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Parlor to Plate – August 21, 2024
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In the latest edition of the Parlor to Plate dairy podcast from Ever.Ag Insights, our all-star panel holds a market report roundup. Did the latest Milk Production report line up with chatter across the country? What did our team take away from the latest GDT results? And what is our analyst seeing on the Pro Farmer Crop Tour?
Join host Katie Burgess and panelists Kevin Peterson, Zach Bowers and Jim Matthews for a spirited discussion.
Questions or comments? Topics you’d like to hear us discuss? Contact us at [email protected].
Show Transcript(Transcript auto-generated)
00;00;00;10 – 00;00;09;05
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;09;07 – 00;00;33;21
Hello and welcome to Parler to Play a weekly podcast for Marriage Insights dedicated to offering listeners enlightening discussion and actionable dairy market intelligence. I’m your host, Katie Burgess. We’re excited to have you join us today. And if you like the show, please subscribe and tell a friend or two. First, let’s timestamp the episode. It’s about 330 Central Time on Wednesday, August 21st, and here’s a rundown of the CME spot markets.
00;00;33;21 – 00;00;52;18
And oh boy, it has been a wild one the past week. Today, Black Cheddar closed at 209 and a half per pound. That’s up $0.07 on the week. Barrels finished at 228 per pound, up $0.12 to a new two year high. Butter is at 316, up $0.04 from a week ago and more than 100 loads of butter have traded over the past week.
00;00;52;18 – 00;01;12;01
And not to be outdone, nonfat dry milk is at one 28.5, up $0.04 to a 18 month high. Turning to the grain markets, December corn continues to trader on the $4 mark, settling today at 398 a bushel. That’s down $0.02 on the week and November. Soybeans are at 981 per bushel, up $0.13 from a week ago. Now let’s get to the show.
00;01;12;02 – 00;01;27;20
I’m joined today by three of my favorite Chicago based brokers, Kevin Peterson, who works with commercial dairy customers. We’ve got Zach Bowers, who works with dairy producers, and Mr. Jim Matthews, who keeps us all up to date on the feed and grain markets. How is everybody doing today?
00;01;27;21 – 00;01;30;17
Doing very well. Just peachy. That’s right.
00;01;30;19 – 00;01;50;19
Perfect. Well, guys, it has been a busy week of reports. We had a global dairy trade auction yesterday. USDA just released a milk production report this afternoon. There are crop analysts across the Midwest looking at yield expectations for crops. So lots to talk about today. So I thought for today we could do a market report roundup. Zach, let’s start with you.
00;01;50;20 – 00;02;07;18
USDA just released a milk production report here this afternoon to some extent, milk production down 4/10 in the month of July. That was within expectations. However, USDA made some pretty big revisions to the June data, and there are a few other interesting parts in there as well. What were your biggest takeaways from the report?
00;02;07;19 – 00;02;37;24
Yeah, I think it’s interesting. You know, I mean it came in in expectations, right? So obviously people say neutral, but I might, you know, answer is less milk is less milk. And we’re also starting to compare it to previous year where we started seeing less milk. Right. So got kind of double negatives happening there. Right. And then you throw on top of that some huge revisions from the previous month, which is what, you know, especially some of the states like Idaho was a big one where, you know, when that report came out, a lot of the dairy producers in Idaho and processors, they’re, you know, we’re kind of telling us a different story.
00;02;37;25 – 00;02;52;14
And it was down a lot more than what was reported. Right. So that was kind of an expected revision. And I think it’ll be interesting to see going forward. You know July. Also extreme heat across most of the country. They’re going to end up, you know, revising that lower as well too. I think overall for me it’s less milk is less milk.
00;02;52;14 – 00;03;00;02
That revision it all kind of to me sums up and justifies what we’re seeing happening in the spot market on the blocks and barrel side of things, for sure.
00;03;00;02 – 00;03;19;24
I thought that was my take too, of hey, the rally is that we’ve seen in the cheese market in the class three market make a whole lot more sense. Seeing June was originally reported at down one. Now June reported it down 1.7%. And to put some data behind your Idaho comment, Idaho originally reported at down one for the month of June, now reported at down 2.8 for the month of June.
00;03;19;24 – 00;03;38;04
You know, a few other states that pop out like an Idaho. Colorado had some big revisions. You know, those were a few states where we heard about avian influenza during the month. But it wasn’t all of that. For instance, Wisconsin had a pretty big revision as well. It went from originally reported that up 9/10 to now reported down 4/10 of a percent.
00;03;38;05 – 00;03;47;04
So you know, some of it could have been avian influenza was making the data a bit murky. But it was states that have been impacted by that and other states that haven’t been reported either.
00;03;47;06 – 00;04;05;02
Yeah, I think California was an interesting one too, only being down 0.3. Not huge. But if you look at last year’s report, they were down 5.5% in that report. Right. So again, year over year doesn’t look as scary as take a look at what happened at this time last year and then add this on. That’s a lot less milk we’re making.
00;04;05;05 – 00;04;05;16
Yeah.
00;04;05;17 – 00;04;21;22
Oh actually one place where we made more milk for the first time in a long time, the southwest squeaked by in a positive territory for the first time in more than a year, all driven, though, by gains in Texas. So interesting to see them back to positive territory. But other than that, all the major milk producing regions were negative.
00;04;21;22 – 00;04;22;16
This month.
00;04;22;18 – 00;04;39;15
The one thing that stuck out to me on that report was the cow number, still down 43,000 year over year. I keep looking at that. Obviously, just as we go forward with new plants coming online very shortly here overall as well. But just where is that milk going to come? You know, not always easy to grow milking cows quickly.
00;04;39;15 – 00;04;41;27
So you know, that’s still a number that I’m keeping my eye on.
00;04;41;29 – 00;04;56;23
Oh for sure. And even though if you look at the July data, it says that we added 5000 cows in July as part of that June revision. They took a lot of cows away last month. So report to report. The herd is even smaller than we had projected as of the end of July. So you’re exactly right, Kevin.
00;04;56;23 – 00;05;12;15
Hey, you know, we don’t have a lot of heifers out there. Slaughter rates have still been low, which I think is how we squeaked that July increase by is just by slaughtering fewer dairy cows. But we’re still in a big hole in the milk production data and the cow numbers data shows it. But moving on from milk production, another big report this week.
00;05;12;15 – 00;05;18;17
Global dairy trade auction yesterday morning. Kevin, I know you watch that one pretty closely. What were your big takeaways there.
00;05;18;21 – 00;05;40;12
Yeah moved higher overall on aggregate. You know basically all products in the positive territory besides cheddar cheese unchanged. My big takeaway there is China really coming back into the fold. Their highest participation really since last year. So call it you know 910 months. So you know they’re getting back into the mix and prices are moving higher. You know kind of following Europe as well.
00;05;40;12 – 00;05;46;11
Prices exploding over there. And so I think the same thing we’re seeing here is kind of what we’re seeing globally right now.
00;05;46;15 – 00;06;03;17
Yeah. The China data is interesting that from the month of August now, China’s buying activity was back in line with the five year average after what had been pretty dismal performance earlier this year with them not buying a lot. So notably much better than we’ve seen out of China lately. But when you look at it compared to history at just in line with average.
00;06;03;17 – 00;06;19;29
So it’ll be interesting to see, you know, how does it keep up? Do they continue on their trend? I don’t know that we’ve heard a lot of positive news about Chinese consumer demand over there, but it does seem like some of the product they had on hand got old. Their milk production hasn’t been growing as much, so it looks like they need a little bit more, at least for now.
00;06;20;01 – 00;06;35;15
Yeah, I would agree. You know they like to keep a lot of stocks on hand typically. And to your point I think they chewed through. Some are getting old and now they might be forced to buy. You know I know they want to be self reliant on milk. And I just don’t know if that’s quite a possibility just with the size of their population.
00;06;35;15 – 00;06;38;24
And so I think, you know, probably just forced to buy here at this time.
00;06;38;29 – 00;06;41;02
Yeah. China always an interesting and watch.
00;06;41;02 – 00;06;41;17
Yes.
00;06;41;20 – 00;06;51;29
And then another big report are kind of ongoing reports that are coming out this week Jim. It’s the crop tours. It’s not an official USDA report. But can you tell us a little bit about that and how it all works.
00;06;52;04 – 00;07;14;00
Speaker 4
Yeah, that is correct. It is not official USDA data. This is a private crop tour that roughly is around this week. Every single year. It’s the Pro Farmer Tour. It is a widely watched but also attended tour as well. We actually have one of our own colleagues on that tour this year, Mike McGinnis from our insights team is currently on the Western Belt Tour.
00;07;14;00 – 00;07;35;01
Speaker 4
So they started off in South Dakota, and then at least for west of the Mississippi, the line through Iowa, Nebraska, eastern Belt, you know, they start in Ohio and run through Indiana and then Illinois. So that tour is going to wrap up here, you know, by around tomorrow afternoon or so. We usually will get that data sent out in terms of finalizing numbers, probably by the end of day Friday, I would guess.
00;07;35;01 – 00;07;58;16
Speaker 4
So, yeah. Like you said, Katie, this is not USDA data. The USDA does not utilize this data in determining its final numbers in terms of crop yield, but it’s something for the market to review. And there’s a little bit of a gap right between that August wise data that we got last Monday, which actually raised yields for corn with those really high yield and production figures.
00;07;58;16 – 00;08;20;28
Speaker 4
So really between that August wise and then you have a September wise report. There’s not a whole lot going on USDA wise between their markets are kind of just watching what U.S weather looks like at this time of year, if we can get any export demand picking up. So it’s kind of fun to have something on the side to review, like from the Pro Farmer Tour and again, to have Mike McGinnis there really sharing with us his impressions.
00;08;20;28 – 00;08;41;24
Speaker 4
We’re getting photos from the field, so it’s been a lot of fun to have him out there the past couple days. I would just say from a very unscientific point of view, it does not feel like yields, at least according to this tour, are as strong as what the USDA is projecting in terms of their current yields they were using on last week’s report.
00;08;41;24 – 00;09;11;16
Speaker 4
That all being said, we are still most likely looking at a very healthy crop production year here in the US, and that is on top of last year’s record production season. So I think even if you do ultimately pull some yield back from the August wise report, perhaps being suggested by this tour, but also by folks that we had ever AG are working with very closely throughout West, both on the dairy side of things, but also the row crop production side of things.
00;09;11;16 – 00;09;51;14
Speaker 4
Even if you brought those yields down, you’re still dealing with a very healthy balance sheet here in the US. I think it’s important for the dairies that are listening to the podcast to keep in mind that, you know, even though the market sentiments and those of us that you’re hopefully working with that ever AG, do not have bullish market sentiments in terms of feed pricing, it’s still very important to look at what the market has done recently and for those that have been very patient, letting this market come to $4 on December corn futures and or $300 on December meal futures, and we’ve broken each of those thresholds now in the last week or two.
00;09;51;20 – 00;10;09;06
Speaker 4
Let’s go ahead and take advantage of that pricing. You know, let’s get some hedges and or physical purchases done. Because as this pro farmer tour is indicating, maybe you’ll just aren’t as high as the USDA is indicating. So there’s there’s maybe potential to bottom this thing out futures wise for a little bit, at least between now and harvest.
00;10;09;06 – 00;10;26;21
Speaker 4
So take advantage of some of these prices while we can have them, and then maybe reassess once we’re seeing those actual combined numbers and real yield numbers coming off of those screens as we push, you know, through mid-September through mid-October, depending on the weather here in the Midwest, that’s what we’re watching for, at least on the feed side.
00;10;26;21 – 00;10;27;06
Speaker 4
Katie, I.
00;10;27;06 – 00;10;47;03
Think that’s a good sentiment, Jim, that when you take those $4 corn prices for December, right now, I mean, that’s the lowest we’ve seen in a long time. You add on to that class three milk for September and October is over 2250. You’ve got September class for 22 40th October at above 2250. Mean you’re looking at some pretty impressive margins on the dairy producer side for the next few months.
00;10;47;03 – 00;10;52;21
And so I don’t know, Zach, what have you been talking to your producers about? It seems like opportunities to lock in some pretty good numbers here.
00;10;52;22 – 00;11;13;22
Yeah. From the producer side of things, Q4 no brainer. Get it done. There’s no reason to wait out anything. There’s good margins there. Q1 and Q2 of 2025 is been the trickier one. We’ve been waiting and waiting and waiting and it’s not moving at all really, which is good and bad. I guess we haven’t missed anything and it’s gotten cheaper to purchase coverage out there.
00;11;13;22 – 00;11;33;13
But at some point, you know, we’re either going to see this rally we’re hoping for continued next leg higher and that will hopefully pull it up. And then we’re going to press hard to get coverage on there. We don’t see that in the next, you know, 15 to 20 days. Then I think it’s just time to bite the ball, get coverage on historically, that’s still very good levels for Q1 and Q2.
00;11;33;13 – 00;11;45;06
When you’re looking at it from class three, class four price over the last ten years. So if you want to layer some in, we encourage you to do so. I think we’re going to put the hammer down hard to get coverage on in the next couple weeks. So regardless of a rally.
00;11;45;11 – 00;12;01;00
So yeah, lots of good opportunities out there for dairy producers. Kevin, you work with a lot of commercial customers. I know that the folks I work with, you know, right now is all about getting their budget set for 2025. What have you been looking at for strategies for buyers on the cheese or the butter front for 2025?
00;12;01;02 – 00;12;20;01
Yeah, I think, you know, most are focused on Jan to June right now, you know, as they do their budget. But that’s probably where they’re looking to get coverage still on the higher end of historicals for most if not all products. And so, you know, I think the auction route is probably the best way to go. You know, especially when we look at cheese, you know, summer weary to get coverage on because of the capacity coming online.
00;12;20;01 – 00;12;41;11
But again, as we continue to harp on, we can’t get that milk growth then, you know, I don’t know the growth we can see in the cheddar cheese space. And even if we do, then it’s likely going to come out of class for in butter and nonfat. And so, you know, also looking at those products to really make sure you’re hedged up on as an end user, knowing that, you know, when they build cheese capacity, it’s likely going to get the milk first.
00;12;41;11 – 00;12;43;15
And that could definitely take away from the butter powder side.
00;12;43;17 – 00;12;59;16
2025 is going to be a tricky one. You know, on one hand we have these really nice looking dairy producer margins. The flip side heifers are expensive and hard to come by new plant capacity in a way that we haven’t seen all at one time before. So lots of moving pieces. These dairy markets are never short for volatility.
00;12;59;16 – 00;13;05;26
So I think on both sides, you know, getting those 2025 plans in place and thinking about them right now is probably some good advice.
00;13;05;26 – 00;13;12;14
Agreed. And add to that the changes in the ethanol. So that’s right, 2025 is likely going to be a volatile year.
00;13;12;16 – 00;13;23;08
Kevin, before we wrap up today, we are going to get a cold storage report on Friday afternoon. It comes out at 2:00 central time after the markets closed. What things should the listeners be watching for when those numbers drop?
00;13;23;08 – 00;13;44;13
Yeah, and the cold storage report I’m continuing. Just a look at that cheddar number, which I think will be under the American type cheese, seeing if there’s a continued drawdown there. Obviously we’ve made 165 million less pounds in that Janet June time period and stocks pulled down as well. So seeing if we’re starting to grow that again or if we’re still depleting inventories, I think is the biggest thing I’m watching for, for sure.
00;13;44;13 – 00;13;54;17
I’m going to add to that. Two, I think it’s going to be interesting to see obviously what that milk production revision is. There going to be a revision to the gold storage report as well? Is there going to be follow through from that? I guess I don’t even know. Katie. How does that.
00;13;54;17 – 00;14;13;05
Work? I’m not sure. It’ll be interesting to see that they come from different sources, but they all, you know, somewhat work together. And I’d say for me, I’m going to be curious to see what that butter number is. You know, September is the time the butter market can get off to the races. So this is kind of the last cold storage report, which tends to be a big one for, you know, how are we heading into the holiday season.
00;14;13;05 – 00;14;28;15
So lots to watch. We’ll see how that crop tour wraps up too at the end of the week. You know, listeners, keep your eyes posted for the results of those reports. Otherwise, you know, it’s always volatile times in the grain and dairy market. So be thinking about how you can hedging help protect your profits for the year ahead.
00;14;28;15 – 00;14;50;02
That’s it for today’s show. Big thanks to Zach, Jim and Kevin. Appreciate you guys. Joining me for the discussion today. Plus big thanks to our ever Egg Insights team for their production support. And thank you to you the listeners. We appreciate you tuning in. If you like the show, please hit subscribe on your favorite podcast app. And if you’d like to learn more about how we help customers manage risk, please contact us at insights at ever.ag.
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Listen Now
In the latest edition of the Parlor to Plate dairy podcast from Ever.Ag Insights, our all-star panel holds a market report roundup. Did the latest Milk Production report line up with chatter across the country? What did our team take away from the latest GDT results? And what is our analyst seeing on the Pro Farmer Crop Tour?
Join host Katie Burgess and panelists Kevin Peterson, Zach Bowers and Jim Matthews for a spirited discussion.
Questions or comments? Topics you’d like to hear us discuss? Contact us at [email protected].
Show Transcript(Transcript auto-generated)
00;00;00;10 – 00;00;09;05
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;09;07 – 00;00;33;21
Hello and welcome to Parler to Play a weekly podcast for Marriage Insights dedicated to offering listeners enlightening discussion and actionable dairy market intelligence. I’m your host, Katie Burgess. We’re excited to have you join us today. And if you like the show, please subscribe and tell a friend or two. First, let’s timestamp the episode. It’s about 330 Central Time on Wednesday, August 21st, and here’s a rundown of the CME spot markets.
00;00;33;21 – 00;00;52;18
And oh boy, it has been a wild one the past week. Today, Black Cheddar closed at 209 and a half per pound. That’s up $0.07 on the week. Barrels finished at 228 per pound, up $0.12 to a new two year high. Butter is at 316, up $0.04 from a week ago and more than 100 loads of butter have traded over the past week.
00;00;52;18 – 00;01;12;01
And not to be outdone, nonfat dry milk is at one 28.5, up $0.04 to a 18 month high. Turning to the grain markets, December corn continues to trader on the $4 mark, settling today at 398 a bushel. That’s down $0.02 on the week and November. Soybeans are at 981 per bushel, up $0.13 from a week ago. Now let’s get to the show.
00;01;12;02 – 00;01;27;20
I’m joined today by three of my favorite Chicago based brokers, Kevin Peterson, who works with commercial dairy customers. We’ve got Zach Bowers, who works with dairy producers, and Mr. Jim Matthews, who keeps us all up to date on the feed and grain markets. How is everybody doing today?
00;01;27;21 – 00;01;30;17
Doing very well. Just peachy. That’s right.
00;01;30;19 – 00;01;50;19
Perfect. Well, guys, it has been a busy week of reports. We had a global dairy trade auction yesterday. USDA just released a milk production report this afternoon. There are crop analysts across the Midwest looking at yield expectations for crops. So lots to talk about today. So I thought for today we could do a market report roundup. Zach, let’s start with you.
00;01;50;20 – 00;02;07;18
USDA just released a milk production report here this afternoon to some extent, milk production down 4/10 in the month of July. That was within expectations. However, USDA made some pretty big revisions to the June data, and there are a few other interesting parts in there as well. What were your biggest takeaways from the report?
00;02;07;19 – 00;02;37;24
Yeah, I think it’s interesting. You know, I mean it came in in expectations, right? So obviously people say neutral, but I might, you know, answer is less milk is less milk. And we’re also starting to compare it to previous year where we started seeing less milk. Right. So got kind of double negatives happening there. Right. And then you throw on top of that some huge revisions from the previous month, which is what, you know, especially some of the states like Idaho was a big one where, you know, when that report came out, a lot of the dairy producers in Idaho and processors, they’re, you know, we’re kind of telling us a different story.
00;02;37;25 – 00;02;52;14
And it was down a lot more than what was reported. Right. So that was kind of an expected revision. And I think it’ll be interesting to see going forward. You know July. Also extreme heat across most of the country. They’re going to end up, you know, revising that lower as well too. I think overall for me it’s less milk is less milk.
00;02;52;14 – 00;03;00;02
That revision it all kind of to me sums up and justifies what we’re seeing happening in the spot market on the blocks and barrel side of things, for sure.
00;03;00;02 – 00;03;19;24
I thought that was my take too, of hey, the rally is that we’ve seen in the cheese market in the class three market make a whole lot more sense. Seeing June was originally reported at down one. Now June reported it down 1.7%. And to put some data behind your Idaho comment, Idaho originally reported at down one for the month of June, now reported at down 2.8 for the month of June.
00;03;19;24 – 00;03;38;04
You know, a few other states that pop out like an Idaho. Colorado had some big revisions. You know, those were a few states where we heard about avian influenza during the month. But it wasn’t all of that. For instance, Wisconsin had a pretty big revision as well. It went from originally reported that up 9/10 to now reported down 4/10 of a percent.
00;03;38;05 – 00;03;47;04
So you know, some of it could have been avian influenza was making the data a bit murky. But it was states that have been impacted by that and other states that haven’t been reported either.
00;03;47;06 – 00;04;05;02
Yeah, I think California was an interesting one too, only being down 0.3. Not huge. But if you look at last year’s report, they were down 5.5% in that report. Right. So again, year over year doesn’t look as scary as take a look at what happened at this time last year and then add this on. That’s a lot less milk we’re making.
00;04;05;05 – 00;04;05;16
Yeah.
00;04;05;17 – 00;04;21;22
Oh actually one place where we made more milk for the first time in a long time, the southwest squeaked by in a positive territory for the first time in more than a year, all driven, though, by gains in Texas. So interesting to see them back to positive territory. But other than that, all the major milk producing regions were negative.
00;04;21;22 – 00;04;22;16
This month.
00;04;22;18 – 00;04;39;15
The one thing that stuck out to me on that report was the cow number, still down 43,000 year over year. I keep looking at that. Obviously, just as we go forward with new plants coming online very shortly here overall as well. But just where is that milk going to come? You know, not always easy to grow milking cows quickly.
00;04;39;15 – 00;04;41;27
So you know, that’s still a number that I’m keeping my eye on.
00;04;41;29 – 00;04;56;23
Oh for sure. And even though if you look at the July data, it says that we added 5000 cows in July as part of that June revision. They took a lot of cows away last month. So report to report. The herd is even smaller than we had projected as of the end of July. So you’re exactly right, Kevin.
00;04;56;23 – 00;05;12;15
Hey, you know, we don’t have a lot of heifers out there. Slaughter rates have still been low, which I think is how we squeaked that July increase by is just by slaughtering fewer dairy cows. But we’re still in a big hole in the milk production data and the cow numbers data shows it. But moving on from milk production, another big report this week.
00;05;12;15 – 00;05;18;17
Global dairy trade auction yesterday morning. Kevin, I know you watch that one pretty closely. What were your big takeaways there.
00;05;18;21 – 00;05;40;12
Yeah moved higher overall on aggregate. You know basically all products in the positive territory besides cheddar cheese unchanged. My big takeaway there is China really coming back into the fold. Their highest participation really since last year. So call it you know 910 months. So you know they’re getting back into the mix and prices are moving higher. You know kind of following Europe as well.
00;05;40;12 – 00;05;46;11
Prices exploding over there. And so I think the same thing we’re seeing here is kind of what we’re seeing globally right now.
00;05;46;15 – 00;06;03;17
Yeah. The China data is interesting that from the month of August now, China’s buying activity was back in line with the five year average after what had been pretty dismal performance earlier this year with them not buying a lot. So notably much better than we’ve seen out of China lately. But when you look at it compared to history at just in line with average.
00;06;03;17 – 00;06;19;29
So it’ll be interesting to see, you know, how does it keep up? Do they continue on their trend? I don’t know that we’ve heard a lot of positive news about Chinese consumer demand over there, but it does seem like some of the product they had on hand got old. Their milk production hasn’t been growing as much, so it looks like they need a little bit more, at least for now.
00;06;20;01 – 00;06;35;15
Yeah, I would agree. You know they like to keep a lot of stocks on hand typically. And to your point I think they chewed through. Some are getting old and now they might be forced to buy. You know I know they want to be self reliant on milk. And I just don’t know if that’s quite a possibility just with the size of their population.
00;06;35;15 – 00;06;38;24
And so I think, you know, probably just forced to buy here at this time.
00;06;38;29 – 00;06;41;02
Yeah. China always an interesting and watch.
00;06;41;02 – 00;06;41;17
Yes.
00;06;41;20 – 00;06;51;29
And then another big report are kind of ongoing reports that are coming out this week Jim. It’s the crop tours. It’s not an official USDA report. But can you tell us a little bit about that and how it all works.
00;06;52;04 – 00;07;14;00
Speaker 4
Yeah, that is correct. It is not official USDA data. This is a private crop tour that roughly is around this week. Every single year. It’s the Pro Farmer Tour. It is a widely watched but also attended tour as well. We actually have one of our own colleagues on that tour this year, Mike McGinnis from our insights team is currently on the Western Belt Tour.
00;07;14;00 – 00;07;35;01
Speaker 4
So they started off in South Dakota, and then at least for west of the Mississippi, the line through Iowa, Nebraska, eastern Belt, you know, they start in Ohio and run through Indiana and then Illinois. So that tour is going to wrap up here, you know, by around tomorrow afternoon or so. We usually will get that data sent out in terms of finalizing numbers, probably by the end of day Friday, I would guess.
00;07;35;01 – 00;07;58;16
Speaker 4
So, yeah. Like you said, Katie, this is not USDA data. The USDA does not utilize this data in determining its final numbers in terms of crop yield, but it’s something for the market to review. And there’s a little bit of a gap right between that August wise data that we got last Monday, which actually raised yields for corn with those really high yield and production figures.
00;07;58;16 – 00;08;20;28
Speaker 4
So really between that August wise and then you have a September wise report. There’s not a whole lot going on USDA wise between their markets are kind of just watching what U.S weather looks like at this time of year, if we can get any export demand picking up. So it’s kind of fun to have something on the side to review, like from the Pro Farmer Tour and again, to have Mike McGinnis there really sharing with us his impressions.
00;08;20;28 – 00;08;41;24
Speaker 4
We’re getting photos from the field, so it’s been a lot of fun to have him out there the past couple days. I would just say from a very unscientific point of view, it does not feel like yields, at least according to this tour, are as strong as what the USDA is projecting in terms of their current yields they were using on last week’s report.
00;08;41;24 – 00;09;11;16
Speaker 4
That all being said, we are still most likely looking at a very healthy crop production year here in the US, and that is on top of last year’s record production season. So I think even if you do ultimately pull some yield back from the August wise report, perhaps being suggested by this tour, but also by folks that we had ever AG are working with very closely throughout West, both on the dairy side of things, but also the row crop production side of things.
00;09;11;16 – 00;09;51;14
Speaker 4
Even if you brought those yields down, you’re still dealing with a very healthy balance sheet here in the US. I think it’s important for the dairies that are listening to the podcast to keep in mind that, you know, even though the market sentiments and those of us that you’re hopefully working with that ever AG, do not have bullish market sentiments in terms of feed pricing, it’s still very important to look at what the market has done recently and for those that have been very patient, letting this market come to $4 on December corn futures and or $300 on December meal futures, and we’ve broken each of those thresholds now in the last week or two.
00;09;51;20 – 00;10;09;06
Speaker 4
Let’s go ahead and take advantage of that pricing. You know, let’s get some hedges and or physical purchases done. Because as this pro farmer tour is indicating, maybe you’ll just aren’t as high as the USDA is indicating. So there’s there’s maybe potential to bottom this thing out futures wise for a little bit, at least between now and harvest.
00;10;09;06 – 00;10;26;21
Speaker 4
So take advantage of some of these prices while we can have them, and then maybe reassess once we’re seeing those actual combined numbers and real yield numbers coming off of those screens as we push, you know, through mid-September through mid-October, depending on the weather here in the Midwest, that’s what we’re watching for, at least on the feed side.
00;10;26;21 – 00;10;27;06
Speaker 4
Katie, I.
00;10;27;06 – 00;10;47;03
Think that’s a good sentiment, Jim, that when you take those $4 corn prices for December, right now, I mean, that’s the lowest we’ve seen in a long time. You add on to that class three milk for September and October is over 2250. You’ve got September class for 22 40th October at above 2250. Mean you’re looking at some pretty impressive margins on the dairy producer side for the next few months.
00;10;47;03 – 00;10;52;21
And so I don’t know, Zach, what have you been talking to your producers about? It seems like opportunities to lock in some pretty good numbers here.
00;10;52;22 – 00;11;13;22
Yeah. From the producer side of things, Q4 no brainer. Get it done. There’s no reason to wait out anything. There’s good margins there. Q1 and Q2 of 2025 is been the trickier one. We’ve been waiting and waiting and waiting and it’s not moving at all really, which is good and bad. I guess we haven’t missed anything and it’s gotten cheaper to purchase coverage out there.
00;11;13;22 – 00;11;33;13
But at some point, you know, we’re either going to see this rally we’re hoping for continued next leg higher and that will hopefully pull it up. And then we’re going to press hard to get coverage on there. We don’t see that in the next, you know, 15 to 20 days. Then I think it’s just time to bite the ball, get coverage on historically, that’s still very good levels for Q1 and Q2.
00;11;33;13 – 00;11;45;06
When you’re looking at it from class three, class four price over the last ten years. So if you want to layer some in, we encourage you to do so. I think we’re going to put the hammer down hard to get coverage on in the next couple weeks. So regardless of a rally.
00;11;45;11 – 00;12;01;00
So yeah, lots of good opportunities out there for dairy producers. Kevin, you work with a lot of commercial customers. I know that the folks I work with, you know, right now is all about getting their budget set for 2025. What have you been looking at for strategies for buyers on the cheese or the butter front for 2025?
00;12;01;02 – 00;12;20;01
Yeah, I think, you know, most are focused on Jan to June right now, you know, as they do their budget. But that’s probably where they’re looking to get coverage still on the higher end of historicals for most if not all products. And so, you know, I think the auction route is probably the best way to go. You know, especially when we look at cheese, you know, summer weary to get coverage on because of the capacity coming online.
00;12;20;01 – 00;12;41;11
But again, as we continue to harp on, we can’t get that milk growth then, you know, I don’t know the growth we can see in the cheddar cheese space. And even if we do, then it’s likely going to come out of class for in butter and nonfat. And so, you know, also looking at those products to really make sure you’re hedged up on as an end user, knowing that, you know, when they build cheese capacity, it’s likely going to get the milk first.
00;12;41;11 – 00;12;43;15
And that could definitely take away from the butter powder side.
00;12;43;17 – 00;12;59;16
2025 is going to be a tricky one. You know, on one hand we have these really nice looking dairy producer margins. The flip side heifers are expensive and hard to come by new plant capacity in a way that we haven’t seen all at one time before. So lots of moving pieces. These dairy markets are never short for volatility.
00;12;59;16 – 00;13;05;26
So I think on both sides, you know, getting those 2025 plans in place and thinking about them right now is probably some good advice.
00;13;05;26 – 00;13;12;14
Agreed. And add to that the changes in the ethanol. So that’s right, 2025 is likely going to be a volatile year.
00;13;12;16 – 00;13;23;08
Kevin, before we wrap up today, we are going to get a cold storage report on Friday afternoon. It comes out at 2:00 central time after the markets closed. What things should the listeners be watching for when those numbers drop?
00;13;23;08 – 00;13;44;13
Yeah, and the cold storage report I’m continuing. Just a look at that cheddar number, which I think will be under the American type cheese, seeing if there’s a continued drawdown there. Obviously we’ve made 165 million less pounds in that Janet June time period and stocks pulled down as well. So seeing if we’re starting to grow that again or if we’re still depleting inventories, I think is the biggest thing I’m watching for, for sure.
00;13;44;13 – 00;13;54;17
I’m going to add to that. Two, I think it’s going to be interesting to see obviously what that milk production revision is. There going to be a revision to the gold storage report as well? Is there going to be follow through from that? I guess I don’t even know. Katie. How does that.
00;13;54;17 – 00;14;13;05
Work? I’m not sure. It’ll be interesting to see that they come from different sources, but they all, you know, somewhat work together. And I’d say for me, I’m going to be curious to see what that butter number is. You know, September is the time the butter market can get off to the races. So this is kind of the last cold storage report, which tends to be a big one for, you know, how are we heading into the holiday season.
00;14;13;05 – 00;14;28;15
So lots to watch. We’ll see how that crop tour wraps up too at the end of the week. You know, listeners, keep your eyes posted for the results of those reports. Otherwise, you know, it’s always volatile times in the grain and dairy market. So be thinking about how you can hedging help protect your profits for the year ahead.
00;14;28;15 – 00;14;50;02
That’s it for today’s show. Big thanks to Zach, Jim and Kevin. Appreciate you guys. Joining me for the discussion today. Plus big thanks to our ever Egg Insights team for their production support. And thank you to you the listeners. We appreciate you tuning in. If you like the show, please hit subscribe on your favorite podcast app. And if you’d like to learn more about how we help customers manage risk, please 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.
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