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Parlor to Plate – June 18, 2024
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In the latest edition of the Parlor to Plate dairy podcast from Ever.Ag Insights, our all-star panel discusses upcoming reports. What might next week’s Milk Production and Cold Storage reports hold? Did we learn anything new from the latest WASDE data? How might grain markets react to new Acreage numbers?
Join host Erica Maedke and panelists Kevin Peterson and Colin Kadis 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;08;23
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;26 – 00;00;28;17
ERICA
Hello. Welcome to Parlor to Plate, a weekly podcast from insights dedicated to offering listeners enlightening discussion and actionable intelligence about dairy markets. I’m your host, Erica McKee. We are excited to have you along. And if you like what you hear, please like, subscribe and tell a friend or two. We are a day early today due to the Juneteenth holiday.
00;00;28;18 – 00;00;55;29
ERICA
It’s Tuesday, June 18th. We are recording around 2:00 central time. Quick rundown of today’s markets. CME Black Cheddar a $1.86 per pound. We are down $0.08 from last Tuesday. Barrels 194 $0.07 lower from last week. Spot butter 311. That is unchanged and nonfat dry milk closing at $1.19 down a penny on the week. Earlier today, the grain complex July corn was at 444 per bushel.
00;00;56;00 – 00;01;18;00
ERICA
July soybeans 1158 per bushel. And July soybean meal at 360 per ton. It’s a new week and another all star panel from the Egg Financial services team. It is all dairy in this June Dairy Month episode. We have Collin Caddis. He helps dairy producers manage risk and I truly laughed out loud when I asked him his favorite dairy product and he said beef.
00;01;18;03 – 00;01;40;26
ERICA
Kevin Peterson helps commercial clients manage their risk and his favorite is a nice piece of sharp cheddar. Welcome to the show, gentlemen. So one of my favorite thought exercises to help me stay sharp with the markets is to think about everything that could take the market higher. Make a list of everything that is bullish in the marketplace. Then take my pen and paper and write down everything that I think could take this market lower.
00;01;40;27 – 00;01;49;13
ERICA
What’s my bearish list? So I asked both Kevin and ERICA today to give me their top bull and their top bear. So ERICA, let’s start with you.
00;01;49;15 – 00;02;09;11
COLIN
Yeah. Thanks, Erica. You know, I think dairymen today woke up. We had $21. Class three. You know, that was last Thursday. Today we are now in the $20 range and lots of calls coming in. Hey, what happened to a whole dollar of class three? But I would like to point out it is still 20 bucks. So, you know, I think in my bullish range heifer prices are insane.
00;02;09;14 – 00;02;28;13
COLIN
You know anecdotally we’re hearing about 3500 which would beat the highs we set in 2014 in California of 3100. You know we’re projecting in our milk production report estimate -0.8% for May, which would be the 11th month of consecutive negative milk production. And you know, we always know we do get heat in the summer. So I’m not sure if it’ll matter.
00;02;28;13 – 00;02;45;20
COLIN
But it is possible to tighten up that 30 day cheese spot market and not have enough milk. And things are already tight, so that is a definite bull on the bear side. The reality is, if you watch the spot market action, it kind of looks like there’s too much cheese out there for current price levels. And we know that we’re not exporting anything.
00;02;45;20 – 00;02;58;13
COLIN
And it seems likely that consecutive months of record exports are what got us up here. So it’s going to be tough to counteract all the cheese that we already got rid of. And now we aren’t getting rid of. But maybe one way we do it is by not making it, at least in the short term.
00;02;58;19 – 00;03;01;20
ERICA
Thanks, ERICA. How about you, Kevin? The Bulls and the bears?
00;03;01;24 – 00;03;19;13
KEVIN
Yeah. So I think I’ll start on the bullish side here. You know, avian influenza still seems to be popping up really all throughout the country. So I think if that can keep running through and, you know, kicking some cows into the pan, you know, that obviously won’t help milk production at all. You know a couple of that obviously with what’s Collins said as well.
00;03;19;13 – 00;03;37;09
KEVIN
You know the heat last week you had the heat dome over the southwest getting up to 108. You know, here now it’s coming through the Midwest, I think in Chicago where 95 tomorrow, some places a little south of us in Illinois are hotter than that. And then it also is going to make its way over to Collin on the East coast later on in the week or maybe next week.
00;03;37;09 – 00;03;52;16
KEVIN
And so, you know, really early in the year to be already getting that kind of heat and, you know, it’s, you know, going to keep continuing into July and into later August month as well. So I think yeah, on the bull side definitely maybe more really does focus around milk production. If we’re getting that flu along with heat.
00;03;52;16 – 00;04;13;07
KEVIN
Really might struggle to have the milk in there to get the product. You know, Mexico continues to import very strongly having some milk production issues down there as well with their drought water issues, things like that. So I think they’ll probably be around here trying to import our product for the foreseeable future. So I definitely think that right now is more so on my mind for the overall orcas in the market.
00;04;13;07 – 00;04;31;19
KEVIN
You know, looking at the bears, really, it’s kind of boring. But, you know, at the beginning, somewhat of a flip of that. If the avian flu continues to be more subtle and we’re getting the milk that we need and you know, you got to throw China in there as well, I think their economy is still really struggling. Imports in the US are extremely lackluster.
00;04;31;19 – 00;04;38;11
KEVIN
Same with their importing from New Zealand. And so I think they definitely fall on the bearish side of the coin right now.
00;04;38;12 – 00;05;00;24
ERICA
Good analysis guys. Thanks for sharing your thoughts there. Over the course of the next week, USDA is going to release two very important dairy reports. So this Friday we will see milk production numbers for the month of May. And on Tuesday of next week USDA will release its cold storage report. Now a lot of times people ask us, what do we think those numbers are going to be?
00;05;00;29 – 00;05;12;02
ERICA
Every egg. We’ll put out our official estimates shortly. But to give folks a bit of a sneak peek, ERICA, I think you got to look at the advance print on the milk production forecast. Yeah.
00;05;12;02 – 00;05;31;25
COLIN
Erica, our team is predicting yet another month of negative year over year milk production to. I think their official estimate is -0.8%, which is quite believable. I mean, this is going to be the first month we see bird flu hit Idaho, which is the third largest milk producing state in the country. As Kevin said, higher temps. The only thing just keep in the back of the mind.
00;05;31;26 – 00;05;45;23
COLIN
You know, the Dairy milk is going to start to run into some nicer milk tax. And of course dairymen always be paid a month delayed from what the month actually settles. But the margins are looking great whether those margins stay there or not, you know, pass through prices again down a whole dollar over the last kind of week.
00;05;45;23 – 00;05;53;25
COLIN
Here we are incentivizing some serious increase in milk supply that we should be expecting, but always tough to do during when replacement costs are high.
00;05;53;29 – 00;06;00;14
KEVIN
ERICA, thank you for that insight. Erica, on the cold storage, do you have any input into what we might forecast for that?
00;06;00;15 – 00;06;21;29
ERICA
So at this point this is unofficial. I will give you a sneak peak to what Erica thinks. We’ve got some econometric models that we run every month to get a sense for where we think the numbers are going to be. Just if we look at history. So the five year average for May, if you look at butter is usually we’re still building inventory in the month of May.
00;06;22;00 – 00;06;42;19
ERICA
The five year average up 22 million pounds the range over the last five years as little as plus 3 million as high as plus 36. So if we look back to where April cold storage was, that was a very strong bill, one of the highest we’ve seen in many, many years. I don’t know that anything significantly changed in May.
00;06;42;19 – 00;07;03;07
ERICA
We still had a decent amount of cream available, still a decent incentive to put butter away. So I think that five year average of plus 22 million pounds is likely on track. And if you tell me I got to take the over or under, I would say slightly over. Now, as we look at total cheese for the month of May, we usually gain 7 million pounds.
00;07;03;13 – 00;07;26;16
ERICA
But the range over the last five years is huge. So you can be as low as losing 24 million pounds in inventory or as high as gaining 32 million pounds. Now, if you ask me where I think we’re going to be, I would actually take the under below that 7,000,005 year average. I think in May we still had good exports leaving the country.
00;07;26;18 – 00;07;49;16
ERICA
We heard of people who are priced on the previous month’s average. So people were buying in as the market moved higher through the month of May. So I think we moved a fair bit of product out of manufacturers inventories and into either intermediate converter and user stocks. So in that case, I do think we could see a wider stock in our total cheese number.
00;07;49;16 – 00;08;06;16
ERICA
But the official statistics yet to come. With that, a big thank you to ERICA and Kevin for joining me on today’s episode and share your insights with our listeners. Thank you, as always, to our media team for mixing and mastering. And thank you to the listeners for joining us today. If you like what you hear, subscribe on your favorite app.
00;08;06;17 – 00;08;13;04
ERICA
And if you’d like to learn more about how we help people manage risk, contact us at insights at Eversheds.
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 Parlor to Plate – June 18, 2024 appeared first on .
View all episodes
By Ever.Ag
5
55 ratings
Listen Now
In the latest edition of the Parlor to Plate dairy podcast from Ever.Ag Insights, our all-star panel discusses upcoming reports. What might next week’s Milk Production and Cold Storage reports hold? Did we learn anything new from the latest WASDE data? How might grain markets react to new Acreage numbers?
Join host Erica Maedke and panelists Kevin Peterson and Colin Kadis 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;08;23
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;26 – 00;00;28;17
ERICA
Hello. Welcome to Parlor to Plate, a weekly podcast from insights dedicated to offering listeners enlightening discussion and actionable intelligence about dairy markets. I’m your host, Erica McKee. We are excited to have you along. And if you like what you hear, please like, subscribe and tell a friend or two. We are a day early today due to the Juneteenth holiday.
00;00;28;18 – 00;00;55;29
ERICA
It’s Tuesday, June 18th. We are recording around 2:00 central time. Quick rundown of today’s markets. CME Black Cheddar a $1.86 per pound. We are down $0.08 from last Tuesday. Barrels 194 $0.07 lower from last week. Spot butter 311. That is unchanged and nonfat dry milk closing at $1.19 down a penny on the week. Earlier today, the grain complex July corn was at 444 per bushel.
00;00;56;00 – 00;01;18;00
ERICA
July soybeans 1158 per bushel. And July soybean meal at 360 per ton. It’s a new week and another all star panel from the Egg Financial services team. It is all dairy in this June Dairy Month episode. We have Collin Caddis. He helps dairy producers manage risk and I truly laughed out loud when I asked him his favorite dairy product and he said beef.
00;01;18;03 – 00;01;40;26
ERICA
Kevin Peterson helps commercial clients manage their risk and his favorite is a nice piece of sharp cheddar. Welcome to the show, gentlemen. So one of my favorite thought exercises to help me stay sharp with the markets is to think about everything that could take the market higher. Make a list of everything that is bullish in the marketplace. Then take my pen and paper and write down everything that I think could take this market lower.
00;01;40;27 – 00;01;49;13
ERICA
What’s my bearish list? So I asked both Kevin and ERICA today to give me their top bull and their top bear. So ERICA, let’s start with you.
00;01;49;15 – 00;02;09;11
COLIN
Yeah. Thanks, Erica. You know, I think dairymen today woke up. We had $21. Class three. You know, that was last Thursday. Today we are now in the $20 range and lots of calls coming in. Hey, what happened to a whole dollar of class three? But I would like to point out it is still 20 bucks. So, you know, I think in my bullish range heifer prices are insane.
00;02;09;14 – 00;02;28;13
COLIN
You know anecdotally we’re hearing about 3500 which would beat the highs we set in 2014 in California of 3100. You know we’re projecting in our milk production report estimate -0.8% for May, which would be the 11th month of consecutive negative milk production. And you know, we always know we do get heat in the summer. So I’m not sure if it’ll matter.
00;02;28;13 – 00;02;45;20
COLIN
But it is possible to tighten up that 30 day cheese spot market and not have enough milk. And things are already tight, so that is a definite bull on the bear side. The reality is, if you watch the spot market action, it kind of looks like there’s too much cheese out there for current price levels. And we know that we’re not exporting anything.
00;02;45;20 – 00;02;58;13
COLIN
And it seems likely that consecutive months of record exports are what got us up here. So it’s going to be tough to counteract all the cheese that we already got rid of. And now we aren’t getting rid of. But maybe one way we do it is by not making it, at least in the short term.
00;02;58;19 – 00;03;01;20
ERICA
Thanks, ERICA. How about you, Kevin? The Bulls and the bears?
00;03;01;24 – 00;03;19;13
KEVIN
Yeah. So I think I’ll start on the bullish side here. You know, avian influenza still seems to be popping up really all throughout the country. So I think if that can keep running through and, you know, kicking some cows into the pan, you know, that obviously won’t help milk production at all. You know a couple of that obviously with what’s Collins said as well.
00;03;19;13 – 00;03;37;09
KEVIN
You know the heat last week you had the heat dome over the southwest getting up to 108. You know, here now it’s coming through the Midwest, I think in Chicago where 95 tomorrow, some places a little south of us in Illinois are hotter than that. And then it also is going to make its way over to Collin on the East coast later on in the week or maybe next week.
00;03;37;09 – 00;03;52;16
KEVIN
And so, you know, really early in the year to be already getting that kind of heat and, you know, it’s, you know, going to keep continuing into July and into later August month as well. So I think yeah, on the bull side definitely maybe more really does focus around milk production. If we’re getting that flu along with heat.
00;03;52;16 – 00;04;13;07
KEVIN
Really might struggle to have the milk in there to get the product. You know, Mexico continues to import very strongly having some milk production issues down there as well with their drought water issues, things like that. So I think they’ll probably be around here trying to import our product for the foreseeable future. So I definitely think that right now is more so on my mind for the overall orcas in the market.
00;04;13;07 – 00;04;31;19
KEVIN
You know, looking at the bears, really, it’s kind of boring. But, you know, at the beginning, somewhat of a flip of that. If the avian flu continues to be more subtle and we’re getting the milk that we need and you know, you got to throw China in there as well, I think their economy is still really struggling. Imports in the US are extremely lackluster.
00;04;31;19 – 00;04;38;11
KEVIN
Same with their importing from New Zealand. And so I think they definitely fall on the bearish side of the coin right now.
00;04;38;12 – 00;05;00;24
ERICA
Good analysis guys. Thanks for sharing your thoughts there. Over the course of the next week, USDA is going to release two very important dairy reports. So this Friday we will see milk production numbers for the month of May. And on Tuesday of next week USDA will release its cold storage report. Now a lot of times people ask us, what do we think those numbers are going to be?
00;05;00;29 – 00;05;12;02
ERICA
Every egg. We’ll put out our official estimates shortly. But to give folks a bit of a sneak peek, ERICA, I think you got to look at the advance print on the milk production forecast. Yeah.
00;05;12;02 – 00;05;31;25
COLIN
Erica, our team is predicting yet another month of negative year over year milk production to. I think their official estimate is -0.8%, which is quite believable. I mean, this is going to be the first month we see bird flu hit Idaho, which is the third largest milk producing state in the country. As Kevin said, higher temps. The only thing just keep in the back of the mind.
00;05;31;26 – 00;05;45;23
COLIN
You know, the Dairy milk is going to start to run into some nicer milk tax. And of course dairymen always be paid a month delayed from what the month actually settles. But the margins are looking great whether those margins stay there or not, you know, pass through prices again down a whole dollar over the last kind of week.
00;05;45;23 – 00;05;53;25
COLIN
Here we are incentivizing some serious increase in milk supply that we should be expecting, but always tough to do during when replacement costs are high.
00;05;53;29 – 00;06;00;14
KEVIN
ERICA, thank you for that insight. Erica, on the cold storage, do you have any input into what we might forecast for that?
00;06;00;15 – 00;06;21;29
ERICA
So at this point this is unofficial. I will give you a sneak peak to what Erica thinks. We’ve got some econometric models that we run every month to get a sense for where we think the numbers are going to be. Just if we look at history. So the five year average for May, if you look at butter is usually we’re still building inventory in the month of May.
00;06;22;00 – 00;06;42;19
ERICA
The five year average up 22 million pounds the range over the last five years as little as plus 3 million as high as plus 36. So if we look back to where April cold storage was, that was a very strong bill, one of the highest we’ve seen in many, many years. I don’t know that anything significantly changed in May.
00;06;42;19 – 00;07;03;07
ERICA
We still had a decent amount of cream available, still a decent incentive to put butter away. So I think that five year average of plus 22 million pounds is likely on track. And if you tell me I got to take the over or under, I would say slightly over. Now, as we look at total cheese for the month of May, we usually gain 7 million pounds.
00;07;03;13 – 00;07;26;16
ERICA
But the range over the last five years is huge. So you can be as low as losing 24 million pounds in inventory or as high as gaining 32 million pounds. Now, if you ask me where I think we’re going to be, I would actually take the under below that 7,000,005 year average. I think in May we still had good exports leaving the country.
00;07;26;18 – 00;07;49;16
ERICA
We heard of people who are priced on the previous month’s average. So people were buying in as the market moved higher through the month of May. So I think we moved a fair bit of product out of manufacturers inventories and into either intermediate converter and user stocks. So in that case, I do think we could see a wider stock in our total cheese number.
00;07;49;16 – 00;08;06;16
ERICA
But the official statistics yet to come. With that, a big thank you to ERICA and Kevin for joining me on today’s episode and share your insights with our listeners. Thank you, as always, to our media team for mixing and mastering. And thank you to the listeners for joining us today. If you like what you hear, subscribe on your favorite app.
00;08;06;17 – 00;08;13;04
ERICA
And if you’d like to learn more about how we help people manage risk, contact us at insights at Eversheds.
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 Parlor to Plate – June 18, 2024 appeared first on .
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