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Parlor to Plate – June 5, 2024
In the latest edition of the Parlor to Plate dairy podcast from Ever.Ag Insights, our all-star panel discusses growing demand. After record cheese exports during the first quarter, how are shipments shaping up for the second half of the year? As more restaurants add value meals, how might cheese demand be impacted? And with lots of corn already in bins, where can growers go to find more sales?
Join host Erica Maedke and panelists Jon Spainhour, Tiffany LaMendola and Jake Kingsley 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;19
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;21 – 00;00;30;24
ERICA
Hello. Welcome to Parler 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’re excited to have you along. And if you like what you hear, please like us subscribe. Until a friend or two timestamp in today’s episode. It is Wednesday, June 5th, around 1:00 Central time.
00;00;30;26 – 00;00;57;13
ERICA
A quick rundown of the markets. CME Black Cheddar, a dollar 86. We’re up a nickel on the week. Merrill’s 195 down a penny from last week. Spot butter 310. We are up $0.02 from last week, but off the 2024 high of 316 earlier this week. Nonfactor milk closed at a dollar 20 up $0.03 from last week. Nearby grains the July contract for corn at 440 per bushel.
00;00;57;14 – 00;01;25;06
ERICA
July soybeans at 1178 per bushel and July soybean meal at 359 per tonne off of today’s high of 365. So certainly some excitement in that area. It is another week and another all star panel from the financial services team. Jake Kingsley, who helps clients hear feed, says Greek yogurt is his favorite for breakfast.
00;01;25;09 – 00;01;47;21
ERICA
Tiffany Lamendola helps dairy producers manage risk, and she says a piece of shark chatter gets her every time. And finally, Jon Spain how our helps our commercial clients manage risk. He’s hedging his bets and saying some natural sharp cheddar or some American slices. With that June dairy month. Let’s talk about demand. And demand comes in a lot of flavors, so to speak.
00;01;47;21 – 00;02;00;26
ERICA
And so, Jake, one of the things I was thinking about as I think about the grains and seed, how do we find demand for more than 2 billion bushels of corn that we are carrying over from last year and a crop are already in the ground?
00;02;00;29 – 00;02;26;04
JAKE
Well, I think there’s a couple of ways to go about it. First of all, it’s going to take time to chew through this much product, but we’ve got to see some lower prices. Probably need to see more than likely we’ll get a few production hiccups in the global supply chain. We can get through it. We are expecting an increase in soybean acres to start to feed into this up and coming renewable diesel program.
00;02;26;04 – 00;02;53;13
JAKE
So that will take away a little bit of corn production as well. And maybe over time we could see some reconfigurations or enhancements in the renewable fuel industry that encourage growth in the ethanol sector or something like that. Not sure if or when we get something like that, but those are a few things that it’s going to take to really start to knock down this pretty tall stack of corn we’ve got.
00;02;53;16 – 00;02;55;10
ERICA
So a nearby at 440.
00;02;55;15 – 00;03;06;08
JAKE
I think we’ve got a little room left to go lower yet. We like that kind of number for our dairy producers and feed buyers. So we’re excited to have excess corn laying around here in the U.S..
00;03;06;11 – 00;03;09;09
ERICA
Now, the soybean balance sheet isn’t quite as heavy.
00;03;09;09 – 00;03;44;02
JAKE
That’s right. Relative to corn, not quite as fluffy. It’s still in much better shape than it’s been in the last few years. But that’s just a thinner balance sheet in general, meaning that any one of those similar factors that could affect corn, some production issues, has a little bit of an increase in exports or now we do have this fairly robust renewable diesel program, really creating domestic demand for beans, The same size hiccups there would have a much greater impact on soybeans and the protein balance sheets.
00;03;44;02 – 00;04;07;05
JAKE
We’re seeing that as we speak. A lot of crushed plants have taken extended downtimes this year to do repairs and maintenance. So if normally they would take two or three weeks off, maybe this year they’re taking three or four. China continues to have exceptional demand for canola out of western Canada while they are contending with a potential rail worker strike in Canada.
00;04;07;05 – 00;04;38;02
JAKE
And that has really slowed and made rail transportation inefficient. And as a result, even from a feed buyer perspective, very healthy soy and protein fundamentals, the immediate supply has been squeezed and we’ve seen these pretty sizable futures rallies, which we’ve now come off of. But basis numbers have shot up and folks are scrambling a little bit to get spot product to market at some of the especially these rail dependent places where maybe cars are a week or two behind and hard to get a hold of.
00;04;38;04 – 00;04;58;29
ERICA
Tiffany, let’s turn it to you. I know you keep a good tab of the dairy markets in general, and you were just mentioning that as you think about demand, you kind of categorize it into three buckets that you like to think of food service in a certain manner. What happens at retail, the grocery stores in another and then exports as that final way to move specialty cheese.
00;04;59;00 – 00;05;05;09
ERICA
How are you seeing that shape up and from an American, from a US centric perspective, how do we move more product?
00;05;05;11 – 00;05;28;07
TIFFANY
Yeah, absolutely. You know, one of the kind of exciting things we’ve been watching for the last several weeks and I think what help can affirm the cheese market up in May was that we were finally seeing some good retail numbers, had some solid weeks where product was moving in at higher than year ago levels. It did seem, though, however, that some promotions that the retailers were running might have helped.
00;05;28;07 – 00;05;51;03
TIFFANY
We saw a big burst in promotional activity, which obviously drops prices. It really seemed to move the dial. I did definitely take notice, though, that this most recent set of data did show promotional activity slowing pretty material this week and prices kind of coming back up. We know that consumers out there are constrained. You know, they’re just having to watch what they spend.
00;05;51;03 – 00;06;07;15
TIFFANY
They don’t have a lot of excess cash. And so we’re going to have to see if this is just a blurb and number of sort of turn back negative again or if we can kind of keep that positive trend going. We’re just a little too early and change in the data to know for sure that the retail level over at the food service level, we’ve kind of had some good news and bad news.
00;06;07;15 – 00;06;34;12
TIFFANY
I mean, things are okay. So so again, people are just having to cut back in places and so the data at Foodservice and certainly at quick service restaurants have not been stellar. So I don’t know if it’s been moving that, you know, on demand a whole lot. We are seeing some of these like quick of restaurants. So we’ve seen Burger King and McDonald’s and Wendy’s all recognizing that, you know, their foot traffic is down a bit and are trying to address that.
00;06;34;13 – 00;06;57;03
TIFFANY
We’re seeing more and more articles around $5 meals and things that are coming back this summer. Hard to know how much cheese is on those items that they’re going to feature in those meals, but hopefully, maybe that helps move some traffic or create some demand certainly during those promotions. I might kick that export bucket over to John. I know that’s something he’s been watching pretty carefully to sort of close out that demand discussion.
00;06;57;03 – 00;07;15;04
JON
Great, Tiffani, thanks. You’re right. I do spend a lot of time focused on the export piece, and I believe it was the March. Cheese exports were a record export level. We haven’t gotten to April yet, but when we do, we’ll probably see that the April numbers are just as big as March, if not bigger. Probably in line at the very least.
00;07;15;07 – 00;07;41;27
JON
I think we can look at that and say, Well, how did that come about? And one I would say to the great work of everybody in the U.S. export side has been working diligently over two years to develop markets and really establish contact with customers outside of the U.S. and push product outside of the U.S. borders. I would also point out that as diligent of the work as they’ve done, we were at a dollar $42.50 while the rest of the world was at a dollar 75 ish in that area.
00;07;41;28 – 00;07;58;02
JON
I think it made it pretty attractive to take product out of the U.S. And so I think we did and we took a lot of product out and again, record exports. But now as we’ve move forward in time, we are, let’s call it an average price of 190 on the spot cheese side and the rest of the world.
00;07;58;02 – 00;08;23;18
JON
You know, the GDP came in at about a dollar 93 yesterday on Cheddar. I think the EU is at around $2. I think it’s very easy to look at those two price points and say, well, we’re at a dollar 90, they’re at 193, we’re still cheaper and I think when we compare apples to apples on that and start looking at tariffs and quotas and transportation, the U.S. probably needs to be quite a bit cheaper on the spot side, if not on the future side.
00;08;23;18 – 00;08;41;27
JON
And I don’t think we are at this moment in time. And I think there’s reason to believe that as we move into the month of June, we’ll see our export. I think our exports have slowed down considerably and the result of that is that we’ve got more cheese coming back into the domestic cheese market. So I think there is a bit of a ceiling here.
00;08;41;27 – 00;09;03;15
JON
That being said, again, we did haul a lot of product out of the country and that’s been very supportive to the cheese price. When we look at it from where our price is now, we’ve seen at least on the future side, we’ve seen a lot of these cheese and classe three futures move to new contract highs or pretty darn close to new contract highs.
00;09;03;20 – 00;09;23;11
JON
And you’re putting some class three numbers in here. You know, we’re trading September at 2027 and you trade in the fourth quarter around 1950, and that’s even after we’ve had a down day this afternoon as we’re talking. So I guess I would push it back to Tiffany on the DRP side and say, what is it that a dairy producer can be doing with these prices?
00;09;23;11 – 00;09;41;21
TIFFANY
Yeah, this rally over the last month has been pretty phenomenal. But it’s back in a position where we can actually look at floor levels that are probably protecting margin, especially as Jake said, with the feed costs coming down into the second half. So we are definitely urging producers to take a really close look at that. I mean, they’re floors, right?
00;09;41;21 – 00;10;05;19
TIFFANY
Let’s just put the floors in and hope these prices stay high or go higher. But yeah, I mean, we’re talking now at. Q three floors over $19 on the class, three side and fourth quarter, not too far behind that. And that even with a down day, like you said today, John, still some really good opportunities out there for any producer who doesn’t have third quarter coverage on that deadline is coming up on June 15th.
00;10;05;19 – 00;10;09;09
TIFFANY
So, yeah, please reach out if you have any questions around that. We’re happy to help.
00;10;09;09 – 00;10;29;06
ERICA
A big thank you to Jake, Tiffany and John for joining me on today’s episode and sharing 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. If you’d like to learn more about how we help people manage risk, contact us at Insights at Ever Dot Egg.
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 5, 2024 appeared first on .
View all episodes
By Ever.Ag
5
55 ratings
In the latest edition of the Parlor to Plate dairy podcast from Ever.Ag Insights, our all-star panel discusses growing demand. After record cheese exports during the first quarter, how are shipments shaping up for the second half of the year? As more restaurants add value meals, how might cheese demand be impacted? And with lots of corn already in bins, where can growers go to find more sales?
Join host Erica Maedke and panelists Jon Spainhour, Tiffany LaMendola and Jake Kingsley 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;19
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;21 – 00;00;30;24
ERICA
Hello. Welcome to Parler 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’re excited to have you along. And if you like what you hear, please like us subscribe. Until a friend or two timestamp in today’s episode. It is Wednesday, June 5th, around 1:00 Central time.
00;00;30;26 – 00;00;57;13
ERICA
A quick rundown of the markets. CME Black Cheddar, a dollar 86. We’re up a nickel on the week. Merrill’s 195 down a penny from last week. Spot butter 310. We are up $0.02 from last week, but off the 2024 high of 316 earlier this week. Nonfactor milk closed at a dollar 20 up $0.03 from last week. Nearby grains the July contract for corn at 440 per bushel.
00;00;57;14 – 00;01;25;06
ERICA
July soybeans at 1178 per bushel and July soybean meal at 359 per tonne off of today’s high of 365. So certainly some excitement in that area. It is another week and another all star panel from the financial services team. Jake Kingsley, who helps clients hear feed, says Greek yogurt is his favorite for breakfast.
00;01;25;09 – 00;01;47;21
ERICA
Tiffany Lamendola helps dairy producers manage risk, and she says a piece of shark chatter gets her every time. And finally, Jon Spain how our helps our commercial clients manage risk. He’s hedging his bets and saying some natural sharp cheddar or some American slices. With that June dairy month. Let’s talk about demand. And demand comes in a lot of flavors, so to speak.
00;01;47;21 – 00;02;00;26
ERICA
And so, Jake, one of the things I was thinking about as I think about the grains and seed, how do we find demand for more than 2 billion bushels of corn that we are carrying over from last year and a crop are already in the ground?
00;02;00;29 – 00;02;26;04
JAKE
Well, I think there’s a couple of ways to go about it. First of all, it’s going to take time to chew through this much product, but we’ve got to see some lower prices. Probably need to see more than likely we’ll get a few production hiccups in the global supply chain. We can get through it. We are expecting an increase in soybean acres to start to feed into this up and coming renewable diesel program.
00;02;26;04 – 00;02;53;13
JAKE
So that will take away a little bit of corn production as well. And maybe over time we could see some reconfigurations or enhancements in the renewable fuel industry that encourage growth in the ethanol sector or something like that. Not sure if or when we get something like that, but those are a few things that it’s going to take to really start to knock down this pretty tall stack of corn we’ve got.
00;02;53;16 – 00;02;55;10
ERICA
So a nearby at 440.
00;02;55;15 – 00;03;06;08
JAKE
I think we’ve got a little room left to go lower yet. We like that kind of number for our dairy producers and feed buyers. So we’re excited to have excess corn laying around here in the U.S..
00;03;06;11 – 00;03;09;09
ERICA
Now, the soybean balance sheet isn’t quite as heavy.
00;03;09;09 – 00;03;44;02
JAKE
That’s right. Relative to corn, not quite as fluffy. It’s still in much better shape than it’s been in the last few years. But that’s just a thinner balance sheet in general, meaning that any one of those similar factors that could affect corn, some production issues, has a little bit of an increase in exports or now we do have this fairly robust renewable diesel program, really creating domestic demand for beans, The same size hiccups there would have a much greater impact on soybeans and the protein balance sheets.
00;03;44;02 – 00;04;07;05
JAKE
We’re seeing that as we speak. A lot of crushed plants have taken extended downtimes this year to do repairs and maintenance. So if normally they would take two or three weeks off, maybe this year they’re taking three or four. China continues to have exceptional demand for canola out of western Canada while they are contending with a potential rail worker strike in Canada.
00;04;07;05 – 00;04;38;02
JAKE
And that has really slowed and made rail transportation inefficient. And as a result, even from a feed buyer perspective, very healthy soy and protein fundamentals, the immediate supply has been squeezed and we’ve seen these pretty sizable futures rallies, which we’ve now come off of. But basis numbers have shot up and folks are scrambling a little bit to get spot product to market at some of the especially these rail dependent places where maybe cars are a week or two behind and hard to get a hold of.
00;04;38;04 – 00;04;58;29
ERICA
Tiffany, let’s turn it to you. I know you keep a good tab of the dairy markets in general, and you were just mentioning that as you think about demand, you kind of categorize it into three buckets that you like to think of food service in a certain manner. What happens at retail, the grocery stores in another and then exports as that final way to move specialty cheese.
00;04;59;00 – 00;05;05;09
ERICA
How are you seeing that shape up and from an American, from a US centric perspective, how do we move more product?
00;05;05;11 – 00;05;28;07
TIFFANY
Yeah, absolutely. You know, one of the kind of exciting things we’ve been watching for the last several weeks and I think what help can affirm the cheese market up in May was that we were finally seeing some good retail numbers, had some solid weeks where product was moving in at higher than year ago levels. It did seem, though, however, that some promotions that the retailers were running might have helped.
00;05;28;07 – 00;05;51;03
TIFFANY
We saw a big burst in promotional activity, which obviously drops prices. It really seemed to move the dial. I did definitely take notice, though, that this most recent set of data did show promotional activity slowing pretty material this week and prices kind of coming back up. We know that consumers out there are constrained. You know, they’re just having to watch what they spend.
00;05;51;03 – 00;06;07;15
TIFFANY
They don’t have a lot of excess cash. And so we’re going to have to see if this is just a blurb and number of sort of turn back negative again or if we can kind of keep that positive trend going. We’re just a little too early and change in the data to know for sure that the retail level over at the food service level, we’ve kind of had some good news and bad news.
00;06;07;15 – 00;06;34;12
TIFFANY
I mean, things are okay. So so again, people are just having to cut back in places and so the data at Foodservice and certainly at quick service restaurants have not been stellar. So I don’t know if it’s been moving that, you know, on demand a whole lot. We are seeing some of these like quick of restaurants. So we’ve seen Burger King and McDonald’s and Wendy’s all recognizing that, you know, their foot traffic is down a bit and are trying to address that.
00;06;34;13 – 00;06;57;03
TIFFANY
We’re seeing more and more articles around $5 meals and things that are coming back this summer. Hard to know how much cheese is on those items that they’re going to feature in those meals, but hopefully, maybe that helps move some traffic or create some demand certainly during those promotions. I might kick that export bucket over to John. I know that’s something he’s been watching pretty carefully to sort of close out that demand discussion.
00;06;57;03 – 00;07;15;04
JON
Great, Tiffani, thanks. You’re right. I do spend a lot of time focused on the export piece, and I believe it was the March. Cheese exports were a record export level. We haven’t gotten to April yet, but when we do, we’ll probably see that the April numbers are just as big as March, if not bigger. Probably in line at the very least.
00;07;15;07 – 00;07;41;27
JON
I think we can look at that and say, Well, how did that come about? And one I would say to the great work of everybody in the U.S. export side has been working diligently over two years to develop markets and really establish contact with customers outside of the U.S. and push product outside of the U.S. borders. I would also point out that as diligent of the work as they’ve done, we were at a dollar $42.50 while the rest of the world was at a dollar 75 ish in that area.
00;07;41;28 – 00;07;58;02
JON
I think it made it pretty attractive to take product out of the U.S. And so I think we did and we took a lot of product out and again, record exports. But now as we’ve move forward in time, we are, let’s call it an average price of 190 on the spot cheese side and the rest of the world.
00;07;58;02 – 00;08;23;18
JON
You know, the GDP came in at about a dollar 93 yesterday on Cheddar. I think the EU is at around $2. I think it’s very easy to look at those two price points and say, well, we’re at a dollar 90, they’re at 193, we’re still cheaper and I think when we compare apples to apples on that and start looking at tariffs and quotas and transportation, the U.S. probably needs to be quite a bit cheaper on the spot side, if not on the future side.
00;08;23;18 – 00;08;41;27
JON
And I don’t think we are at this moment in time. And I think there’s reason to believe that as we move into the month of June, we’ll see our export. I think our exports have slowed down considerably and the result of that is that we’ve got more cheese coming back into the domestic cheese market. So I think there is a bit of a ceiling here.
00;08;41;27 – 00;09;03;15
JON
That being said, again, we did haul a lot of product out of the country and that’s been very supportive to the cheese price. When we look at it from where our price is now, we’ve seen at least on the future side, we’ve seen a lot of these cheese and classe three futures move to new contract highs or pretty darn close to new contract highs.
00;09;03;20 – 00;09;23;11
JON
And you’re putting some class three numbers in here. You know, we’re trading September at 2027 and you trade in the fourth quarter around 1950, and that’s even after we’ve had a down day this afternoon as we’re talking. So I guess I would push it back to Tiffany on the DRP side and say, what is it that a dairy producer can be doing with these prices?
00;09;23;11 – 00;09;41;21
TIFFANY
Yeah, this rally over the last month has been pretty phenomenal. But it’s back in a position where we can actually look at floor levels that are probably protecting margin, especially as Jake said, with the feed costs coming down into the second half. So we are definitely urging producers to take a really close look at that. I mean, they’re floors, right?
00;09;41;21 – 00;10;05;19
TIFFANY
Let’s just put the floors in and hope these prices stay high or go higher. But yeah, I mean, we’re talking now at. Q three floors over $19 on the class, three side and fourth quarter, not too far behind that. And that even with a down day, like you said today, John, still some really good opportunities out there for any producer who doesn’t have third quarter coverage on that deadline is coming up on June 15th.
00;10;05;19 – 00;10;09;09
TIFFANY
So, yeah, please reach out if you have any questions around that. We’re happy to help.
00;10;09;09 – 00;10;29;06
ERICA
A big thank you to Jake, Tiffany and John for joining me on today’s episode and sharing 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. If you’d like to learn more about how we help people manage risk, contact us at Insights at Ever Dot Egg.
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 5, 2024 appeared first on .
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