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GDT Review with Jon Spainhour – May 21, 2024
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 the statement is meant for educational purposes and is not a solicitation to buy or sell commodities.
00;00;08;27 – 00;00;16;16
CODY
Hello everybody. Welcome back to another Good Tuesday. I am your host, Cody Koster. With me from Chicagoland, Mr. John Spain. Howard. John, how are you today?
00;00;16;18 – 00;00;19;20
JON
Doing great, Cody. And just so happy to be here. we’re happy.
00;00;19;20 – 00;00;33;08
CODY
To have you here for this intricate look at global dairy trade on this beautiful Tuesday afternoon. It is May 21st, 2024. John and I are going to go over this morning’s GDP and I mean all encompassing a.
00;00;33;08 – 00;01;05;04
JON
Decently higher GDP. Yeah, you Becky sorry, this is another higher GDP print and I would say another print that is going to catch some people and I say some people off guard. The overall index is going to come in at 3.3% higher. Again, the second higher print in a row and it really making some good advances there. The highlight of the market is going to be the butter market, which is going to come in 5.1% higher, right around $3.14 on an 82% butterfat basis.
00;01;05;04 – 00;01;31;02
JON
That’s going to compare to the U.S. That’s settled the day at $3.11. So, again, a huge move higher in the New Zealand butter price and the U.S. right in there behind it at 311 on the AMP side, an impressive feat as well, up 3.4 coming in at about $3.34 a pound. So I guess when we look at it to say that the fats were really the highlight here, we can look at the cheese market.
00;01;31;02 – 00;01;51;21
JON
Mozzarella was up 9.8%. But I think we have to be really, really careful about making too big of a deal out of that. It’s going to come in at 191 again. That’ll be the biggest mover on the day, but I have to question the validity of that move. There’s just so little volume on there. So we’re going to give the most valuable player or to butter and amp when we go to the cheddar side.
00;01;51;21 – 00;02;14;23
JON
Cheddar was actually down point four at 192. That’s going to compare to the U.S., which is right around two bucks there. And then finally, as we move to the powder side, hormone powder, again, expected to be lower on this auction based on the futures action on the SGX, home up powder futures actually comes in 1.7% higher and then skim milk powder expected to be higher.
00;02;14;27 – 00;02;33;20
JON
A little bit of a disappointment as compared to the SGX, S&P futures, but nevertheless, up 3.1%, coming in at $1.19 a pound. The U.S. started the day at 116. It rallied on the heels of this GDP today to one 1750.
00;02;33;20 – 00;02;51;29
CODY
Now, if I’m not mistaken, John, last time we talked two weeks ago for a global dairy trade for milk powder was kind of expected in quotations to go lower, but actually surprised everyone by being in the positive, if I’m not mistaken. Is there not a trend in the whole milk powder? But what do you think is driving the surprises in that market for these two?
00;02;52;00 – 00;03;15;15
JON
Gtis I think we’ve got two different attitudes taking place in here are maybe two different paradigms. The first paradigm says that if China is not in the market, then the market is going to go lower specifically for milk powder. And if China is in the market, then the market’s probably going to go higher. And I think you’ve got a lot of people that are accurately looking out into the market right now and saying, I don’t think China is going to be here at API.
00;03;15;15 – 00;03;38;20
JON
As we pointed out last time, there were quite a few people from the New Zealand ish area or it said another way, people that are forward facing to China more so than others. And I think there was a lot of concern in regards to China coming back. And as we pointed out on the GDP from two weeks ago, that was the lowest Chinese participation on the GDP since 2011 and yet prices still went up.
00;03;38;20 – 00;03;56;11
JON
Right. And so here comes the other side of that paradigm, and that is that there are other people that are participating other than China, other players that are very important, and they’re moving from being bit players to come in more center stage in the dairy drama, if you will. And those people are Southeast Asia who have always been there.
00;03;56;11 – 00;04;17;11
JON
But now more so than ever, we’re starting to see the Middle East drift in. And so the other side of the coin says when these people are here, prices can go up. And when they’re not here, prices can go down. Right. And so I guess I would say that the futures as we know them on the whole milk powder side seem to be dominated a little bit by the old paradigm of saying, hey, listen, if China is not here, prices are going down.
00;04;17;12 – 00;04;38;00
JON
And indeed, on this auction, once again, China was here, but nothing impressive. They did a little bit better than the last auction, but still, just looking at our statistics here, Chinese participation was down 35% on a year over year basis. I think that says something in itself. But most importantly, last year was already a dismal performance on the year before.
00;04;38;00 – 00;04;58;19
JON
So Chinese participation still continuing to wane and yet prices went higher again here and that really falls into my opinion, onto the backs of Southeast Asia. Their participation was up 18% year over year. And then when we look to the Middle East, they were down a little bit, but they did pick it up. Europe picked it up about 18% year over year.
00;04;58;19 – 00;05;19;26
JON
We can point out Africa was up 120%. But I don’t think that that means too much to us simply because we’re coming off of such a small base. But again, most importantly, Southeast Asia was here and the Middle East was here. And again, China did show up, but not nearly in the way that they normally should. So to answer your question again, Cody, I think the expectations are of China is not going to be here.
00;05;19;26 – 00;05;25;29
JON
Prices are going to go lower. China really hasn’t been here and prices still went higher. I think that’s really where the surprise is coming from.
00;05;26;02 – 00;05;43;02
CODY
I think it’s interesting you said that before, is when one hand is not buying, you know, we’ll call this one China. The other countries are over here that prices are expected to go down. But the rest of the countries have kind of really stepped up the game on the purchasing power. And then they’re really fill the gaps in, at least in the past couple of auctions this year so far.
00;05;43;03 – 00;06;04;13
JON
That’s right. And that just opens the door to the proverbial glass half empty, glass half full. Do we not need China anymore? Right. Look, we’re already demonstrating. Maybe we don’t need them in the market. Maybe the rest of the world is stuff that their demand so much that we don’t need them, I guess. And the glass half empty sides is, boy, what happens when the Middle East and Southeast Asia slow down?
00;06;04;15 – 00;06;22;28
JON
I think I probably find myself still in that second camp in the glass half empty. I have concerns that, you know, these other players just don’t have the sustainable purchasing power that will be needed to replace Chinese demand. You can say, well, they’ve been here two auctions in a row and look what’s happened to prices. That is true.
00;06;22;28 – 00;06;52;11
JON
I would just point out that last auctions volume was pretty low and this auction volume was even lower. So we are in that low point of New Zealand volumes, right? It might be anybody’s behavior might have an exacerbated effect to the upside when they step in during this time just because there’s not as much product around. But at the same point in time as we start marching closer to the New Zealand season coming online and more product comes on for offer, I think we have to say that’s really the judgment period.
00;06;52;11 – 00;07;05;14
JON
I think on do we still need China? And who knows, China may still come back and come back in a big way. I don’t want to rule that out. I just have reservations about that. And I think a lot of people that are or China forward facing would say the same thing.
00;07;05;16 – 00;07;18;14
CODY
What’s a great explanation? Appreciate that one. John, Is there anything else from this auction specifically that really stood out in your mind? Like you said, prices higher as far as trading volume, maybe not so much, but anything to you specifically that really kind of hit home?
00;07;18;14 – 00;07;44;17
JON
I guess I will just say that the world that market is pretty darn impressive from several different factors. The first one of which is just the price point, $3.11 here in the U.S. on May 21st. Right. That’s just an extraordinary statement all in itself. And I think there’s probably reason to believe that we’re supported to moving higher in that mortar market as we move out of the melt production season here in the US and into the demand season.
00;07;44;17 – 00;08;03;15
JON
I think that’s just such an impressive point. But it’s not just here in the U.S., as we pointed out, in New Zealand, coming in around 314 a pound, that’s impressive in itself and Europe isn’t far behind. And then I would also point out that we don’t normally see the world that market grouped together. So tightly for so long.
00;08;03;18 – 00;08;23;25
JON
And by that I mean generally, you know, that prices can move all around and go in different directions and generally have different reasons for doing so throughout the global price portfolio right now, we are grouped very tightly together and we have been so for about 3 to 4 months. Again, just not something we normally see and looking for an explanation as to why we’re seeing that.
00;08;23;25 – 00;08;45;27
JON
You know, I think at first we were maybe willing to say it feels like coincidence, but as we go along and see that price really stick together a little bit tighter than what we’re seeing, I’m forced to say maybe there’s something bigger at play here or maybe there’s a new pattern that’s involved. I have to say right now, if there is one, I’m not sure what it is, but I definitely say, Wow, this is so different and so impressive that these prices are grouped so tightly together.
00;08;45;27 – 00;08;58;24
JON
But again, I’ll just go back. The most important statement is $3.11 here on May 21st in the U.S. and $3.14 in Europe. I really think that’s a statement that the global fat market is in a pretty supported state.
00;08;58;28 – 00;09;15;25
CODY
Awesome. Well, John, we appreciate your insight into the global dairy trade per usual. John and I are going to be back with you folks in two weeks, the beginning of June, for the next global dairy trade. Until then, have a fantastic weekend and even better week. You don’t enjoy the sunshine and we’ll see you at the beginning of June.
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 GDT Review with Jon Spainhour – May 21, 2024 appeared first on .
View all episodes
By Ever.Ag
5
55 ratings
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 the statement is meant for educational purposes and is not a solicitation to buy or sell commodities.
00;00;08;27 – 00;00;16;16
CODY
Hello everybody. Welcome back to another Good Tuesday. I am your host, Cody Koster. With me from Chicagoland, Mr. John Spain. Howard. John, how are you today?
00;00;16;18 – 00;00;19;20
JON
Doing great, Cody. And just so happy to be here. we’re happy.
00;00;19;20 – 00;00;33;08
CODY
To have you here for this intricate look at global dairy trade on this beautiful Tuesday afternoon. It is May 21st, 2024. John and I are going to go over this morning’s GDP and I mean all encompassing a.
00;00;33;08 – 00;01;05;04
JON
Decently higher GDP. Yeah, you Becky sorry, this is another higher GDP print and I would say another print that is going to catch some people and I say some people off guard. The overall index is going to come in at 3.3% higher. Again, the second higher print in a row and it really making some good advances there. The highlight of the market is going to be the butter market, which is going to come in 5.1% higher, right around $3.14 on an 82% butterfat basis.
00;01;05;04 – 00;01;31;02
JON
That’s going to compare to the U.S. That’s settled the day at $3.11. So, again, a huge move higher in the New Zealand butter price and the U.S. right in there behind it at 311 on the AMP side, an impressive feat as well, up 3.4 coming in at about $3.34 a pound. So I guess when we look at it to say that the fats were really the highlight here, we can look at the cheese market.
00;01;31;02 – 00;01;51;21
JON
Mozzarella was up 9.8%. But I think we have to be really, really careful about making too big of a deal out of that. It’s going to come in at 191 again. That’ll be the biggest mover on the day, but I have to question the validity of that move. There’s just so little volume on there. So we’re going to give the most valuable player or to butter and amp when we go to the cheddar side.
00;01;51;21 – 00;02;14;23
JON
Cheddar was actually down point four at 192. That’s going to compare to the U.S., which is right around two bucks there. And then finally, as we move to the powder side, hormone powder, again, expected to be lower on this auction based on the futures action on the SGX, home up powder futures actually comes in 1.7% higher and then skim milk powder expected to be higher.
00;02;14;27 – 00;02;33;20
JON
A little bit of a disappointment as compared to the SGX, S&P futures, but nevertheless, up 3.1%, coming in at $1.19 a pound. The U.S. started the day at 116. It rallied on the heels of this GDP today to one 1750.
00;02;33;20 – 00;02;51;29
CODY
Now, if I’m not mistaken, John, last time we talked two weeks ago for a global dairy trade for milk powder was kind of expected in quotations to go lower, but actually surprised everyone by being in the positive, if I’m not mistaken. Is there not a trend in the whole milk powder? But what do you think is driving the surprises in that market for these two?
00;02;52;00 – 00;03;15;15
JON
Gtis I think we’ve got two different attitudes taking place in here are maybe two different paradigms. The first paradigm says that if China is not in the market, then the market is going to go lower specifically for milk powder. And if China is in the market, then the market’s probably going to go higher. And I think you’ve got a lot of people that are accurately looking out into the market right now and saying, I don’t think China is going to be here at API.
00;03;15;15 – 00;03;38;20
JON
As we pointed out last time, there were quite a few people from the New Zealand ish area or it said another way, people that are forward facing to China more so than others. And I think there was a lot of concern in regards to China coming back. And as we pointed out on the GDP from two weeks ago, that was the lowest Chinese participation on the GDP since 2011 and yet prices still went up.
00;03;38;20 – 00;03;56;11
JON
Right. And so here comes the other side of that paradigm, and that is that there are other people that are participating other than China, other players that are very important, and they’re moving from being bit players to come in more center stage in the dairy drama, if you will. And those people are Southeast Asia who have always been there.
00;03;56;11 – 00;04;17;11
JON
But now more so than ever, we’re starting to see the Middle East drift in. And so the other side of the coin says when these people are here, prices can go up. And when they’re not here, prices can go down. Right. And so I guess I would say that the futures as we know them on the whole milk powder side seem to be dominated a little bit by the old paradigm of saying, hey, listen, if China is not here, prices are going down.
00;04;17;12 – 00;04;38;00
JON
And indeed, on this auction, once again, China was here, but nothing impressive. They did a little bit better than the last auction, but still, just looking at our statistics here, Chinese participation was down 35% on a year over year basis. I think that says something in itself. But most importantly, last year was already a dismal performance on the year before.
00;04;38;00 – 00;04;58;19
JON
So Chinese participation still continuing to wane and yet prices went higher again here and that really falls into my opinion, onto the backs of Southeast Asia. Their participation was up 18% year over year. And then when we look to the Middle East, they were down a little bit, but they did pick it up. Europe picked it up about 18% year over year.
00;04;58;19 – 00;05;19;26
JON
We can point out Africa was up 120%. But I don’t think that that means too much to us simply because we’re coming off of such a small base. But again, most importantly, Southeast Asia was here and the Middle East was here. And again, China did show up, but not nearly in the way that they normally should. So to answer your question again, Cody, I think the expectations are of China is not going to be here.
00;05;19;26 – 00;05;25;29
JON
Prices are going to go lower. China really hasn’t been here and prices still went higher. I think that’s really where the surprise is coming from.
00;05;26;02 – 00;05;43;02
CODY
I think it’s interesting you said that before, is when one hand is not buying, you know, we’ll call this one China. The other countries are over here that prices are expected to go down. But the rest of the countries have kind of really stepped up the game on the purchasing power. And then they’re really fill the gaps in, at least in the past couple of auctions this year so far.
00;05;43;03 – 00;06;04;13
JON
That’s right. And that just opens the door to the proverbial glass half empty, glass half full. Do we not need China anymore? Right. Look, we’re already demonstrating. Maybe we don’t need them in the market. Maybe the rest of the world is stuff that their demand so much that we don’t need them, I guess. And the glass half empty sides is, boy, what happens when the Middle East and Southeast Asia slow down?
00;06;04;15 – 00;06;22;28
JON
I think I probably find myself still in that second camp in the glass half empty. I have concerns that, you know, these other players just don’t have the sustainable purchasing power that will be needed to replace Chinese demand. You can say, well, they’ve been here two auctions in a row and look what’s happened to prices. That is true.
00;06;22;28 – 00;06;52;11
JON
I would just point out that last auctions volume was pretty low and this auction volume was even lower. So we are in that low point of New Zealand volumes, right? It might be anybody’s behavior might have an exacerbated effect to the upside when they step in during this time just because there’s not as much product around. But at the same point in time as we start marching closer to the New Zealand season coming online and more product comes on for offer, I think we have to say that’s really the judgment period.
00;06;52;11 – 00;07;05;14
JON
I think on do we still need China? And who knows, China may still come back and come back in a big way. I don’t want to rule that out. I just have reservations about that. And I think a lot of people that are or China forward facing would say the same thing.
00;07;05;16 – 00;07;18;14
CODY
What’s a great explanation? Appreciate that one. John, Is there anything else from this auction specifically that really stood out in your mind? Like you said, prices higher as far as trading volume, maybe not so much, but anything to you specifically that really kind of hit home?
00;07;18;14 – 00;07;44;17
JON
I guess I will just say that the world that market is pretty darn impressive from several different factors. The first one of which is just the price point, $3.11 here in the U.S. on May 21st. Right. That’s just an extraordinary statement all in itself. And I think there’s probably reason to believe that we’re supported to moving higher in that mortar market as we move out of the melt production season here in the US and into the demand season.
00;07;44;17 – 00;08;03;15
JON
I think that’s just such an impressive point. But it’s not just here in the U.S., as we pointed out, in New Zealand, coming in around 314 a pound, that’s impressive in itself and Europe isn’t far behind. And then I would also point out that we don’t normally see the world that market grouped together. So tightly for so long.
00;08;03;18 – 00;08;23;25
JON
And by that I mean generally, you know, that prices can move all around and go in different directions and generally have different reasons for doing so throughout the global price portfolio right now, we are grouped very tightly together and we have been so for about 3 to 4 months. Again, just not something we normally see and looking for an explanation as to why we’re seeing that.
00;08;23;25 – 00;08;45;27
JON
You know, I think at first we were maybe willing to say it feels like coincidence, but as we go along and see that price really stick together a little bit tighter than what we’re seeing, I’m forced to say maybe there’s something bigger at play here or maybe there’s a new pattern that’s involved. I have to say right now, if there is one, I’m not sure what it is, but I definitely say, Wow, this is so different and so impressive that these prices are grouped so tightly together.
00;08;45;27 – 00;08;58;24
JON
But again, I’ll just go back. The most important statement is $3.11 here on May 21st in the U.S. and $3.14 in Europe. I really think that’s a statement that the global fat market is in a pretty supported state.
00;08;58;28 – 00;09;15;25
CODY
Awesome. Well, John, we appreciate your insight into the global dairy trade per usual. John and I are going to be back with you folks in two weeks, the beginning of June, for the next global dairy trade. Until then, have a fantastic weekend and even better week. You don’t enjoy the sunshine and we’ll see you at the beginning of June.
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 GDT Review with Jon Spainhour – May 21, 2024 appeared first on .
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