as we stay somewhere in that range, I don’t think we’ll see any major price reactions.

00;06;09;00 – 00;06;34;24

You know, you look at the bottom line first and then more importantly, how does the trade react to it? How does manage money and the growers and users respond to what the report might say? So the information’s important, but really the more critical thing that moves the price is the reaction to the report on soybeans. Again, the carry outnumber as long as we stay 450 million bushels or greater on the carryout.

00;06;34;24 – 00;06;49;15

I think the trade will continue to look thin at South American weather. And that’d be the other thing I would look at in the report. Secondary is, has USDA made any major changes on world production and world demand on corn beans?

00;06;49;15 – 00;07;12;15

Are we before we switch back to corn for a second, let’s stay in that soybean group for a second. You mentioned Brazil. We always talk about China and soybeans. It seems like Brazil was dry, not unusually so, or severely so, but it tends to be dry there late September. And now the Ranger coming in October. Are we expecting to see relief and the season get going, or what’s the Brazil situation then let’s talk about China and its appetites for soybeans.

00;07;12;21 – 00;07;37;01

Certainly start with Brazil. They were extremely dry during the dry season. October kicks into the rainy season. That’s effectively April in South America. I know there were some concerns not having the rain early because Brazil can begin planting in early September, and there weren’t a lot of early beans planted because of lack of moisture. They were about 4.5% planted.

00;07;37;01 – 00;07;58;22

As of last week. Normal would be about 10%, and I went back and was looking at the pace of planting, and one of the fastest paces that we’ve seen in Brazil in the last five years was the 20 1819 crop, and they would have been 27% planted that year as of last week. And interestingly, that was one of the lower yield.

00;07;58;22 – 00;08;24;12

The following year was the second slowest in the last five years, the 20 1920 crop. And yet they produced 126 million metric tons, so 9 million tons more than they did with the fastest planning pace. So with soybeans, it’s not always the fastest being the best. It’s the growing season. And we always joke here in the United States, you know, July, August rains make the soybeans so late July early August beans.

00;08;24;12 – 00;08;32;24

And it’s no different in South America. Those late rains at the key sea development stage makes a difference in the final production. Yeah.

00;08;32;24 – 00;08;48;20

One of the first things I learned about soybeans was they are a crop of August. I was told when I was a youngster coming to the business. Still true today? China? Yes, certainly. Things are messy there economically. We’ve seen the big stimulus all kinds of things we could talk about there, but specifically its appetite for U.S. grain imports, specifically soybeans.

00;08;48;20 – 00;08;52;29

What’s been the story there? Do we have any expectations for changes or good? Bad, indifferent?

00;08;52;29 – 00;09;15;09

I was looking at the report several weeks ago that showed that China had one of its largest imports of soybeans in August, the month of August. Most of those came out of South America. China has been buying from the United States, depending on where you shake out there being demand, Brazil cannot raise enough beans right now to supply all of China’s needs.

00;09;15;09 – 00;09;39;29

So China still relies on the US for some of their being imports. So on the bean exports, the USDA currently has 1.85 billion projected, a large percentage of that will be China. We’ll see if China retains the appetite. I was also looking at the seasonal pattern and China after the large increase in the late summers. They’re buying South American beans.

00;09;39;29 – 00;10;11;19

They tend to tail off, which actually surprised me. I would have thought, you know, during our harvest would have also been Chinese imports. But they do pick up after the first of the year. Usually Brazil will begin harvest the week of Christmas and with a little slower planting pace, it’s going to be about 30 days later than normal before China can buy beans from Brazil, so I expect to have at least a month’s worth of exports that month of January and possible and early February that could still impact our total export demand.

00;10;11;22 – 00;10;31;21

Let’s talk about corn again. So I don’t know where the line of demarcation should be, but let’s say we’re at 422, been in a nice little recovery rally. What would be the couple of things that might take corn above 450, let’s say, or a couple of things that would take corn below 350 in the field the next few months.

00;10;31;21 – 00;11;00;26

The 450 is a lot easier. Obviously China demand coming in and buying us corn. We don’t have much forecast for China to come in and buy corn from the United States. They’ve been getting any corn needs from other parts of the world, you know, Ukraine, South America. That would be a change. And if you would all of a sudden tip that carryout from one 9 to 1 8 or 1 seven, that would raise price and certainly push it towards 450.

00;11;00;26 – 00;11;28;04

Keep in mind that manage money is still sitting on a net short position. They’re short 61,000 contracts as of last night, and normal for them would be this time of year to be long, almost 108,000 contracts. So just money flow from net short to net long would influence that too. The flip side is you still got growers that are about 850 million bushels behind where they would normally be with a bigger crop than three year average.

00;11;28;04 – 00;11;50;10

So you got that whole dynamic. I think the lack of farmers selling keeps it from getting much above 450, because I think if we got December corn to 450, that would put March corn at four 65th May corn, possibly for 75. And those are price targets that growers should be looking at the stick in additional hedges and probably have some offers out there at those levels.

00;11;50;12 – 00;11;59;00

Well, let’s make it 375 since we’re so close to 422, what about 375, you know, or even, dare we say, 350? What would take the market into that kind of a downtick?

00;11;59;00 – 00;12;26;03

I’m not sure. This particular crop year would see a 375 without a major surprise in the production, like if we would all of a sudden, instead of a 183 and change, go to a 185 or 186 where you had larger supplies and didn’t increase the demand. Or the flip side is if we would see exports slide or revision on the feed use, that’s currently at 5.8 to 5 billion bushels.

00;12;26;03 – 00;12;54;17

If you have a health outbreak, avian influenza in broilers or one of the larger in beef consumption, where, you know, beef is such a large user of corn, if we’d see some disease come in and affect those demand side. So I think that’s a minor possibility at this point. But if we would get the acres I know S&P global, which is the old informed advisory, they had come out with 92.7 million acres.

00;12;54;17 – 00;13;16;05

And if we got a trend line yield and just lowered usage 250 million bushels, that would take the carryout ratio up to the point that would get you a 350. So it makes a pretty big number next year. That would be a better possibility, as next fall if we have a good growing season, get a few extra corn acres and see a dip in demand.

00;13;16;07 – 00;13;34;02

All right, before we go, Steve, today can’t help myself. You and I often trade emails at odd hours over the weekends about macro indicators. We’re kind of junkies on the economic scene. Certainly no shortage of interesting macro things to discuss these days. What do you like watching day to day or month to month in terms of the macro indicators?

00;13;34;02 – 00;13;45;28

And maybe, you know, if they have a tie back to the grain markets or the markets we cover, any favorites out there for you? Anything that you like? Hey, it’s retail sales day. This is going to be a good one or what gets you really engaged. On the macro side.

00;13;46;02 – 00;14;13;28

I look at a number of different things. You never know what might impact the overall economy that eventually spills down into the ag commodities. You know, certainly the inflation. I mean, there’s the whole debate about inflation, you know, are we going to see another round? We certainly saw recently what union the longshoremen’s request for a 77% pay increase and a potential settlement that over 60%.

00;14;13;28 – 00;14;38;04

The one thing whatever you do have, inflation and wages aren’t keeping up. Workers become disenchanted. They’ll move for a raise if they can get it, and employers then are forced with the issue that they could lose employees if they don’t raise wages. So you often when you have high inflation, get a second round due to inflated wage, you you’re trying to play catch up from the first round of inflation.

00;14;38;04 – 00;15;01;02

So I think the whole inflation deflation is an interesting conversation. And especially when you’ve got deflation in China, and because they stayed closed for so long due to Covid. And now you reference China’s stimulus program where they’re going to infuse $1.4 trillion into the economy to try to spur, demand on China steps in and wants to buy anything.

00;15;01;02 – 00;15;21;12

They have a large enough demand base that they can certainly move prices. And whether that’s energy, commodities like grains, I don’t think we’ll see it on the meat side. You know, you look at their pork production, while it may be down as far as numbers, with them having more confinement type operations, they are raising heavier hogs and what they did in the past.

00;15;21;12 – 00;15;52;26

So you don’t need as many hogs to produce the same amount of pork. So you know, you’ve got that. And then what happens with change in Washington DC? Do we see changes in policies? I’m not necessarily a political junkie, but I do pay attention, especially during election years, on any potential changes in policies. Again, whether it’s related to energy or just the overall world market, especially when you’ve got some of the issues that are going on in Ukraine, Russia and Israel with what’s going on there and the potential for any escalation.

00;15;53;02 – 00;16;12;14

Well, let’s just say this, Steve, you don’t live in a swing state. And so you should be grateful because, you know, here in Wisconsin and our friends, our peers in Iowa are getting full on advertising assaults every minute of every day. Well, thank you so much for joining us today. And we’ll be back in a couple of weeks with another edition of From the Furrow.

Disclaimer: TRADING FUTURES AND OPTIONS ON FUTURES INVOLVES SIGNIFICANT RISK OF LOSS AND MAY NOT BE SUITABLE FOR EVERYONE. THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THE INFORMATION AND COMMENTS CONTAINED HEREIN ARE PROVIDED BY EVER.AG AS GENERAL COMMENTARY OF MARKET CONDITIONS. THIS INFORMATION SHOULD NOT BE INTERPRETED AS TRADING ADVICE OR RECOMMENDATION WITHOUT FURTHER DISCUSSION WITH YOUR EVER.AG ADVISOR. THIS IS A MATTER OF SOLICITATION.
EVER.AG INSURANCE SERVICES IS A LICENSED INSURANCE AGENCY AND AN AFFILIATE OF EVER.AG. INFORMATION CONTAINED HEREIN IN THIS WEBSITE IS COMPILED FOR THE CONVENIENCE OF THE USER. INFORMATION IS OBTAINED FROM SOURCES BELIEVED TO BE RELIABLE AND IS FURNISHED WITHOUT RESPONSIBILITY FOR ACCURACY OR CONTENT. MARKET DATA IS SUBJECT TO CHANGE AT ANY TIME. Ever.Ag is a licensed insurance agency in the following states: AZ, CA, CO, CT, FL, GA, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MO, MT, NE, NV, NH, NM, NY, NC, ND, OK, OH, OR, PA, RI, SD, TN, TX, UT, VT, VA, WA, WV, WI, WY.
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The post From the Furrow – Steve Ring – October 9, 2024 appeared first on .

View the video version of this episode here.

In The Grain Feed, Jim Matthews is joined by a rotating cast of analysts to discuss what dairy and livestock producers can be doing to manage their risk. This week, Jim is joined by Jenny Wackershauser, Katie Burgess and Cody Koster at the World Dairy Expo in Madison, WI.

Questions or comments? Topics you’d like to hear us discuss? Contact us at [email protected].

The following music was used for this media project:
Music: Funky Intro 29 by TaigaSoundProd
Free download: https://filmmusic.io/song/9520-funky-intro-29
License (CC BY 4.0): https://filmmusic.io/standard-license
Artist website: https://linktr.ee/taigasoundprod
© Ever.Ag 2024, confidential and proprietary.

Disclaimer: TRADING FUTURES AND OPTIONS ON FUTURES INVOLVES SIGNIFICANT RISK OF LOSS AND MAY NOT BE SUITABLE FOR EVERYONE. THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THE INFORMATION AND COMMENTS CONTAINED HEREIN ARE PROVIDED BY EVER.AG AS GENERAL COMMENTARY OF MARKET CONDITIONS. THIS INFORMATION SHOULD NOT BE INTERPRETED AS TRADING ADVICE OR RECOMMENDATION WITHOUT FURTHER DISCUSSION WITH YOUR EVER.AG ADVISOR. THIS IS A MATTER OF SOLICITATION.

The post The Grain Feed – World Dairy Expo – October 3, 2024 (Audio Only) appeared first on .

In the latest edition of the Parlor to Plate dairy podcast from Ever.Ag Insights, our all-star panel discusses important drivers in dairy and grain markets. How are dairy end users planning and hedging as they look to 2025? What steps are producers taking to manage risk heading into next year? And how is South American weather impacting grain prices?

Join host Kathleen Wolfley and panelists Zach Bowers, Kevin Peterson and Britt O’Connell for a spirited discussion.

Questions or comments? Topics you’d like to hear us discuss? Contact us at [email protected].

(Transcript auto-generated)

00;00;00;10 – 00;00;08;21

Future trading involves risk and is not suitable for all investors. Content provided in this segment is meant for educational purposes and is not a solicitation to buy or sell commodities.

00;00;08;23 – 00;00;34;25

Hello and welcome to Parler to Play a weekly podcast from Drag Insights, dedicated to offering listeners enlightening discussion and actionable intelligence about dairy market. I’m your host, Kathleen. Hopefully. We are excited to have you along. If you like what you hear. Please like, subscribe and tell a friend or two. Let’s timestamp today’s recording. It is Wednesday, October 2nd around 1 p.m. central time.

00;00;34;25 – 00;00;58;07

Can’t believe it’s October. The fall leaves are starting to get a little bit more crunchy here in Western New York, but here’s a rundown on the markets. See me block cheddar close at 203, down $0.15 on the week. Barrels at 215, down $0.28. Spot butter down to the lowest level since January at 268, $0.18 lower. And the nonfat dairy milk market closed at $1.36, down $0.02.

00;00;58;12 – 00;01;20;23

And now for the grain market. December corn is trading around 433 per bushel. November soybeans at 1057 per bushel. And the December soybean meal market is trading around 342 per ton. It’s another week. And another all star panel from the financial services team. First, we have Kevin Peterson in our Chicago office. He helps commercial clients manage risk and anchor in the Platteville office.

00;01;20;23 – 00;01;39;10

We have Brett O’Connell, who works diligently for grain producers across the country. And last but not least, we have Zach Bowers, who works with dairy producers to manage milk market revenues. Tim, welcome to the show. It’s been a little while. Thanks for having us on today. Is everybody excited for fall? You got your pumpkins out. The moms are ready to go.

00;01;39;17 – 00;01;44;27

Dad. Summer’s over by the weather does feel nice. Pumpkin spice latte season, plaid shirts and all.

00;01;44;29 – 00;01;58;26

Oh my goodness. I love a good pumpkin spice when appropriate, but I’m more of an apple kind of girl. So we’ve been hitting up the local apple orchard getting those apple cider donuts, which I don’t know, they hit the apple cider donuts in the Midwest. Or is that just a northeast thing?

00;01;58;26 – 00;02;01;09

Oh, they sure do. We got our apple picking.

00;02;01;09 – 00;02;20;00

Yeah. This place. I don’t think they actually grow their own apples anymore, but they’re still a staple in the Kathleen running around on the weekend stop. In any case, team thought today we could talk about what is the most important thing in the markets right here, right now on October 2nd, the beginning of the fourth quarter. Kevin, let’s start with you.

00;02;20;01 – 00;02;23;09

What’s the most important thing in your mind right now?

00;02;23;09 – 00;02;41;05

Yeah, from my viewpoint, I think the most important thing is actually done with Q4 and the hedge wise and really looking out into 2025 as a lot of end users start to set their budget for next year. Obviously, we’ve been talking for a while now. Two massive plants coming online. But the big question still remains can we get them out?

00;02;41;05 – 00;02;57;26

And and so I think if you’re an end user looking out at that curve class three and cheese curve, obviously the highest full year curve we’ve ever seen. And so it doesn’t look very appealing to go out and get anything done right now again, even as budgets are being set. But again, it’s the question of can we get the milk?

00;02;57;26 – 00;03;19;13

And if we can next year it should be extremely oversupplied in cheese, obviously. However, though if we can’t, things might still run a hair tight. We have a lot to make up for this year’s production wise off cheddar specifically to kind of get back to average levels of production. So I think that plant out of Hill Mark can help turning to other commodities like butter as well, where we have a little bit of a pullback here.

00;03;19;13 – 00;03;41;19

Obviously, it seems that at least for now, butter manufacturers are pretty happy with stocks in the coolers for the holiday season. But we know, as in years past, you know, that can kind of turn on a dime. But futures out there as well is still holding now a premium to current spot levels. And so yeah that’s my biggest focus right now continues to be those 2025 markets and getting customers taken care of out there.

00;03;41;26 – 00;03;58;21

So I guess thinking about your 2025 commentary, aside from new cheese plans coming online. So let’s theoretically say they get all or most of the milk that they need. What are some of the other cases for a bearish market? What could take the market lower aside from the new plants coming online in your mind?

00;03;58;22 – 00;04;15;21

Obviously the plants are the big one. But aside from that, you know demand has been pretty sluggish all year domestically. And I think we see that continue to be a trend. I don’t think that’s obviously going to help the markets at all as well. And then you know, always we talk about export ability or on marginal product. Europe has been running pretty hot over there.

00;04;15;21 – 00;04;21;18

However, if they cool down and we’re not priced competitively, I think that’s also going to be another case in the market next year.

00;04;21;18 – 00;04;38;11

But right now it seems we are pretty competitive on a forward looking basis versus let’s say, European mozzarella prices. So we are on competitive footing. I guess the question that I keep coming back to you in the cheese market is we exported a heck of a lot of cheese in the first half of the year, record amounts of cheese.

00;04;38;11 – 00;04;54;22

How does the market digest cheese availability or the export picture? If we don’t hit those record high levels again, I mean, if we don’t hit new records, does the market look at that as more of a bearish indicator, if indeed we do have more cheese on the marketplace, come say March, April next.

00;04;54;22 – 00;05;17;12

Year I mean yeah, absolutely. Yeah. If we get more supply and exports cut off, we’re going to be in a glut of products. Even just looking at those manufacturing plants on their own, those new cheese plants, maybe we’re talking about a 5% increase in cheese, whereas demand usually is more around maybe the 2% level. So yeah, without expanded export capabilities or a really good demand, we’re going to outpace ourselves.

00;05;17;12 – 00;05;20;23

Quick math for 2 to 3 years on new cheese coming online.

00;05;21;00 – 00;05;32;28

History does say you don’t tend to grow capacity and demand in a linear fashion. So I don’t know. Stay tuned. 2025 I think it’d be pretty interesting from a cheese market perspective. Zach your turn. What’s your most important thing?

00;05;32;28 – 00;05;53;23

Yeah, I mean, to go off of that, I’m the same opinion, right? 2025. Right. We should be pretty well wrapped up at this point with Q4 hedges. And if you’re not I mean, don’t feel like you missed the boat, right? We’re off of our highs, but we’re still talking $2,122 milk out there, right? October. We don’t see a lot of risk in mathematically, but November December are free to go as they please.

00;05;53;23 – 00;06;13;21

So, you know, if you’re still open on some stuff there, that’s obviously priority number one, as we’ve seen, you know, that’s the most affected by this recent fall off in the cheese spot market. Right. But the beauty of it has been you know, as Kevin alluded to, budgets are being set. We’re clearly seeing the end user starting to step out into that 2025 curve to start establishing some of their hedges.

00;06;13;21 – 00;06;32;16

Right. We’re seeing some government purchase orders coming through, as they typically do this time of year, as well as, I think, export orders, too, when they look out at that curve and see sub $2 futures versus what they’re paying right now. Right. So we want to really take advantage of that because, you know, even though near eight months in class three are falling, we’ve seen that Janet Junker push into new highs as of yesterday.

00;06;32;16 – 00;06;44;20

Right. So what we definitely want to take advantage of that for all the reasons that, you know, you guys just said. Right. The number one question mark is if milk is going to be there or not. Well, we’re going to walk into a time period where seasonally we’re going to get more milk out of the same cows, right.

00;06;44;20 – 00;07;01;10

We do know of some plans for some expansion on dairy farms across the US coming in the next six months as well. Two that coincide with some of those cheese plants. So I think you’re going to start seeing the milk. For the most part, it feels like pretty much every state, you know, obviously, barring California and Wisconsin, has really dealt with the bird flu.

00;07;01;10 – 00;07;10;26

So that shock is probably out of our system as well. So yeah, taking advantage of the support in the trade volume we’ve seen in the 2025 curve is definitely our priority number one right now.

00;07;11;03 – 00;07;28;23

What about the powder space. Are you guys watching anything in particular there? I know New Zealand milk production has been a little stronger to start the season. China’s on air, more active at G.D.. There’s some talk about stimulus packages in China. What should people be watching out for as it relates to the powder market?

00;07;28;25 – 00;07;47;21

Yeah. You know, I think when I look at that market, I kind of compare it right now to similar to cheese, I mean, definitely supply constraints in there. I think year to date now through July, I want to say we made about 200 million less pounds of nonfat here in the US. And so obviously, I agree that demand has been a little sluggish, especially out of China.

00;07;47;21 – 00;08;06;16

But still, when you make that much less powder year over year, I think you can tend to see prices rise, which we have continuing to hold kind of a premium on New Zealand. And I think that could continue as well just with our supply constraints. They obviously have weakened demand as well out of China, but tend to be making more skim milk powder down there versus whole milk powder.

00;08;06;16 – 00;08;12;14

So yeah, I would look to see us continue to trade a premium to them, whereas historically that probably isn’t the norm.

00;08;12;14 – 00;08;21;00

Right? I don’t want to forget about you and the grain market. The ever important grain market. What’s the most important thing going on on your side of the desk? So I think really what we’re.

00;08;21;00 – 00;08;22;29

Going to be watching right now is South American.

00;08;22;29 – 00;08;23;11

Weather.

00;08;23;11 – 00;08;24;08

That is the.

00;08;24;08 – 00;08;25;28

Thing that sort.

00;08;25;28 – 00;08;32;13

Of was the catalyst behind this most recent run in the grain and seed complex, as we saw the funds.

00;08;32;13 – 00;08;32;27

Carrying a.

00;08;32;27 – 00;08;54;00

Pretty aggressive short position on both corn and beans and looking to cover that as some of this early South American weather was a bit questionable. Now, as we move forward, forecasts do look more amicable for a good growing season in some of these drier parts of Brazil, with rains forecasted to continue to fall into and through October. But I think that’s really going to be the main watch point.

00;08;54;00 – 00;09;23;10

Purpose has been really early in the US this year. It’s amazing how many guys are already done with soybeans, but anecdotal evidence of both the soybean and the corn crop suggests that it is going to be a very strong crop. We’ve heard of some really pretty high wild yields out here. Not to say it’s great everywhere, but even in the areas that are disappointing, you know, those folks are only maybe 5 or 10 bushels off of their average, which is pretty incredible, especially considering some of the early season struggles and damage that some of those folks had.

00;09;23;10 – 00;09;24;08

So I think South.

00;09;24;08 – 00;09;25;10

America weather, that.

00;09;25;10 – 00;09;28;11

Is our main watch point here in the grain and feed space.

00;09;28;15 – 00;09;38;26

How’s demand looking at grain and feeds? It seems like every once in a while I’ll catch little notes from the grain team around export orders. Stronger. Weaker than years prior. Yeah, especially on corn.

00;09;38;26 – 00;09;39;13

It’s not.

00;09;39;13 – 00;09;40;07

Really a demand.

00;09;40;07 – 00;10;03;04

Issue. We’ve seen really solid demand for corn products. It’s the production issue, if you will, meaning we’ve simply out produced our current demand. Although I can’t say that it’s poor demand. It’s very strong demand. If you look at all three of your major corn demand centers on the soybean side of things, you know, we continue to crush soybeans in this country at a near record breaking pace every month with the export program is lacking.

00;10;03;04 – 00;10;12;06

And we have seen some sales here in the last few weeks, particularly to China, which is something that we needed to see happen. But we’re still behind pace of where we really need to be. And so that’s something.

00;10;12;06 – 00;10;12;16

We’re going to.

00;10;12;16 – 00;10;14;10

Continue to watch there as well.

00;10;14;14 – 00;10;36;00

Well, a huge thank you to Brett, Zach and Kevin for joining me on today’s episode and sharing your insights with our listeners. Thank you, as always to our media team for mixing and mastering. Thank you to you, the listener, for joining us today. If you like what you hear, subscribe on your favorite app. If you’d like to learn more about how we help people manage risk, contact us at [email protected].

Disclaimer: TRADING FUTURES AND OPTIONS ON FUTURES INVOLVES SIGNIFICANT RISK OF LOSS AND MAY NOT BE SUITABLE FOR EVERYONE. THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THE INFORMATION AND COMMENTS CONTAINED HEREIN ARE PROVIDED BY EVER.AG AS GENERAL COMMENTARY OF MARKET CONDITIONS. THIS INFORMATION SHOULD NOT BE INTERPRETED AS TRADING ADVICE OR RECOMMENDATION WITHOUT FURTHER DISCUSSION WITH YOUR EVER.AG ADVISOR. THIS IS A MATTER OF SOLICITATION.

The following music was used for this media project:

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License (CC BY 4.0): https://filmmusic.io/standard-license

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© Ever.Ag 2023, confidential and proprietary.

The post Parlor to Plate – October 2, 2024 appeared first on .

Cody Koster and Jon Spainhour take a deep dive into this week’s GDT report.

Questions or comments? Contact Jon at [email protected], Cody at [email protected], or give us a call at (312) 492-4200.

(Transcript auto-generated)

00;00;00;10 – 00;00;08;15

Future trading involves risk and is not suitable for all investors. Content provided in this segment is meant for educational purposes and is not a solicitation to buy or sell commodities.

00;00;08;18 – 00;00;16;04

Hello everybody. Welcome back to another DDT Tuesday. I am your host, Cody Costa. With me, Mr. John Spain. How are John? How are you.

00;00;16;04 – 00;00;18;25

Today doing well, Cody, and happy to be here. Oh, I’m.

00;00;18;25 – 00;00;23;08

Happy to have you here on the 1st of October, our very first GDP of the month of the quarter.

00;00;23;09 – 00;00;27;21

Given me. And you are a man of statistics today.

00;00;27;24 – 00;00;37;27

The facts write them down, their facts. All right. So GDP today down 0.8 percent as an aggregate. But we still had some fireworks within the commodities.

00;00;37;27 – 00;00;55;14

And so yeah you bet Cody let’s start out with I would say the big winner, but it wasn’t exactly the big winner but whole milk powder, which is kind of the heavy weight of the average was up 3.2%. If we look at where futures were forecasting that was going to come in at, it was right around the price it did.

00;00;55;14 – 00;01;35;01

So I think we can go ahead and say that whole milk powder came in right on the expectations. As we move to the other products. It gets a little weirder, though. Skim milk powder came in at down 0.5. I think futures were looking for a little bit more than that. And for those people who watched the GDP round by round, because it’s a very exciting and illustrious job, you would note that we went to a very small supply demand ratio on skim very early, and skim came from -6% to -0.5% over a 5 to 6 round period there on a 1.25 demand ratio.

00;01;35;01 – 00;02;05;15

So just to say that that was a very low supply demand ratio, normally we see a commodity kind of turn off a few rounds after it gets there and we don’t see very many increases. Skim milk powder was able to drag from -6% to -0.5% on a very low supply demand ratio. One thing that the GDP has done over the past few years is made sure that if one commodity looks undervalued compared to the other, buyers can switch their demand out of one commodity and into the other.

00;02;05;15 – 00;02;23;19

My sense is, is that as homo powder was approaching a higher price and skim milk powder was at a lower price, we saw some people who could start to pull some of their demand out of whole milk powder and put it in a skim. I know it’s a little bit of inside baseball, but it is important to point out here that we did see that function take place today.

00;02;23;24 – 00;02;39;10

I think another one I was going to ask you about, John is mozzarella. And I know that’s kind of an outlier. You know, depending on how much it trades and when it does trade. But when you were talking about rounds, it’s actually closed on round four. Does that usually happen or does it kind of drag out a little bit longer throughout the rounds?

00;02;39;15 – 00;03;01;01

Well, Mott’s is one of those newer products to the portfolio here. So for us to say we’ve never seen it happen before, I think that is an accurate statement. At the same point in time, we just don’t have that long of a price history or an action history to look at. So I would just say that this is rare to see so far in the history of mozzarella.

00;03;01;01 – 00;03;14;10

It is rare for us to see this. And it was down 7.3% at 225, as you noted, Cody, we shut it down after about the fourth or fifth round in there, and we saw the other commodities go out as far as 12 rounds or so.

00;03;14;11 – 00;03;21;12

Yeah, I just never saw one shut down. I guess that quick in my opinion, when the other ones lasted, you know, all the way to the bell, if you will.

00;03;21;13 – 00;03;38;08

I think one thing to take away from that is that over the last few auctions, it’s been, you know, it really accelerate at higher was taking the commanding premium on a lot of the other cheeses of the world. So it’s possible that buyers, whomever the buyer was last time said I don’t need it this time. We just saw it move lower.

00;03;38;08 – 00;04;02;12

What we want to point out, though, is that cheddar cheese did come up today. It came out 3.7%. And something to really point out that’s interesting about the cheddar is that, again, this auction was full of interesting little, you know, nuances in here. That contract one cheese for fresh delivery was up 31% and came in at a price of about 262 to 62 a pound.

00;04;02;13 – 00;04;41;22

If we look at contract two, it was only up 2.8%. You know, when we convert that over that comes in 209. So a huge divergence between contract one and contract two. And then contract three goes even lower and successively on out through contract five. In terms of what in the world happened there. You have somebody that appears to need New Zealand cheddar almost for immediate prompt shipment in terms of the amount of volume that’s associated with that, I’m not entirely sure, but I’m assuming it’ll be a small volume in terms of what caused somebody to have to do that.

00;04;41;22 – 00;05;06;22

I know a lot of people were looking in and saying, is that because of the port strike that happened today, at first I would have to say cheese. Let’s think about that and then come back to the idea that I’m not going to say it absolutely had nothing to do with it. But, you know, is an East Coast port strike, and it’s mainly affecting imports because we don’t export a lot out of the East Coast, mainly out of the West Coast, if not right across the border in El Paso, down in New Mexico.

00;05;06;22 – 00;05;30;16

So stepping back and saying what happened here, one can’t help but think that the the chaos that further broke loose in the Middle East this morning between Iran and Israel might not have had an effect on somebody. Again, I have no idea, but somebody that might have been looking for product out of Europe to come down through the Suez Canal, might have seen, hey, I want to bring it out of New Zealand and I need prompt shipment.

00;05;30;16 – 00;05;45;20

It’s the best answer I can come up with because it just doesn’t make sense in terms of is there a shortage of cheese in New Zealand right now that would cause their cheddar to go to 262 for prompt shipment, while their second month is only at 209?

00;05;45;23 – 00;05;57;00

Gotcha. Yeah. Today, out of all days, there seems to be a lot of things happening, not just in our country, but throughout the world that could, you know, greatly impact some of these prices. The way that things move across different ocean front also.

00;05;57;02 – 00;06;29;18

Yeah. So when it comes to cheddar, they came in a 3.7% higher. I would say in all honesty, that is right around where our average block and barrel price are right. Locks 208 barrels two 14.5. So you know we’re right in there. I know as always, it’s very tempting to say, well, we’re probably going to export. I think the response to that is still, maybe I think a lot of people that we speak with in the international world, this GDP contract one was standing would say New Zealand has a lot of cheese for sale for export.

00;06;29;18 – 00;07;02;26

And if the US wants to compete with it, we generally have to be around $1.85. I would also just point out that here, you know, when it comes to butter, you know, butter 82% was down 2.1%. It’s going to come in at about 291. AMF was down 0.1%. And that’s going to come in. You know in that 327 area I want to point this out because Europe has been significantly higher, has been about $4 for both the prompt shipment and for their futures, you know, deferred shipment.

00;07;02;26 – 00;07;25;03

And that has kind of kept the US butter price supported, if not New Zealand’s price supported a little bit through the lens of we’re probably not going to export into Europe, although some people believe that Zealand can. But for the US it’s not a matter of the fact that we’re going to export into Europe as much as we might export into the regions that Europe isn’t going to.

00;07;25;03 – 00;07;43;13

With that in mind, we keep expecting to see the New Zealand’s butter price rally, the European butter price break. What we have seen in the last few days is the European fat price has started to move lower, in some cases very significantly in a very rapid fashion and at the same point in time, the New Zealand price just hasn’t caught a bid.

00;07;43;14 – 00;08;06;25

The US price has not caught a bid. And here we find the US butter price at 275. We are now the cheapest in the world here. So our export prospects have probably, you know, didn’t develop so far and our ability to export into Q1, that opportunity might start to dwindle if that European fat price continues to move lower.

00;08;06;28 – 00;08;20;23

John. The purchases by region. Just looking at the chart from, you know, what we send out to have nothing really sticks out as a big change from the last GDP had two weeks ago. Is there anything that you saw differently that I didn’t on the regions?

00;08;20;28 – 00;08;41;14

I guess something that does stand out here is event over, event change again, Middle East, 14% higher than the last event. I just can’t help but think that has something to do with that cheese price. Maybe not when we go to China. A bit of a nuanced result here as well. When we look at it from a year over year change up 10%.

00;08;41;14 – 00;09;03;04

When we look at it from an event change from last auction down seven, that’s again a bit of a confusing outcome, simply from the idea that we have looked at it through a lot of different lenses and one of which is, hey, the Chinese are coming back to the GDP, but they’re always here. Same point in time. And if they’re going to be here, this is the time of year they’ll be here.

00;09;03;04 – 00;09;20;18

I think, you know, we’ve been saying let’s look at it. Do they overperform seasonally when we look at it from an event over, event change again down, I guess we would expect that. But from a seasonal standpoint they’re up 10%. We got to put that in the bullish camp to find people a fresh agenda, which I encourage everybody to seek out their information.

00;09;20;18 – 00;09;44;25

They have, you know, been quick to point out, just be careful. Overall, Chinese purchases continue to disappoint around the world. We are seeing more of their purchasing come to the GDP, and that does give at least the illusion that, hey, look, China’s back at the same when it’s high. And when we look at their actual import data, it does not support the idea that China has purchased a lot more.

00;09;44;25 – 00;10;04;19

And then again, something else is developed here in the last couple weeks is that the Chinese have instituted some pretty significant stimulus plans for their economy, that we can look at that and say, that should be good for dairy demand. And at the same point in time, we’re seeing them say we want to support local dairy consumption and the local dairy production.

00;10;04;19 – 00;10;25;07

That’s a really hard thing to dig through. Yes, there’s going to be more demand, and overall, this could spur more demand for dairy products. At the same point in time, we expect to see them support their own domestic dairy herd, and we just don’t know what that’s going to look like at this point in time. So again, that’s just taking in the China or the rest of the groups there.

00;10;25;07 – 00;10;35;21

Southeast Asia, when we look at it versus last year, they were down 12%, you know, and then up 14% on an event over a change. So nothing real significant to look at there.

00;10;35;21 – 00;10;50;10

Cody. Well, John, as always, we appreciate your insight into the global dairy trade. You and I are going to be back together here middle of the month on the 15th of October for the next GDP. We appreciate everyone tuning in, listening. Until next time, have a great week and even better weekend. We’ll see you on the 15th.

The following music was used for this media project:

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This episode is also available on the following
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Disclaimer: TRADING FUTURES AND OPTIONS ON FUTURES INVOLVES SIGNIFICANT RISK OF LOSS AND MAY NOT BE SUITABLE FOR EVERYONE. THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THE INFORMATION AND COMMENTS CONTAINED HEREIN ARE PROVIDED BY EVER.AG AS GENERAL COMMENTARY OF MARKET CONDITIONS. THIS INFORMATION SHOULD NOT BE INTERPRETED AS TRADING ADVICE OR RECOMMENDATION WITHOUT FURTHER DISCUSSION WITH YOUR EVER.AG ADVISOR. THIS IS A MATTER OF SOLICITATION.

The post GDT Review with Jon Spainhour – October 1, 2024 appeared first on .

View the video version of this episode here.

In The Grain Feed, Jim Matthews is joined by a rotating cast of analysts to discuss what dairy and livestock producers can be doing to manage their risk. This week, Jim is joined by Jake Kingsley and Korri Romero.

Questions or comments? Topics you’d like to hear us discuss? Contact us at [email protected].

The following music was used for this media project:
Music: Funky Intro 29 by TaigaSoundProd
Free download: https://filmmusic.io/song/9520-funky-intro-29
License (CC BY 4.0): https://filmmusic.io/standard-license
Artist website: https://linktr.ee/taigasoundprod
© Ever.Ag 2024, confidential and proprietary.

Disclaimer: TRADING FUTURES AND OPTIONS ON FUTURES INVOLVES SIGNIFICANT RISK OF LOSS AND MAY NOT BE SUITABLE FOR EVERYONE. THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THE INFORMATION AND COMMENTS CONTAINED HEREIN ARE PROVIDED BY EVER.AG AS GENERAL COMMENTARY OF MARKET CONDITIONS. THIS INFORMATION SHOULD NOT BE INTERPRETED AS TRADING ADVICE OR RECOMMENDATION WITHOUT FURTHER DISCUSSION WITH YOUR EVER.AG ADVISOR. THIS IS A MATTER OF SOLICITATION.

The post The Grain Feed – September 26, 2024 (Audio Only) appeared first on .

In the latest edition of the Parlor to Plate dairy podcast from Ever.Ag Insights, our all-star panel looks at supply-side factors. How is global milk production faring? Could US dairy prices and inventories open export opportunities? 

Join host Erica Maedke and panelists Jon Spainhour and Colin Kadis for a spirited discussion.

Questions or comments? Topics you’d like to hear us discuss? Contact us at [email protected].

(Transcript auto-generated)

00;00;00;10 – 00;00;08;16

Future trading involves risk and is not suitable for all investors. Content provided in this segment is meant for educational purposes and is not a solicitation to buy or sell commodities.

00;00;08;18 – 00;00;29;06

Hello. Welcome to Parler to play a weekly podcast from ever sites dedicated to offering listeners enlightening discussion and actionable intelligence about dairy markets. I’m your host, Eric Mankey. We are excited to have you along today. And if you like what you hear, please like, subscribe and tell a friend or two. Today it is Wednesday, September 25th, around 1:00 central time.

00;00;29;08 – 00;00;52;05

A quick rundown of the markets CME block cheddar. We are at 218, down $0.07 for the second week in a row. Barrels 243 down $0.20 on the weak spot. Butter. We are under the $3 handle at 286. We are $0.15 down. Nonfat dry milk is at $1.38 per pound, down a penny on the week in the grain complex.

00;00;52;05 – 00;01;18;25

December. Corn at 412 per bushel. That’s down a penny. November. Soybeans at 1042, up $0.28 per bushel from last week. And December soybean meal up six bucks to three, 24 per ton. It’s a new week. And another all star panel from the financial services team today. I’ve got John Spane Howard. He helps cooperative processors and end users manage their price risk, as well as Colin Cates, who helps dairy producers manage their risk.

00;01;18;27 – 00;01;38;05

Gentlemen, markets are moving quickly. We are approaching the fall harvest. The peak holiday demand season. Certainly, we’re all watching what the markets are doing right now. And I will say one of the big questions people have been asking me about generally is milk production. And that supply. So, Colin, I think you’ve got some thoughts on that to share with our listeners.

00;01;38;07 – 00;01;53;12

Yeah. Erica, you know, we were talking before the call, but the story of milk production is really three stories. You know, New Zealand has been surprising. Maybe, you know, this is the time of year when they really start to ramp up again. They’re a pasture based system, so it’s not unusual for them to see a lot of milk says now.

00;01;53;12 – 00;02;12;19

But even the milk as compared to last year are pretty insane. I think they’re actually up 9% just on volume alone year over year, which is wild, by all means. Kind of shifting to Europe. It’s really the opposite story. You know, Europe has struggled with a disease called bluetongue. I think in our camp we’ve heard that bluetongue is usually worse fell on dairy herds in the summer.

00;02;12;19 – 00;02;28;22

So it’s possible that, you know, the impacts of bluetongue might alleviate a little bit as we get into the winter. But even as we look at the data here and the recent, you know, data unfortunately is July, but in July they were down 1% year to date. So you kind of add New Zealand, lots of milk, Europe, not nearly enough milk.

00;02;28;22 – 00;02;47;01

And then when we come home, you know back to the US. I think the story for a long time has been, hey, less milk, less milk, less milk. We were still down minus 0.1 percent. You know, that was against expectations of minus 0.4 to minus 0.5. So I think it is worth pointing out, you know, we had some big states like Texas that was up more than 7%.

00;02;47;01 – 00;03;09;02

Idaho had some bird flu issues and went from -1% last month to actually almost back to parity. And even California, which was up 2%. You know, generally when we see something like bird flu, we say on a statewide level we’re usually down 2%. Well, California is 18% of national milk, down 2% on 18% is about minus 0.36 or minus point 4%.

00;03;09;02 – 00;03;29;03

So still not enough to counteract what we’ve seen from Texas and Idaho that continues for future months. John, you know, on the producer side, I think there is this fear that we’re going to be making more milk here. Of course, the only reason it matters is if the milk turns into cheese or other products. What are you seeing on your side in terms of cheese and maybe even export opportunities?

00;03;29;10 – 00;04;01;04

Well, I think we have to look at it from each different region and possibly each different product. What we do know is that in Europe right now, cheese is as high as 242 to 50 out there on a spot basis, particularly in the Gouda and Mott’s range. That does start to open up some cheese export opportunities. Probably won’t do it on a spot basis though, because our barrels, even though they were down almost $0.12 today, still 243 and our blocks at just shy of 218.

00;04;01;04 – 00;04;25;25

So you put that together and could that open up an export opportunity? Sure. But we’ll probably do it more on the futures side of things. Our futures in November 2nd 22. These 210 I don’t know that we’re going to see those export opportunities really open up here in the fourth quarter. As much as maybe if that international cheese price stays as high as it is in Europe that we can see some stuff go out against Q1.

00;04;25;25 – 00;04;53;19

The Q1 average right now is right around 193 on our cheese side, and I think the European price is still well above that. So that could open up some opportunities there. However, I would point out that contacts that we’re familiar with will say, yeah, that’s if you’re competing with Europe, but you’re not just competing with Europe, you’re competing with New Zealand, New Zealand prices for export right now, if we want to compete with them, we need to be in that 175 to 185 area.

00;04;53;20 – 00;05;12;14

As you mentioned earlier, there’s a lot of milk in New Zealand. We’re still all kind of looking in and saying is China back? Is China not back? Even if China’s here, there still seems to be a pretty big hole of demand in the marketplace. And New Zealand has a lot of sellers. They’ve got to move right now. That’s going to put them aggressively competing with the US.

00;05;12;14 – 00;05;34;11

And again, people are saying, hey, if you want to move cheese internationally versus New Zealand anyways, gets that 175 to 185 area. When we go into the butter side of things, this is where it gets a little bit more interesting. Butter in EU has been around for hours now for most of the last two months. I think a lot of people look at that and say they’re at $4, we’re at 320 or we had been at 320.

00;05;34;11 – 00;05;56;15

How on earth are we not exporting? And I think what we have to remember specifically, not just about Europe, but about the international market. The international market likes 82% fat, unsalted butter by standard here in the US, we make 80% fat salted butter. We will make it 82%. But we need a long standing commitment from the buyers to buy that line.

00;05;56;15 – 00;06;13;00

Time and people here aren’t going to make it on spec, and they’re not going to make it on maybe one month or two month. They want a three, six month, even a one year commitment to take that butter. And again, I want to make sure that everybody understands. It’s not like people are saying, we’re going to take butter out of the US and put it into France.

00;06;13;00 – 00;06;36;13

I’m not saying it can’t happen, but it’d be really hard to make that happen. What you’re really trying to do is get into the regions that Europe might normally export into, and that is going to be the Middle East. That’s a big region there that we can compete on. And I would just say that right now, the forward curve on that first half butter in Europe right now is still up in that 375 to 380 area.

00;06;36;13 – 00;07;05;15

Our forward curve and here is just shy of 285 right now. So what’s going to buy those exports. It’s that forward curve discounted to the rest of the world. That’s exactly where we’re at right now. I think it opens up the door for exports in 2025. Again, I’m not saying it can’t happen in 2024, but it’s just hard to make that happen, especially considering that I’m guessing most of the butter that has been made in the US so far this year has been that 80% fat salted spec that’s out there.

00;07;05;21 – 00;07;22;05

John, as we think about New Zealand and if they have a great season, a lot of milk solids coming at them. I mean, their dryers in many cases are set up to really push the peak season through whole milk powder. So from a product mix perspective, I do think that could have an impact.

00;07;22;05 – 00;07;41;01

Right now you’re right, Erica. They’re going to have to run whole milk powder. Right. That’s what they’re set up to do. It’s fast. They can get it out the door. But once they start to slow down and come out of that peak, then they can start getting pretty picky and choosy about what product mix they go to. You have to imagine they’re going to be looking for those higher value products right now.

00;07;41;01 – 00;08;13;01

Believe it or not, those higher value products are butter and skim versus whole milk powder, right? That spread is pretty big, and they’re probably going to go try to attack those higher values. So if you’re a New Zealand dairy producer right now, you have to be pretty darn happy. You’re pushing through some pretty big milk numbers and some pretty big milk solids numbers, and you’re getting some pretty relatively high prices versus what we’ve seen here in the last few years, I guess, John, just thinking about New Zealand dairy producers, I know on the American side, I mean, these are some of the best margins we’ve really ever seen.

00;08;13;01 – 00;08;32;04

And even as we look at 2025, where prices might be 3 or $4 lower, they still look great. You know, I was just looking at a chart today of EU mozzarella Jan June versus CME futures. We’ve seen the strength in the barrel. Any thoughts there I mean can the dairy producer rely on maybe some of this mozzarella either through export or pizza demand.

00;08;32;04 – 00;08;56;13

Do you have any news there. Well I don’t know how much I can say they can rely on it. But I would say that, you know, the barrel price being as high as it is right now is the after effects of several different functions, one of which is we had pretty decent mozzarella exports, right. So the more mozzarella exports we have, typically the less barrel production we have, the less barrel production we have.

00;08;56;13 – 00;09;22;23

Prices typically go up. You lose those mozzarella exports or even your domestic mozzarella. You generally make barrels. And the price of barrels comes down right now. Again it’s not the only contributing factor, but it is a big factor that we had very good mozzarella exports for the better part of the year. And even now I think people would say mozzarella exports are better than they expected, considering where our futures were at the time that maybe some of these orders got booked.

00;09;22;26 – 00;09;34;11

I guess we’re probably going to get some clarity on that tomorrow with the cold storage report, right. We’ve got two experts, John and Erica. You know what would be surprising to you guys to see tomorrow from the report? What are we kind of expecting.

00;09;34;12 – 00;10;00;17

So the official average insights numbers. So for August we’re expecting butter to come in at 315 million pounds. That would be down 39 million from July. Normally we’re down about 27. So we are expecting a much larger drawdown on butter stocks. And then in the cheese realm, we would expect 1.38 billion pounds, down about 23 million pounds. Usually we’re down about 14.

00;10;00;17 – 00;10;22;15

So again another big drawdown in cheese. And I would say the market movement, especially in cheese to me supports that. We just don’t have as much in inventory. You know, we’ve had very high prices. That’s usually a sign of tightness now, maybe a tightness in the 4 to 30 day old realm rather than just inventory in general. That to me, if we don’t have big drawdowns, that might be the bigger surprise.

00;10;22;15 – 00;10;22;27

John.

00;10;23;05 – 00;10;45;29

I think that’s exactly it. Erica. I mean, I think we can look at the price action in barrels and say that suggests that there’s probably was an issue with production and or cold storage. Right. So I think the big surprise when it comes to cheese would be is if there isn’t a larger than usual drawdown in that number, but if it does come in and we do see that number, I don’t think anybody can look at that and say why?

00;10;45;29 – 00;11;06;00

That really shocked me. Based on what we’ve seen here. Maybe there was a little bit of a timing issue. Again, these barrels didn’t really start running in earnest until the 6th of September. Right? So this cold storage is going to be an August cold storage number. So maybe it’s not reflecting in there. But my guess is, is that it’s at least reflected in there in some way.

00;11;06;00 – 00;11;09;24

So that’s what I would be looking for is a larger than usual drive.

00;11;10;00 – 00;11;11;00

The question from.

00;11;11;06 – 00;11;15;13

Erica, why did the entomologist throw the butter out the window to see a butterfly?

00;11;15;13 – 00;11;38;05

Colin special talent telling great jokes. A big thank you to Colin and John for joining me on today’s episode and sharing your insights with our listeners. Thank you, as always to our media team for mixing and mastering. Thank you to the listeners for joining us today. If you like what you hear, subscribe on your favorite app. And if you’d like to learn more about how we help people manage risk, contact us at insights at ever.ag.

Disclaimer: TRADING FUTURES AND OPTIONS ON FUTURES INVOLVES SIGNIFICANT RISK OF LOSS AND MAY NOT BE SUITABLE FOR EVERYONE. THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THE INFORMATION AND COMMENTS CONTAINED HEREIN ARE PROVIDED BY EVER.AG AS GENERAL COMMENTARY OF MARKET CONDITIONS. THIS INFORMATION SHOULD NOT BE INTERPRETED AS TRADING ADVICE OR RECOMMENDATION WITHOUT FURTHER DISCUSSION WITH YOUR EVER.AG ADVISOR. THIS IS A MATTER OF SOLICITATION.

The following music was used for this media project:

Music: Funky Intro 29 by TaigaSoundProd

Free download: https://filmmusic.io/song/9520-funky-intro-29

License (CC BY 4.0): https://filmmusic.io/standard-license

Artist website: https://linktr.ee/taigasoundprod

© Ever.Ag 2023, confidential and proprietary.

The post Parlor to Plate – September 25, 2024 appeared first on .

In our weekly series From the Furrow, host Mike McGinnis and fellow grain geeks shed light on current market conditions and how grain producers can take action to manage their risk.

This week, Mike is joined Veronica Nigh, Senior Economist with The Fertilizer Institute. How are fertilizer prices looking heading into 2025? Why is phosphate so expensive? Are producers likely to pay less for potash, urea or DAP? Mike and Veronica discuss those topics and a whole lot more.

Questions or comments? Topics you’d like to hear us discuss? Contact us at [email protected].

(Transcript auto-generated)

00;00;00;13 – 00;00;16;16

Futures trading involves risk and is not suitable for all investors. Content provided in the segment is not for educational purposes and is not a solicitation to buy or sell commodities. Opinions and statements of guests not affiliated with every egg of their own, and do not reflect the views of the brand. The accuracy of their statements can not be guaranteed by Oberacker.

00;00;16;19 – 00;00;36;17

Hello and welcome to From the Furrow, brought to you by Ever AG Insights. Each week we talk with subject matter experts on news and topics affecting the grain markets. I’m your host, Mike McGuinness, and today we get started with a review of the markets. It’s Tuesday, September 24th, 2024. The new crop December corn futures contract is up three quarters of a cent at 414 per bushel.

00;00;36;18 – 00;01;01;07

Meanwhile, November soybeans are up 13.5 cents at 1053. And for our discussion coming up, it might be helpful to note that soybeans are up $1 per bushel over the last 30 days. Meanwhile, corn has jumped $0.28 since the 24th of August. Turning to our guest this week, it’s our privilege to have Veronica Nye, senior economist with the Fertilizer Institute, and we want to thank Veronica for joining us today.

00;01;01;08 – 00;01;04;00

Veronica, thanks very much for having me on the program, I appreciate it.

00;01;04;02 – 00;01;25;28

You bet. We’re going to talk about the fertilizer market today. And of course, this is a time when farmers are getting set to either book or apply or do both their fertilizer for the fall, or maybe buy it this fall and will apply it in the spring. Those are the two times that are popular for farmers to do so, and some of the decision making that goes into that when they do it, you know, goes for farm to farm, producer to producer.

00;01;25;28 – 00;01;51;07

But currently the topic here with the fertilizer market is declining. Grain prices are making fertilizers less affordable as the summer fill programs end. And then we look forward to the fall and the cost reset for the fall. The question to you, Veronica, is, do you see this as a theme for this year’s fertilizer purchasing season? And though less affordable, all but a few fertilizers are down from a year ago, and most are down from a month ago.

00;01;51;09 – 00;02;20;18

Well, you know, certainly we’re obviously very concerned about our customers ability to afford all of their inputs, fertilizer included. You know, USDA just two weeks ago told us that net farm income, when adjusted for inflation, is down 26% compared to 2022, is high. So, you know, that’s obviously something that our members have a lot of concern about. And, you know, just a couple of weeks ago, again, you know, we had the Bankers Association coming in and saying, hey, on Capitol Hill, they’re concerned about the fact that the farm bill hasn’t been reauthorized.

00;02;20;18 – 00;02;41;19

And the concern that folks aren’t able to get operating loans for the next year. So when we look at overall fertilizer demand in the United States, about 70, 75% of nutrient uses associated with cleanings of corn, soybeans, wheat and cotton. So obviously, when those products are experiencing a significant downturn, that has a significant impact on demand in the US.

00;02;41;19 – 00;03;06;23

And then I think, you know, overall, when we think about fertilizer, this has been something that we want to make sure you talk about on a regular basis is that 90% of nutrient demand is outside of the United States. So as we’re thinking about these global products, you know, corn, beans, wheat, cotton, obviously all very global products, we have to think about, not just what’s going on for fertilizer demand in the US, but also fertilizer demand globally.

00;03;06;25 – 00;03;26;05

I think it’s a great point. I agree that I don’t think that a lot of people consider that fact that it is a global market, and you think about that when they talk about the crop production, but not necessarily with fertilizer. So a good point. Now phosphate affordability is as low as it’s been since 2008. In other words, to put it another way, it’s the most expensive there’s been for quite some time.

00;03;26;05 – 00;03;28;28

What’s driving the phosphate price so high?

00;03;29;00 – 00;03;50;18

You know, phosphates continue to be a frustrating component of the total fertilizer picture. You know, I think again, folks are going to get tired of hearing me talk about countries that aren’t the United States. But when we look at phosphate, we have to continue to consider that China’s continued export restrictions on phosphates, particularly DAP and limited global capacity additions, are challenging in 2024.

00;03;50;19 – 00;04;17;05

We also see a number of fertilizer producers, both in the US and globally, choosing not to produce DAP in particular, but instead channeling those phosphates into higher value add fertilizer products you know, that benefit growers and other ways. We’re seeing, you know, a couple of challenges on the phosphate market with a lack of additional capacity and then production being funneled really outside of those products that particularly in the US, we like to use.

00;04;17;05 – 00;04;31;11

Potash prices in September anyway, are down 8% from a month ago. DAP, Mapp, urea and UAN are all lower in September than a month ago. Are we seeing the beginning of a fall trend here, or is this move lower some sort of a Hedvig?

00;04;31;13 – 00;04;59;04

Well, you know, we tend not to comment on prices at TFI, but, you know, as I look at total demand for all three of the major nutrients, both in the US and globally, I think it’s going to be a challenging 2025, our calendar year. You know, that’s at least what our members are expecting, that as mentioned, the affordability is declining in the US, around the world, and that certainly makes its way into the demand side when you have lower demand for products, obviously prices come down.

00;04;59;04 – 00;05;12;06

So when we look at the total picture on the supply and demand side on fertilizers, supply looks pretty good. Demand is starting to soften fundamentally. That would suggest that the direction of prices into the next six months, 12 months.

00;05;12;08 – 00;05;20;15

Let’s move on to anhydrous. Those prices have moved higher in September versus a month ago. What are the supply demand fundamentals for in hydrous heading into the fall?

00;05;20;18 – 00;05;42;00

You know, one of the unique things about TFP as an organization is that the vast majority of producers of fertilizer in the United States as members, and they have voluntarily provide for us their production data. And what I can say from the nitrogen standpoint is that particularly in the last let’s say, four months, we’ve been a bit challenged on the production side on nitrogen.

00;05;42;00 – 00;06;03;20

We had a couple of facilities that had unexpected shutdowns. Those facilities are coming back online now, but it doesn’t take long for that to be felt in the marketplace. When you’re looking at a 100,000 short ton difference from month to month. So the other big thing, of course, on nitrogen is that the significant role that natural gas plays in the production of nitrogen fertilizers.

00;06;03;24 – 00;06;20;29

And that was my next question. Natural gas prices are falling. And the experts or what I’m reading anyway, of those folks that follow this market, they expect it to remain low for the next two years. I supply seems to be driving the prices lower. That said, natural gas, as you just mentioned, is the main raw material for making fertilizer.

00;06;21;00 – 00;06;22;15

Discuss that relationship there if you would.

00;06;22;21 – 00;06;48;06

Yeah. So as you said, natural gas really matters as a key portion of the production of ammonia, which is in turn the building block for all nitrogen fertilizers, natural gas is about 70 to 90% of the cost when you’re producing ammonia. So as goes the natural gas market, oftentimes as goes nitrogen fertilizer. So yes, certainly it would appear following those markets that we’re in for a couple of years of better natural gas prices.

00;06;48;06 – 00;07;16;12

I will remind you all that the last few years have been wild. Is that a good technical term? You know, back in 2019, natural price on Henry Hub was about $2 per million BTU in towards the end of 2022, we got all the way up to $14.5. Today we’ve gotten back to that $2 per million BTU price and hoping not only for it to stay around that price level, but for some lack of variability, some stability in that market will help fertilizer prices.

00;07;16;12 – 00;07;29;11

It’s going to help a lot of sense, but makes a lot of sense when we think about things like nitrogen fertilizers. But also, you know, when you think of the way that ammonia prices make their way into Mop and DAP, right? It’s not an insignificant contributor to those prices either.

00;07;29;11 – 00;07;41;26

TFI has worked hard to educate commodity groups, farmer organizations and others the past couple of years about the many issues impacting fertilizer markets and what influences the prices. You just mentioned a few. What has been the message?

00;07;41;29 – 00;08;03;18

You know, I think I should pause here for just a moment to say that prior to coming to tie at the end of 2023, I spent 12 years with American Farm Bureau Federation in their econ shop. You know, I’m very sensitive to and familiar with the producer organizations and the challenges of, frankly, just growing a crop every year and know that growers have really felt the whip of the market in the last few years.

00;08;03;18 – 00;08;21;29

And, you know, I remember sitting in meetings of TFI just a few years ago back in 21, 22. And as they were explaining to me, you know, all of the different components, and I realized and I’m continuing to learn all the things that go into producing fertilizers like nitrogen fertilizer. You can make that from about anything, right? And you can just pull it from the air.

00;08;21;29 – 00;08;38;06

But it takes about 3 to $5 million to build a plant. And 3 to 5 years to get an ammonia plant up. And doing so, I guess, might take away from the nitrogen side. And what I want folks to keep in mind is it takes a good amount of time and a good amount of money to bring a new production facility online.

00;08;38;06 – 00;08;55;29

And, you know, about 90% of global production of nitrogen fertilizers is consumed in country. So wherever it’s produced is where it’s consumed. So we’re all chasing about 10%. When the market gets tight, we’re chasing about 10% of production on phosphates. You know, that’s a product that has to be mined. If you’ve got it, you’ve got it. If you don’t, you don’t.

00;08;55;29 – 00;09;14;14

And about 44% of global production is exported, and it’s really concentrated in a few countries. And just because you produce it doesn’t mean you export it, which has been a fun element of the fertilizer markets in the last few years. Think about on the phosphate side, the fact that China, who had been 21% of global exports of phosphates, has shut off exports.

00;09;14;14 – 00;09;35;23

And then when you look on the potash side, 75% of all production is exported. But again, if you’ve got that mineral, you’ve got it. If you don’t, you don’t. And so, you know, 70%, 65, 70% of global exports come out of just two countries, Canada and Russia. So as we think about all of the with of what’s been going on in some of those major exporting countries, it really drives home.

00;09;35;23 – 00;09;51;01

And what we’ve been trying to talk with grower groups about is there’s some that’s under control and there’s some things that are under our control, and we need to work together, if we can, to find solutions to help minimize the impact of those areas where we currently don’t have control.

00;09;51;04 – 00;09;58;02

And finally, the so what segment I like this because it really zeroes in on what we’ve been talking about. What should producers take away from our talk here?

00;09;58;02 – 00;10;27;16

Well, you know, the first thing is how much of global nutrient use is outside of the US. And thinking about how much that impacts the fact, not just U.S. production of fertilizer, but global production of fertilizer. And, you know, the industry plans on about 2% growth in fertilizer use year over year. That follows about what we see on Planet Acres and in total usage over the last few years, we’ve had vagaries in the market on the demand side that went from 5% plus to 4% negative over the course of, you know, two years.

00;10;27;16 – 00;10;49;23

So, frankly, it’s taken the industry a while to get back to a place of normal. And I would say that global fertilizer production, as we’re thinking about what natural gas prices are looking like, both in the US and in the EU, when we think about business sort of getting back to normal in a post-Covid and a dealing with Russia Ukraine situation as those things are a bit normalizing.

00;10;49;23 – 00;11;14;13

You know, I think we’re getting closer to a place where fertilizer markets look more like the markets that we were used to of years ago, where there weren’t this huge change in prices throughout the growing season. You know, I was just looking back in 2017, we would look at prices changing on phosphates and potash, maybe 4% over a growing year, and how much that variation has picked up over the last few years.

00;11;14;13 – 00;11;33;07

And we’re starting to see that range of price difference starting to narrow again. So we know fertilizer prices are always going to be more than what growers are want to pay. Nobody wants to pay more for inputs. I think some of that variation that has been so incredibly hard to account for from a grower perspective, from an ag retailer perspective, is starting to mitigate.

00;11;33;07 – 00;11;36;09

Unless, of course, you know, we welcome black swans back into our markets.

00;11;36;14 – 00;11;45;22

Well, Veronica, that’s been a great conversation. And this has really helped a lot of folks understand. And thanks for breaking down each fertilizer in this category. And given your outlook we appreciate it.

00;11;45;23 – 00;11;56;15

My pleasure. We certainly want to be a resource. If folks want to call and yell, I want to hear it. Do you want to have us come and talk at a grower meeting? We’d love to do it. Please do consider as a resource we have folks viewers in that way.

00;11;56;16 – 00;12;13;29

Veronica. Nice, senior economist with the Fertilizer Institute. We’d like to thank her again for her insight on the fertilizer market. And if you’ve enjoyed listening from The Furrow, be sure to tell a friend or to and subscribe to us wherever you listen to your podcast. Thank you to the Ever Egg Insights Crew for their work on today’s show.

Disclaimer: TRADING FUTURES AND OPTIONS ON FUTURES INVOLVES SIGNIFICANT RISK OF LOSS AND MAY NOT BE SUITABLE FOR EVERYONE. THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THE INFORMATION AND COMMENTS CONTAINED HEREIN ARE PROVIDED BY EVER.AG AS GENERAL COMMENTARY OF MARKET CONDITIONS. THIS INFORMATION SHOULD NOT BE INTERPRETED AS TRADING ADVICE OR RECOMMENDATION WITHOUT FURTHER DISCUSSION WITH YOUR EVER.AG ADVISOR. THIS IS A MATTER OF SOLICITATION.
EVER.AG INSURANCE SERVICES IS A LICENSED INSURANCE AGENCY AND AN AFFILIATE OF EVER.AG. INFORMATION CONTAINED HEREIN IN THIS WEBSITE IS COMPILED FOR THE CONVENIENCE OF THE USER. INFORMATION IS OBTAINED FROM SOURCES BELIEVED TO BE RELIABLE AND IS FURNISHED WITHOUT RESPONSIBILITY FOR ACCURACY OR CONTENT. MARKET DATA IS SUBJECT TO CHANGE AT ANY TIME. Ever.Ag is a licensed insurance agency in the following states: AZ, CA, CO, CT, FL, GA, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MO, MT, NE, NV, NH, NM, NY, NC, ND, OK, OH, OR, PA, RI, SD, TN, TX, UT, VT, VA, WA, WV, WI, WY.
—
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The post From the Furrow – Veronica Nigh – September 24, 2024 appeared first on .

In the latest edition of the Hog Talk podcast from Ever.Ag Insights, we lay out the pre-report thoughts on this week’s Hogs and Pigs report, discuss the hog market outlook for 2025, consumer demand for pork for the winter months, and how the looming port strikes along the East Coast and Gulf of Mexico could impact US pork exports.

Listen to Dr. Steve Meyer’s perspective on these topics and more.

Questions or comments? Topics you’d like to hear us discuss? Contact us at [email protected].

(Transcript auto-generated)

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The following music was used for this media project:
Music: Funky Intro 29 by TaigaSoundProd
Free download: https://filmmusic.io/song/9520-funky-intro-29
License (CC BY 4.0): https://filmmusic.io/standard-license
Artist website: https://linktr.ee/taigasoundprod
© Ever.Ag 2024, confidential and proprietary.

Disclaimer: TRADING FUTURES AND OPTIONS ON FUTURES INVOLVES SIGNIFICANT RISK OF LOSS AND MAY NOT BE SUITABLE FOR EVERYONE. THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THE INFORMATION AND COMMENTS CONTAINED HEREIN ARE PROVIDED BY EVER.AG AS GENERAL COMMENTARY OF MARKET CONDITIONS. THIS INFORMATION SHOULD NOT BE INTERPRETED AS TRADING ADVICE OR RECOMMENDATION WITHOUT FURTHER DISCUSSION WITH YOUR EVER.AG ADVISOR. THIS IS A MATTER OF SOLICITATION.

EVER.AG INSURANCE SERVICES IS A LICENSED INSURANCE AGENCY AND AN AFFILIATE OF EVER.AG. INFORMATION CONTAINED HEREIN IN THIS WEBSITE IS COMPILED FOR THE CONVENIENCE OF THE USER. INFORMATION IS OBTAINED FROM SOURCES BELIEVED TO BE RELIABLE AND IS FURNISHED WITHOUT RESPONSIBILITY FOR ACCURACY OR CONTENT. MARKET DATA IS SUBJECT TO CHANGE AT ANY TIME. Ever.Ag is a licensed insurance agency in the following states: AZ, CA, CO, CT, FL, GA, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MO, MT, NE, NV, NH, NM, NY, NC, ND, OK, OH, OR, PA, RI, SD, TN, TX, UT, VT, VA, WA, WV, WI, WY.

The post Hog Talk – September 24, 2024 appeared first on .

View the video version of this episode here.

In The Grain Feed, Jim Matthews is joined by a rotating cast of analysts to discuss what dairy and livestock producers can be doing to manage their risk. This week, Jim is joined by Jake Kingsley and Natalie McCarty.

Questions or comments? Topics you’d like to hear us discuss? Contact us at [email protected].

The following music was used for this media project:
Music: Funky Intro 29 by TaigaSoundProd
Free download: https://filmmusic.io/song/9520-funky-intro-29
License (CC BY 4.0): https://filmmusic.io/standard-license
Artist website: https://linktr.ee/taigasoundprod
© Ever.Ag 2024, confidential and proprietary.

Disclaimer: TRADING FUTURES AND OPTIONS ON FUTURES INVOLVES SIGNIFICANT RISK OF LOSS AND MAY NOT BE SUITABLE FOR EVERYONE. THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THE INFORMATION AND COMMENTS CONTAINED HEREIN ARE PROVIDED BY EVER.AG AS GENERAL COMMENTARY OF MARKET CONDITIONS. THIS INFORMATION SHOULD NOT BE INTERPRETED AS TRADING ADVICE OR RECOMMENDATION WITHOUT FURTHER DISCUSSION WITH YOUR EVER.AG ADVISOR. THIS IS A MATTER OF SOLICITATION.

The post The Grain Feed – September 19, 2024 (Audio Only) appeared first on .