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GDT Review with Jon Spainhour – August 6, 2024
Listen Now
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.
Show Transcript(Transcript auto-generated)
00;00;00;10 – 00;00;08;25
VOICEOVER
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;27 – 00;00;16;02
CODY
Hello everybody. Welcome back to another GDC Tuesday. I’m your host, Cody Koster, with me from Chicago, Mr. John Spain, our John, how.
00;00;16;02 – 00;00;19;04
JON
Are you doing? Great. Cody, on this fine summer afternoon and.
00;00;19;04 – 00;00;22;01
CODY
This a little bit cooler summer afternoon, I might add.
00;00;22;07 – 00;00;29;22
JON
That it’s been fairly hot here this summer. And here we are at a balmy 70 degrees in Chicago, so looking forward to spending the afternoon outside.
00;00;29;27 – 00;00;32;20
CODY
Absolutely. Well, speaking of hot.
00;00;32;20 – 00;00;33;16
JON
Another hot.
00;00;33;16 – 00;00;38;07
CODY
Get today. Maybe not so much in prices, but still a hot GTI nonetheless.
00;00;38;07 – 00;01;02;00
JON
You know what this GTI was a little bit different than what we’ve seen recently. Let’s start with a price run down here. Whole milk powder, according to our statistics, came in about 3.7% higher futures were forecasting that prices would be about unchanged. So I would say that whole milk powder was probably the surprise of the auction. And so that was again, it surprise to the upside.
00;01;02;00 – 00;01;24;05
JON
Let’s go to skim milk powder. It came in at 1.1% lower at $1.15. If we compare that to where futures were trading, that was right about where the futures were trading out. The GTI pulse, which took place over the last two weeks, was indicating we might see a little bit more weakness than that. But all in all, when we’re right in that, when we’re just off by a penny or so and there we’ll say that the futures and the poles for corn at about right.
00;01;24;05 – 00;01;49;08
JON
As we move to the fat side, we’ll say that AMF came in 2.2% higher. Good sign there on the fat. Conversely, over on the butter side, water came in 1.8% lower, coming in about 294 on an 82% butterfat equivalent. And then finally, as we moved to cheese, cheddar came in 1.4% higher at $1.94. But then as we go to mozzarella, that came in significantly higher at 208.
00;01;49;08 – 00;02;10;07
JON
As always, we like to make sure that when we’re talking about cheese here, we’ve been scolded by people that look at this market on the international comparison quite a bit and say, you just can’t compare GTI cheddar to us. CME Tigre cheddar. They are cheddar cheese, but there’s a lot of differences and there’s a lot of quotas and tariffs that go into the pricing of cheddar.
00;02;10;07 – 00;02;29;03
JON
So it is tempting to look at those that price and say, hey, this is the same thing. But we’ve been, you know, kind of warned or scolded if you will say, really be careful with that one. As we move to mozzarella, though, mozzarella came in significantly higher at about 208. Again, people said be careful with that one. On top of everything else, very little volume traded hands there.
00;02;29;03 – 00;02;46;25
JON
I know the last time I looked at it, I think there were five loads of mozzarella that had traded on the GTI that day. I suspect there was about that much today as well. Nevertheless, mozzarella prices did come in at 208. When we look at the aggregate price here, here’s where things get a little bit funky. It all comes down to how the math is calculated.
00;02;46;25 – 00;03;07;27
JON
You know, we saw the whole milk powder be 3.7% higher, skim a little bit, lower. The fats mixed and cheese a little bit higher. The change in the weighted average price on this auction came in 4.1% lower. So that’s where it gets a little interesting. And again, it’s all going to come down to the weighting and how far out on the curve things went.
00;03;07;27 – 00;03;26;13
JON
But in reality here we’ll look at this one and say it was 4.1% lower. But we would also point out that there was a decent amount of volume on this auction quite a bit more, to be honest with you. 13,000 metric tons of more volume were sold on this auction than the last one, so it was a big volume day.
00;03;26;13 – 00;03;29;27
JON
Again, the weighted average price 4.1% lower.
00;03;30;01 – 00;03;39;21
CODY
Well, speaking of volume, we don’t want to get anybody too excited. But as you had noted before, we jumped on here, there was somebody that was back in the, in the buying seat this week, more than they had in the previous couple.
00;03;39;21 – 00;04;01;12
JON
You bet. Cody, you know, we talked about it. It seems like forever. And we’ve been waiting for China to show back up. They’ve come in in fits and starts. But what we can say is that China did show up on this auction, and they took quite a bit of product. Again. Want to note there was quite a bit of product for sale, and so maybe those are a lot of product for sale on the auction because they hadn’t been buying.
00;04;01;13 – 00;04;23;22
JON
Or maybe they were waiting for this volume to show up on the GTC to buy it. Nevertheless, they were here. They did buy it. And when we look at it as compared to the last auction, we would say there participation was 124% better than it was on the last auction event. Very exciting to see. You know, I think people have been China watchers have been looking for signs of life out of that area of the world.
00;04;23;23 – 00;04;40;19
JON
However, it is important to note that when we compare it on a year over year change, it’s still down 4%. So that’s they’ve done it a long time, yet still down 4% on a year over year basis. And then finally, I would point out on this one, when we take the aggregate Chinese purchases throughout this year, they’re just not good.
00;04;40;19 – 00;04;52;15
JON
They are still down significantly. So one auction here was very positive sign in that development, but we’ll want to see if there is more behind that because so far the trend is stated that they just aren’t here right now.
00;04;52;16 – 00;05;01;24
CODY
I mean, there was a little bit of speculation that it might be seasonality, purchasing kind of going into the middle of the summer with China for, you know, the beginning of August GDP here.
00;05;01;24 – 00;05;26;24
JON
Yeah, I think, you know, again, it’s not a line for them to purchase as much as they did. It’s just out of line as it relates to recent history. You know, I know some people on the Drag Insights team have been really focused on Chinese milk prices have been significantly lower. There’s also been a bit of an effort put forth by the Chinese government to reduce some of the livestock out there, and dairy cows being part of that, to help manage prices within China.
00;05;26;24 – 00;05;51;10
JON
If we look at it from that regards, we would say there’s a pretty good chance that maybe we’ll see China come back at some point in time. And I think some people were looking for some behavior like this today. I think this might be a little bit premature to connect all those dots, but nevertheless, we started to draw a little bit of the blueprint for the possibility that China will reenter the market at a more stable volume than they have here over the last year and a half.
00;05;51;15 – 00;06;04;12
CODY
With that being said, John, is there anything that we are looking forward to and our next auction is going to be two weeks away on August 20th, but anything on your radar for that one, or anything you want to touch on for this auction that really stuck out to you for GT.
00;06;04;15 – 00;06;29;07
JON
I guess I would just point out here, you know, I think I mentioned it last time, I’ve mentioned it in my newsletter a few times at least right now. The GT skin price is $1.15 a pound. If we look at Europe, it’s roughly about the same thing. And when we look here at the US, we would say the US price is one, 23.25, I have pointed out before, but it’s very rare for the US to be able to trade at a premium to the rest of the world, much less to maintain that premium.
00;06;29;07 – 00;06;52;10
JON
When it comes to nonfat versus skim certainly is possible. It’s just hard to maintain and it’s hard for that premium to get too big. We’ve had a little bit of a heat scare here in the US. It’s heightened the nonfat market up almost immediately after the last. After the last GTC, we went down and touch one 1650, and we’ve spent the last few weeks coming out of that and trading up here at this higher tier.
00;06;52;10 – 00;07;14;29
JON
I guess I would just look at it to say, I feel like this GT kind of cemented that SMP price there at $1.15, again, with the Chinese being in here, it possibly lends support to the overall auction for the overall skim complex. But my guess is, is that we start to see the US price start to fade off of its current highs, and maybe migrate back towards that international price.
00;07;15;04 – 00;07;15;12
JON
All right.
00;07;15;12 – 00;07;31;04
CODY
Well, definitely something to watch on our auction upcoming days here. As I mentioned before, John and I are going to be back in two weeks end of August. August 20th is the next GT. Until then, we appreciate everybody listening and we will see everyone in two weeks in the next global dairy trade.
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.
This episode is also available on the following
platforms:
Apple Podcasts
Listen NowYouTube Music
Listen NowSpotify
Listen NowQuestions or Comments?
Simply respond to this email or give us a call at 312-492-4200.
The post GDT Review with Jon Spainhour – August 6, 2024 appeared first on .
View all episodes
By Ever.Ag
5
55 ratings
Listen Now
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.
Show Transcript(Transcript auto-generated)
00;00;00;10 – 00;00;08;25
VOICEOVER
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;27 – 00;00;16;02
CODY
Hello everybody. Welcome back to another GDC Tuesday. I’m your host, Cody Koster, with me from Chicago, Mr. John Spain, our John, how.
00;00;16;02 – 00;00;19;04
JON
Are you doing? Great. Cody, on this fine summer afternoon and.
00;00;19;04 – 00;00;22;01
CODY
This a little bit cooler summer afternoon, I might add.
00;00;22;07 – 00;00;29;22
JON
That it’s been fairly hot here this summer. And here we are at a balmy 70 degrees in Chicago, so looking forward to spending the afternoon outside.
00;00;29;27 – 00;00;32;20
CODY
Absolutely. Well, speaking of hot.
00;00;32;20 – 00;00;33;16
JON
Another hot.
00;00;33;16 – 00;00;38;07
CODY
Get today. Maybe not so much in prices, but still a hot GTI nonetheless.
00;00;38;07 – 00;01;02;00
JON
You know what this GTI was a little bit different than what we’ve seen recently. Let’s start with a price run down here. Whole milk powder, according to our statistics, came in about 3.7% higher futures were forecasting that prices would be about unchanged. So I would say that whole milk powder was probably the surprise of the auction. And so that was again, it surprise to the upside.
00;01;02;00 – 00;01;24;05
JON
Let’s go to skim milk powder. It came in at 1.1% lower at $1.15. If we compare that to where futures were trading, that was right about where the futures were trading out. The GTI pulse, which took place over the last two weeks, was indicating we might see a little bit more weakness than that. But all in all, when we’re right in that, when we’re just off by a penny or so and there we’ll say that the futures and the poles for corn at about right.
00;01;24;05 – 00;01;49;08
JON
As we move to the fat side, we’ll say that AMF came in 2.2% higher. Good sign there on the fat. Conversely, over on the butter side, water came in 1.8% lower, coming in about 294 on an 82% butterfat equivalent. And then finally, as we moved to cheese, cheddar came in 1.4% higher at $1.94. But then as we go to mozzarella, that came in significantly higher at 208.
00;01;49;08 – 00;02;10;07
JON
As always, we like to make sure that when we’re talking about cheese here, we’ve been scolded by people that look at this market on the international comparison quite a bit and say, you just can’t compare GTI cheddar to us. CME Tigre cheddar. They are cheddar cheese, but there’s a lot of differences and there’s a lot of quotas and tariffs that go into the pricing of cheddar.
00;02;10;07 – 00;02;29;03
JON
So it is tempting to look at those that price and say, hey, this is the same thing. But we’ve been, you know, kind of warned or scolded if you will say, really be careful with that one. As we move to mozzarella, though, mozzarella came in significantly higher at about 208. Again, people said be careful with that one. On top of everything else, very little volume traded hands there.
00;02;29;03 – 00;02;46;25
JON
I know the last time I looked at it, I think there were five loads of mozzarella that had traded on the GTI that day. I suspect there was about that much today as well. Nevertheless, mozzarella prices did come in at 208. When we look at the aggregate price here, here’s where things get a little bit funky. It all comes down to how the math is calculated.
00;02;46;25 – 00;03;07;27
JON
You know, we saw the whole milk powder be 3.7% higher, skim a little bit, lower. The fats mixed and cheese a little bit higher. The change in the weighted average price on this auction came in 4.1% lower. So that’s where it gets a little interesting. And again, it’s all going to come down to the weighting and how far out on the curve things went.
00;03;07;27 – 00;03;26;13
JON
But in reality here we’ll look at this one and say it was 4.1% lower. But we would also point out that there was a decent amount of volume on this auction quite a bit more, to be honest with you. 13,000 metric tons of more volume were sold on this auction than the last one, so it was a big volume day.
00;03;26;13 – 00;03;29;27
JON
Again, the weighted average price 4.1% lower.
00;03;30;01 – 00;03;39;21
CODY
Well, speaking of volume, we don’t want to get anybody too excited. But as you had noted before, we jumped on here, there was somebody that was back in the, in the buying seat this week, more than they had in the previous couple.
00;03;39;21 – 00;04;01;12
JON
You bet. Cody, you know, we talked about it. It seems like forever. And we’ve been waiting for China to show back up. They’ve come in in fits and starts. But what we can say is that China did show up on this auction, and they took quite a bit of product. Again. Want to note there was quite a bit of product for sale, and so maybe those are a lot of product for sale on the auction because they hadn’t been buying.
00;04;01;13 – 00;04;23;22
JON
Or maybe they were waiting for this volume to show up on the GTC to buy it. Nevertheless, they were here. They did buy it. And when we look at it as compared to the last auction, we would say there participation was 124% better than it was on the last auction event. Very exciting to see. You know, I think people have been China watchers have been looking for signs of life out of that area of the world.
00;04;23;23 – 00;04;40;19
JON
However, it is important to note that when we compare it on a year over year change, it’s still down 4%. So that’s they’ve done it a long time, yet still down 4% on a year over year basis. And then finally, I would point out on this one, when we take the aggregate Chinese purchases throughout this year, they’re just not good.
00;04;40;19 – 00;04;52;15
JON
They are still down significantly. So one auction here was very positive sign in that development, but we’ll want to see if there is more behind that because so far the trend is stated that they just aren’t here right now.
00;04;52;16 – 00;05;01;24
CODY
I mean, there was a little bit of speculation that it might be seasonality, purchasing kind of going into the middle of the summer with China for, you know, the beginning of August GDP here.
00;05;01;24 – 00;05;26;24
JON
Yeah, I think, you know, again, it’s not a line for them to purchase as much as they did. It’s just out of line as it relates to recent history. You know, I know some people on the Drag Insights team have been really focused on Chinese milk prices have been significantly lower. There’s also been a bit of an effort put forth by the Chinese government to reduce some of the livestock out there, and dairy cows being part of that, to help manage prices within China.
00;05;26;24 – 00;05;51;10
JON
If we look at it from that regards, we would say there’s a pretty good chance that maybe we’ll see China come back at some point in time. And I think some people were looking for some behavior like this today. I think this might be a little bit premature to connect all those dots, but nevertheless, we started to draw a little bit of the blueprint for the possibility that China will reenter the market at a more stable volume than they have here over the last year and a half.
00;05;51;15 – 00;06;04;12
CODY
With that being said, John, is there anything that we are looking forward to and our next auction is going to be two weeks away on August 20th, but anything on your radar for that one, or anything you want to touch on for this auction that really stuck out to you for GT.
00;06;04;15 – 00;06;29;07
JON
I guess I would just point out here, you know, I think I mentioned it last time, I’ve mentioned it in my newsletter a few times at least right now. The GT skin price is $1.15 a pound. If we look at Europe, it’s roughly about the same thing. And when we look here at the US, we would say the US price is one, 23.25, I have pointed out before, but it’s very rare for the US to be able to trade at a premium to the rest of the world, much less to maintain that premium.
00;06;29;07 – 00;06;52;10
JON
When it comes to nonfat versus skim certainly is possible. It’s just hard to maintain and it’s hard for that premium to get too big. We’ve had a little bit of a heat scare here in the US. It’s heightened the nonfat market up almost immediately after the last. After the last GTC, we went down and touch one 1650, and we’ve spent the last few weeks coming out of that and trading up here at this higher tier.
00;06;52;10 – 00;07;14;29
JON
I guess I would just look at it to say, I feel like this GT kind of cemented that SMP price there at $1.15, again, with the Chinese being in here, it possibly lends support to the overall auction for the overall skim complex. But my guess is, is that we start to see the US price start to fade off of its current highs, and maybe migrate back towards that international price.
00;07;15;04 – 00;07;15;12
JON
All right.
00;07;15;12 – 00;07;31;04
CODY
Well, definitely something to watch on our auction upcoming days here. As I mentioned before, John and I are going to be back in two weeks end of August. August 20th is the next GT. Until then, we appreciate everybody listening and we will see everyone in two weeks in the next global dairy trade.
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.
This episode is also available on the following
platforms:
Apple Podcasts
Listen NowYouTube Music
Listen NowSpotify
Listen NowQuestions or Comments?
Simply respond to this email or give us a call at 312-492-4200.
The post GDT Review with Jon Spainhour – August 6, 2024 appeared first on .
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