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)

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;22 – 00;00;17;11

Hello everybody. Welcome back to another glorious Get Tuesday. I’m your host, Cody Koster, with me from Chicago, Mr. John Spain. How are John? How are you today?

00;00;17;11 – 00;00;20;22

Doing great, Cody, and super happy to be here. Well, we are.

00;00;20;22 – 00;00;34;04

Happy to have you here on this beautiful global dairy trade. Tuesday. We had a GDC today, the 3rd of December that was actually on a whole up 2.5%. And that was primarily driven by whole milk powder on this episode.

00;00;34;05 – 00;01;00;07

You’re absolutely right, Cody. We were up 2.5%, according to our statistics on the totality of the auction. And you’re absolutely right. That whole milk powder was the leader of the pack, up 4.1%. That’s really the good news here. Again, whole milk powder was up 4.1%. Futures were looking for about 3.5% higher. So probably in line with where the futures were looking.

00;01;00;07 – 00;01;25;09

However, when we come back over to the pulse we can say that the pulse was only looking for about 2.4% higher. So the whole milk powder kind of outperformed, if you will. And like I said, that’s the good news. As we go to the other products, it gets a little less positive. Focusing on AMF down 0.5% and going to butter down 4.7%.

00;01;25;09 – 00;01;47;02

Now, I think that’s important to point out, because we were looking at the GDS price as being significantly lower than the European price, but also higher than the US. I think on the last auction, we saw the GT butterfat price come up a little bit, and that gave a little bit of hope to people like the US that we were going to see some exports.

00;01;47;02 – 00;02;05;14

Unfortunately, on this auction, we’ve seen the European price come down as well as we see the New Zealand price starting to drift lower. So taking a little bit of room out of the fat market as we move to the cheese side of things, cheddar was down 3%. That brings us down to an average of about 213 on the cheddar price.

00;02;05;14 – 00;02;30;17

And the monster dollar price was down 4.5%. That was down to 187. Again, we have to be careful about looking too deeply into these prices on the cheeses right now, but I would just say that this is the second downtick and mozzarella in the last two auctions. And so we are starting to see that international cheese price drift a little lower, cheddar move lower as well.

00;02;30;17 – 00;03;00;18

Not quite as drastically. Finally, I want to wrap up this section by focusing on skim milk powder. Skim milk powder came in 1.2% lower at an average price of about $1.29 a pound. That in itself not that remarkable. However, we would say that the GDS pulse itself was looking for about a 1.4% increase. And when we look over at the GDS skim milk powder futures, they were looking for almost 5% higher.

00;03;00;18 – 00;03;30;02

We come in at 1% lower. I would call that as much as whole milk powder kind of outperformed. I would say that skim milk powder very much underperformed expectations. The US responded by moving to one 3750 today on the spot market. That was down $0.02. Even with that, that leaves us the skim milk powder market in New Zealand at 129 and the EU market down at the low one 20s.

00;03;30;02 – 00;03;50;13

So the US is still very much the highest price in the world, and the rest of the world is starting to move lower. I do feel like this auction was influenced by some recent weakness in the EU skim milk powder market, specifically going into Algeria, where we’ve seen sub 120 prints taking place on EU scale.

00;03;50;13 – 00;04;10;12

So we’ll recap on that. John. Our powder price highest in the world. But if you look at our butter cheese price still the lowest, even though people want to compare the cheddar price and the mozzarella price 1 to 1 to ours. And you said before that that cannot happen because they are not 1 to 1 lookalike products. But we still have the cheapest cheese price in the world.

00;04;10;12 – 00;04;11;13

After today’s get.

00;04;11;19 – 00;04;32;08

You back on all three accounts. One is that we are the cheapest in the world. Secondly, you can’t count them 1 to 1, but directionally they certainly do stand for something, right? And then finally I would say that we’re absolutely right. The US cheese and butter prices, very much the lowest in the world, are nonfat price, very much the highest in the world.

00;04;32;10 – 00;04;55;04

And I think taking a little bit of a look at the volume by region, an interesting thing, just looking out the glass that our insights team had sent out on this auction. North Asia was 51% of the auction today, which is 14% lower from the last event, but up 70% on a year over year basis. That is quite a back and forth on those numbers there.

00;04;55;04 – 00;05;13;26

Yeah, you know, those data points are all over the place like you just pointed out there. Coty North Asia very much did come out swinging on this one or they were here. And when we compare that to last year, they were up 70%. That’s quite a statement, right? Just last year we have to remember they were doing so little business.

00;05;14;01 – 00;05;37;05

And then when we compare this auction to just the last auction, North Asia, China down 14%. I think it’s also important to point out, though, that the event volume is starting to drift lower, 7% lower. We’re out of the seasonal peak. So this is one of those areas where we’re going to see, you know, event to event changes be lower simply because we’re drifting lower on the volumes on offer.

00;05;37;05 – 00;06;13;22

However, it does stand out that China was 70% higher. Again, they continue to outperform where we run into a little bit of trouble. Here is our ancillary players like the Middle East and Southeast Asia. The Middle East down 28% on a year over year change, down 15% on an event change. I’m going to go ahead and say the Middle East probably found some cheap skim milk powder out of Europe in the last week or so and decided to forego buying skim on the GT, whereas China very much a whole milk powder driven market, they were still here and thus we have 4.1% higher on whole milk powder.

00;06;13;22 – 00;06;36;23

Finally, we would point out that Southeast Asia, a big skim milk powder buyer as well their year over year change down 23%. Event over event up two. So China very much outperforming the Middle East and Southeast Asia who have definitely been here at times this year and and played a very strong role backed off on this one. And I think that’s really where you get the dichotomy of the products.

00;06;36;23 – 00;06;51;12

Again China very whole milk powder centric. The rest of the world, very other commodity centric being skim fat and cheese. I don’t know that a whole lot of that stuff necessarily makes its way into China. I did actually performed the second best out of the.

00;06;51;13 – 00;07;13;10

Arch, down to 1.2%, being the second best of today’s auction. Interesting nonetheless. Well, John, thank you for your insight on today’s GDP. The next time you and I are going to be together is in two weeks, December 17th. That is going to be the last auction of 2024. So we roll into the new year. So with that, we appreciate everybody tuning in, listening.

00;07;13;10 – 00;07;18;18

John and I will be back with you guys in two weeks. But until then, have a great week and even better weekend. We’ll talk to you soon.

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