In the latest Parlor to Plate dairy podcast from Ever.Ag Insights, our all-star panel digs into the “nice and naughty” market trends shaping the close of 2024. How have rising cheese exports and lower feed costs impacted dairy producers this year? What challenges lie ahead with volatile whey prices, tight heifer supplies, and ongoing impacts of avian influenza on milk production? And what are the big questions for 2025, including new cheese processing capacity and export competitiveness?

Join host Katie Burgess with panelists Brian Fletcher, Ryan Yonkman, and Natalie McCarty for a lively discussion.

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

(Transcript auto-generated)

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

00;00;08;28 – 00;00;32;13

Hello and welcome to Parlor to plate, a weekly podcast from ever again sites dedicated to offering listeners enlightening discussion and actionable dairy market intelligence. I’m your host, Katie Burgess. We’re excited to have you along. If you enjoy the show, please like it. Subscribe and tell a friend or two. First, let’s timestamp the episode. It is 10 a.m. Central Time on Wednesday, December 18th, and here’s your rundown of CME spot markets over the past week.

00;00;32;13 – 00;00;54;10

Yesterday, black cheddar close at 186 per pound. That’s up $0.13 from last week and the highest price in more than a month. Barrels also higher, finishing at one 7850 up $0.10 from a week ago. Butter is at 252 per pound, down a penny, and nonfat dry milk is holding at 138 per pound. Turning to the grain market today, March corn is at 442 per bushel.

00;00;54;12 – 00;01;18;16

That’s down $0.06 from a week ago. While soybeans are at the lowest level we’ve seen in quite a while. January soybeans at 956 per bushel. That’s up $0.39 from a week ago. So let’s get to the show. I am excited today to be joined by some of my nicest colleagues. We’ve got Brian Fletcher coming to us from Chicago, Ryan Jackman also from the Chicago area, and Natalie McCarty out in California.

00;01;18;21 – 00;01;21;04

How are you guys doing today? Looking forward to Christmas.

00;01;21;07 – 00;01;21;29

Oh ho ho.

00;01;22;02 – 00;01;24;03

Nothing like a Santa Claus rally.

00;01;24;05 – 00;01;42;21

I agree. That’s right. The excitement has been building in the markets. Here we are Wednesday morning reporting. We’ve got one week from today. We’ll all be gathered around the Christmas tree, probably knee deep and wrapping paper by that time. So as we think about wrapping up the year, how have things played out here over the course of 2024?

00;01;42;22 – 00;01;58;09

The team today is rounded up some of the nice and naughty factors that we’ve seen across the dairy and grain markets here over the past year, and I’d say we’ve had our handful of both, definitely some very nice things that have happened in the markets in 2024. What do you have? Those markets have also gotten up to some ish yet.

00;01;58;09 – 00;02;15;16

So what to call out? What we see as some of those big factor is heading into your end. Before we jump into it though, we will say that we know we have listeners all across the dairy spectrum in market as some people like low prices, others like high prices. So as we walk through today, we’ll talk about it from either a buyer or seller perspective.

00;02;15;16 – 00;02;26;00

But know that, you know, in these markets we have people who sit on all sides. So kicking things off, Brian, I know you work with dairymen each and every day. What was one of the nicest things they saw this year?

00;02;26;01 – 00;02;43;01

Yeah, I think from a holistic standpoint, for the most part we’re going to say aren’t farm margins. We’re in the nice category. We know the first half started a little rough, but we certainly ended the year pretty strong. And so we can say on fine margins with good milk prices, cheaper feed finally, and certainly some version of record high cattle prices.

00;02;43;01 – 00;02;44;12

What’s that in the nice camp.

00;02;44;17 – 00;03;02;14

Oh for sure. I mean, this year it didn’t necessarily start off so nice, especially if you were in cheese territory. But as the year continued, those higher prices are sure a big benefit to the dairy producers out there. How about you, Fletch? I know you’re working with commercial customers on the buy and the sell side. What’s one of the biggest nice things you saw here in 2020 for.

00;03;02;15 – 00;03;27;28

2024? I think we’ll look back at this year and say it is officially the banner year for cheese exports. All year long we’ve been exporting at a record setting pace and that’s been fantastic. So within that, it’s definitely a highlight. What’s really interesting about that, though, is actually this week for the first time, the US is no longer the clear cut low price around the world.

00;03;27;28 – 00;03;50;20

So we’ve had a really good year for 2024. And I think with the amount of new processing capacity coming online, looking at the domestic demand growth environment, we’re going to need to continue to build on the record setting pace that we’ve had in 2020 for moving forward. So it’s been really good, but looking forward, it’s going to be a little bit more challenging, at least.

00;03;50;20 – 00;04;18;16

To get new exports on the books doesn’t mean some are already on the books. It just means like getting new deals done is going to be a little bit more challenging. What the EU market in the low one 80s for mozzarella cheese. Our block market is in the mid one 80s. So on a spot price and forward price, you can find cheaper sources of product on the global market right now, which I would say without some big changes down the road could be a little problematic for the US market.

00;04;18;16 – 00;04;22;15

But for now, let’s celebrate a banner export year for 2020.

00;04;22;15 – 00;04;38;26

Four for sure. And I think that is the question on everyone’s mind for 2025, as we’ve had a good window here to get some sales booked. But you know, how much was it and is it going to be enough given the new cheese capacity coming online. So we’ll see what 2025 brings for the cheese export market. And Natalie, how about you?

00;04;38;26 – 00;04;43;13

It feels like an easy one over on the food side. Lots of nice lower prices here. This year.

00;04;43;16 – 00;05;14;26

Absolutely. Ryan touched on that. I think if I had to categorize it in the nicest thing in the market, the feed market would be soy meal prices. That influences your canola prices and also your soy meal and your bypass proteins. That is down 32% this year alone versus last year. Switching over to you know, I know people aren’t going to necessarily think this is the case, but what I would maybe call a naughty kind of a mixed, actually, but a naughty at the moment is corn prices.

00;05;14;26 – 00;05;36;11

The USDA did come out with a report last week. They reduced the U.S. ending stocks. And conversely, that has put a floor underneath pricing at the moment. So we’re really only down about 3% versus last year. I’m going to also talk a little bit about the fact that even though that’s a little bit of a naughty, it’s not as good as it was.

00;05;36;12 – 00;05;46;13

We also, though, need to be reminded that we’re down 16% versus a five year average. So still great, great prices and things that need to be taken advantage.

00;05;46;13 – 00;05;55;12

Of for sure. To your point, we’re not as low as we were. It’s still not bad relative to the long run of history, but not quite as sweet as we see on the protein side.

00;05;55;12 – 00;06;00;24

Absolutely. And I think it’s a good reminder that managing risk is very, very important for sure.

00;06;00;24 – 00;06;17;17

I think that is key across all these markets as we head into potentially what could be a volatile 2025. I guess from there, we think about some volatility in the markets that might have been I don’t know if we’ll call a naughty, but we’ll say up to some mischief what the way market has been on quite the run here.

00;06;17;18 – 00;06;19;25

How would you categorize that one for 2024.

00;06;20;00 – 00;06;45;27

That one in terms of a demand highlight? I think it absolutely has been a shining star. We’ve heard, especially once you get into the higher protein ways, whether it’s 80 or isolate, it feels like that market in general has expanded. So what’s been really interesting recently is the driveway price, which tends to be the input cost to making the higher end proteins.

00;06;45;27 – 00;07;20;19

That’s really done a number in terms of catching up on a multiple basis, catching up to the pricing. So what’s been interesting recently is we’ve really heard that the rising driveway costs relative to the equity prices has now encroached on the margin potential for the manufacturers. So it’s been interesting with the driveway market moving all the way up to the I-70 since area, we’ve heard in some cases that it’s not a clear cut decision to be making the higher end proteins, and it doesn’t mean that the higher end proteins can’t make a leg higher.

00;07;20;19 – 00;07;45;01

It just means that the current situation we’re in is it’s not a no brainer to be making that. So we’ll see how we go into 2025, see if the momentum continues. If not, it almost feels like we’re at the first layer of resistance that we’ve had in the market in, let’s just say, all year long. But overall, in terms of dairy demand, the higher end protein category has been exceptional all year long, for sure.

00;07;45;01 – 00;08;02;00

I think that definitely goes on the nice list in terms of dairy demand, higher prices as way impacts class three values. Just a challenge. If you’re a buyer out there to get that product as you see those prices going up and up. But to your point, 2025 is a new year. We’ll have some new capacity and we’ll see how it all evens out for us.

00;08;02;01 – 00;08;18;17

Yeah, I will see a history suggest that this price point, there isn’t much time that we spend up here. You never know what the future brings. But what tends to happen is we run into a brick wall right now, at least on the higher end protein that we just haven’t heard of that pushback yet. So we shall see.

00;08;18;17 – 00;08;25;24

But watching carefully to see when it comes south for sure. Brian, how about you? Any naughty factor this year on the dairy producer side of things?

00;08;25;24 – 00;08;43;15

Yeah, I mean, I guess I’ll take the obvious, right? Not certainly avian, which you can strip out in regards to what it meant to markets. Right. Anybody certainly having to deal with that throughout this year. And by no means is it done. We’re all still very aware of this actively moving throughout the United States. It’s naughty right. It’s been a problem.

00;08;43;15 – 00;08;52;18

It’s not been fun. And that’s going to live in that camp till we figure out how to treat it or gain immunities or whatever that might be. That is yet to be figured out just yet, for sure.

00;08;52;18 – 00;09;12;01

And I mean, just as the update that we’ve had the past few weeks, we continue to see cases in California and we do get a milk production report tomorrow, December 19th. So it’ll give us a fresh look of, hey, how much of an impact did avian influenza have in California during the month of November? Contacts out there suggests that it was probably a little worse than we had seen the month prior.

00;09;12;01 – 00;09;26;17

But I guess, you know, as we look towards 2025, at least for California dairy producers, now that this is a great target. But so many of them have had it at this point. And so hopefully those case numbers will start to slow out there. But then, of course, you know, there are some areas of the country that haven’t had it yet.

00;09;26;17 – 00;09;32;03

So I think it’s going to remain a big watch factor of what happens with milk supply as we make our way into 2025.

00;09;32;06 – 00;09;50;15

Yeah. And it’s still laid up against you know, you could call this a naughty nice list all on its own in regards to the cattle market. We know our heifer replacements are still very tight. We could call that nice. And hey, that’s not going to allow us to turn the spigot on any major way. But it’s also creating problems for dairies that have to backfill dealing with avian.

00;09;50;15 – 00;10;04;25

And we know heifer prices are extremely high. Not really any writing on the wall that says that should change when you consider the supply environment we’ve got. So yes, it is a watch factor. The heifer replacement market will continue to be a watch factor as we go into next year.

00;10;05;01 – 00;10;21;28

Well, on that note, there’s plenty of stuff for all of us to keep an eye on as we head into the new year. But thanks so much for joining me today. Brian, Brian and Natalie appreciated your comments, and there’s fun running down the list with you, as there have been a lot of different things happening in the markets here in 2024.

00;10;21;29 – 00;10;44;08

Also, big thanks to our listeners. We really appreciate your support and a big thanks to the other insights production team. If you like the show, please hit subscribe on your favorite podcast app. And just to note that we’ll be taking a break next week for the holidays, but we’ll be back with fresh new episodes in 2025. We appreciate everything you do, and if you’d like to learn more about everything, please contact us at [email protected].

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