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Parlor to Plate – May 22, 2024
In the latest edition of the Parlor to Plate dairy podcast from Ever.Ag Insights, our all-star panel discusses burning questions. What pushed April milk production to higher-than-expected levels, amid HPAI and other headwinds? What are markets telling us about Class III and IV, and what incentives do they offer? Should we – or grain markets – be worried about crop progress just yet?
Join host Erica Maedke and panelists Ryan Yonkman, Jon Spainhour and Verl Prather 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;16
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;18 – 00;00;29;17
ERICA
Hello. Welcome to Parler to Plate a weekly podcast from Average Insights dedicated to offering listeners enlightening discussion and actionable intelligence about dairy markets. I’m your host today, Erika mackey. We are excited to have you along. And if you like what you hear, please like us subscribe. Until a friend or two. Today is Wednesday, May 22nd. It’s around 1:00 Central time.
00;00;29;21 – 00;00;52;18
ERICA
A quick rundown of the markets. CME black cheddar, the dollar 84. We’re down $0.09 from this time last week. Barrels still up at a lofty 203 but down $0.03 from a week ago. Spot butter at 311. This is the highest price so far this year, up $0.06 from last week. And nonfat dry milk closing today at a dollar 17, up a penny on the week.
00;00;52;19 – 00;01;16;18
ERICA
In the grain complex nearby, corn is at 458 per bushel, down $0.04 from last week. Soybeans 1236, up $0.23 a bushel and soybean meal at 372 per tonne up on the week. It’s a new week and another all star panel from the financial Services team today making his debut on Heartland a plate. We have Grill Prater, our director of buyer relations.
00;01;16;25 – 00;01;42;18
ERICA
We’ve got Brian Jackman, who helps our dairy producer clients manage their risk. And John Spain. Howard, who helps folks later down the supply chain, also manage risk. So let’s start in the grain complex today. I want to say today’s theme is really what are the questions of the day? And let’s see what we know about them. In this case, the grain world’s certainly we are in the middle of planting right now, sits and starts rain, no rain, drought.
00;01;42;19 – 00;01;48;17
ERICA
Can you give us an update on where are we at with crop progress? Should folks be worried at this point?
00;01;48;18 – 00;02;17;25
VERL
Yeah, you bet. The USDA data released on Monday definitely showed great progress for U.S. corn and soybean farmers over the course of the last week when it comes to planting, we’ve made great strides towards catching up to the five year average pace. Corn is about 70% planted nationwide compared to a 71% average. So a lot of the late planting concerns has kind of been decimated by this report’s update.
00;02;17;26 – 00;02;52;22
VERL
The window more for planting has no doubt been much tighter this year than in recent history. In fact, talking to producers in the Midwest, there’s quite a few of them that have yet to be able to string together more than 2 to 3 days of planting activity before getting put back on the sidelines by rainfall. However, a large portion of Illinois has actually missed rains that were forecasted yesterday or on Tuesday, which should allow the producers, at least in Illinois, to knock out a large portion of their estimated 3.6 million acres of corn that are left to be planted there.
00;02;52;23 – 00;03;25;26
VERL
While it’s definitely true that rain does make rain, we’ve heard of a flood of reports that the date on the calendar is kind of pushed folks to plant into marginal conditions as waiting for more ideal conditions to arrive. Is not feasible really this far into the planting season. And then additionally, the wave of heat that we’ve had over many areas of the Midwest has definitely brought about replant conversations as the top layer of soil crusted over and has kind of prevented strong emergence of the crop that is in the ground.
00;03;25;29 – 00;03;46;16
VERL
These items, as well as the uncertainties of weather forecasts as we kick off the growing season and kind of work our way towards pollination and seem to keep the funds interested in getting closer to a net neutral position on the corn market. I know you guys had talked last week about the funds getting much closer to that net neutral position.
00;03;46;16 – 00;04;04;04
VERL
They still hold a short position when it comes to corn, but they kind of continued to chip away at the block here this last week as well. And by the look at the corn market here, as we kind of reach the midway point this week, it does seem as if they’re back to purchasing more corn.
00;04;04;08 – 00;04;26;10
ERICA
So overall, as we saw in the last was the report carry out. Stocks were still very heavy from last year, over 2 billion bushels. The expectation for the upcoming crop year, again, assuming trend line yields and the crop goes well, we’re still pretty heavy. So how are producers and growers reacting to that? I mean, I know we had quite a bit of grain in the beans.
00;04;26;10 – 00;04;30;20
ERICA
You’re out in the fields. Any word on sales from the producer side?
00;04;30;25 – 00;04;56;27
VERL
Yeah. So over the course of the last couple of weeks, as we kind of take this rally off back in April, really they have been actively rewarding the market on the way up, mostly with old crop sales from the sounds of things, as we talk to end users across the country now that selling pace has slowed as folks have kind of turned their attention back towards planting and being out within the field.
00;04;56;29 – 00;05;19;26
VERL
However, it does seem as though these end users have had a flood of corn. We saw basis values really deteriorate rate across the country during the last handful of weeks or so are 2 to 3 weeks at least. And now that sentiment is changing a little bit nearby corn based ethanol plants is actually starting to strengthen up a little bit.
00;05;19;26 – 00;05;42;15
VERL
So that tells me that the producer has slowed down in their sales. They’re likely looking for that next level in order to kind of reengage. Now, I think one of the most important parts of the last couple of weeks that I’ve been touching on with producers is to just stick with their plan. Right. We created a marketing plan back in the late winter to early spring.
00;05;42;15 – 00;05;53;04
VERL
This time of the year can be extremely emotional and we’re just trying to talk to folks and keep in their mind about them and making sure that they stick with the plan that they had created previously.
00;05;53;05 – 00;06;11;02
ERICA
Thanks, bro. And for those of you who enjoy listening to Burrell’s commentary, he’s a regular feature on the grain feed. Mr. Rural No doubt. Fraser With that, let’s turn it to John. I want to talk a little bit because people have been asking me what’s causing this cheese market run. And the other question is, where are we going from here?
00;06;11;02 – 00;06;12;17
ERICA
What’s your take on the situation?
00;06;12;20 – 00;06;34;28
JON
Sure. Yeah. Anybody watching the cheese market can look back, you know, six weeks ago and see we were in the one forties and one fifties and then we just went on. I love to say it’s an unprecedented run, but in the cheese market sometimes this really is an unprecedented and we moved all the way to as high as to 11 to 12 and barrels and did touch that $2 mark temporarily in the blocks.
00;06;34;29 – 00;06;55;25
JON
If we look back and say, how did that happen? I think there were a few things that led to it. The most important of which is, I think when we look at the export report for March, it shows that we had record cheese exports. They’re just huge and monstrous. And maybe stand back from that. You can say, Well, yeah, of course, we were at 140 to 150 while the rest of the world was at a dollar 75.
00;06;55;25 – 00;07;18;29
JON
We certainly should have had those exports. I would expect to see that the April export report is going to look just about the same. We stayed at those levels during April as well. So I think we had these a record amount of cheese leaving the country or contracted to leave the country. And at the same point in time, you know, it sounds like there were several different plants around the country that may have run into some very good production issues.
00;07;18;29 – 00;07;41;18
JON
And as that has happened, that meant that there was just less finished goods into a market that was already contracted to get exported. It in itself is that the slowdown in finished goods, the most bullish thing in the world? No. The increase in exports, the most bullish thing in the world? Not necessarily. Or sometimes it can be what put the two together and suddenly we make this gigantic move all the way up and to the $2 area.
00;07;41;19 – 00;07;58;02
JON
Eric, if you were to look at it and say, why have we started to back off those prices in the last 3 to 4 trading sessions? And then where do we go from here? I would say one of the things that we have to remember is that the rest of the world is still at a dollar 75 to a dollar 85 on cheese.
00;07;58;02 – 00;08;18;05
JON
And we went all the way or above $2 on the average. That in itself is going to slow exports down and we’ve seen an increase of barrel volume here on the CME, which kind of goes back to our long standing theory. The more mozzarella exports we have, the less barrels we make for the domestic market and the less exports we have, the more barrels we make.
00;08;18;05 – 00;08;50;13
JON
And they show up back here in the domestic market. And it seems as though that’s what we’re doing. I would also point out, though, a lot of buyers buy off of the prior month’s average if they look back in April on the R average, at least that was about a dollar 55 right. Fast forward to people that are going to be cutting their June contracts here pretty soon or finalizing those numbers when they look at the May and R that’s going to come in right now at about a dollar 88, there’s a tremendous amount of sticker shock as people move towards resetting those prior month average deals.
00;08;50;13 – 00;09;15;13
JON
I think that a slowed domestic business down and we’re starting to see some of that business already start to hurt back up and come into the market. As far as where we go, I think we’re going to continue to see exports slow. We’re going to continue to see those prior month averages really slow down the demand. And at the same point in time, I don’t know that we’re going to see the finished goods, all of those finished goods issues that we spoke about get fixed suddenly here.
00;09;15;13 – 00;09;37;20
JON
I think that’s going to be an ongoing concern and it’s going to probably get worse as we go leave spring flush and get into that time period of less milk as opposed to more. So I do think there’s a pullback still in the cards, maybe to that dollar 7175 area. But I definitely doesn’t feel like we’re going to get back down to that one 4150 area where we were just a few short weeks ago.
00;09;37;21 – 00;09;44;17
ERICA
So in some ways the cure for high prices is high prices, but just not a correction all the way back to those seasonal lows.
00;09;44;17 – 00;09;45;12
JON
That is correct.
00;09;45;13 – 00;10;07;20
ERICA
Brian, let’s turn it to you. So John just talked about this run up in cheese and futures. Certainly for class three went with it. Now one day USDA released milk production. And those numbers, honestly, I would peg them a little bit bearish down 4/10 of a percent was a better number than most people had anticipated in terms of more milk being produced in the month of April.
00;10;07;20 – 00;10;15;18
ERICA
So how are you seeing the futures market reacting to that? And what is that telling us about the future of Class three and Class four?
00;10;15;18 – 00;10;33;28
RYAN
Yeah, you know, in this run up in class three areas have finally been able to walk into an arena where we could see black anchor profitability across the curve. They’re having their day in the sun for the first time in a while. When we look at this whole thing, you know, there’s adage you got to feed the bull and I look at the last ten days or so, we stop doing that.
00;10;33;28 – 00;10;51;17
RYAN
You know, John just described this four week run every week. It felt like we learned something new that had bullish, whether it was the record exports or Midwest milk was getting tighter trading premiums, the last milk report being pretty friendly. And so as you look at the last ten days, as soon as we’ve crept up above $20 milk, we know that number works.
00;10;51;17 – 00;11;09;05
RYAN
Dairies have been actively managing risk. But then things started to change a bit as we talk about the idea, as John said, watching hard Italian cheese maybe turn into blocks, blocks start to show up, barrels start to show up as an indication of less, not less, exports. We became the highest priced cheese in the world that’s starting to play out.
00;11;09;05 – 00;11;27;17
RYAN
So up here we look at this as a great opportunity. The milk production report to me was the straw that broke the camel’s back here where you just kind of punched the bull in the nose again, where. Yes, expected portions were negative point eight, maybe -1%. We came in at negative point four. I think we have to use the word bearish carefully.
00;11;27;17 – 00;11;47;24
RYAN
It’s bearish from the regard of $21 milk, 21 and a half, which is where we were trading. So we do look at this in the short term came from $21 milk. You have to keep feeding this bull market. We didn’t that report didn’t do that. So we do look at that as a miss in a reason I think for up here along with the other things we’ve talked about B reason to see this thing take a breather.
00;11;47;24 – 00;12;09;26
RYAN
As John mentioned we might have to get back to a export friendly price, which you could infer one 7180 cheese potentially. Again, that said, less is still less. We still have expectations as we roll into summer that milk will only get tighter. I personally look at this market as, hey, higher lows, higher highs, it feels like to me that’s what the cheese and class three space is transitioning into.
00;12;10;01 – 00;12;26;02
RYAN
As John mentioned, 150 cheese seems like a very difficult thing to foresee right now, especially as we’re seeing global prices in a week like this actually start to move a little bit higher. Again, those are some of the things I think we really got to keep an eye on. They’ve been pretty consistently trading, you know, 180 ish ma tie, 190 cheddar.
00;12;26;02 – 00;12;36;22
RYAN
If we could start to see price action over there and we just got a taste of what it looks like here when things get tight. I do think those were some positive notes this week on the back side of, yes, a milk report that I think does leave way for some downside here.
00;12;36;25 – 00;12;57;27
ERICA
Big thank you today to girl John and Ryan for joining me on the 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. And if you’d like to learn more about how we help people manage risk, contact us at Insights at Dot 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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© Ever.Ag 2023, confidential and proprietary.
The post Parlor to Plate – May 22, 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 burning questions. What pushed April milk production to higher-than-expected levels, amid HPAI and other headwinds? What are markets telling us about Class III and IV, and what incentives do they offer? Should we – or grain markets – be worried about crop progress just yet?
Join host Erica Maedke and panelists Ryan Yonkman, Jon Spainhour and Verl Prather 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;16
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;18 – 00;00;29;17
ERICA
Hello. Welcome to Parler to Plate a weekly podcast from Average Insights dedicated to offering listeners enlightening discussion and actionable intelligence about dairy markets. I’m your host today, Erika mackey. We are excited to have you along. And if you like what you hear, please like us subscribe. Until a friend or two. Today is Wednesday, May 22nd. It’s around 1:00 Central time.
00;00;29;21 – 00;00;52;18
ERICA
A quick rundown of the markets. CME black cheddar, the dollar 84. We’re down $0.09 from this time last week. Barrels still up at a lofty 203 but down $0.03 from a week ago. Spot butter at 311. This is the highest price so far this year, up $0.06 from last week. And nonfat dry milk closing today at a dollar 17, up a penny on the week.
00;00;52;19 – 00;01;16;18
ERICA
In the grain complex nearby, corn is at 458 per bushel, down $0.04 from last week. Soybeans 1236, up $0.23 a bushel and soybean meal at 372 per tonne up on the week. It’s a new week and another all star panel from the financial Services team today making his debut on Heartland a plate. We have Grill Prater, our director of buyer relations.
00;01;16;25 – 00;01;42;18
ERICA
We’ve got Brian Jackman, who helps our dairy producer clients manage their risk. And John Spain. Howard, who helps folks later down the supply chain, also manage risk. So let’s start in the grain complex today. I want to say today’s theme is really what are the questions of the day? And let’s see what we know about them. In this case, the grain world’s certainly we are in the middle of planting right now, sits and starts rain, no rain, drought.
00;01;42;19 – 00;01;48;17
ERICA
Can you give us an update on where are we at with crop progress? Should folks be worried at this point?
00;01;48;18 – 00;02;17;25
VERL
Yeah, you bet. The USDA data released on Monday definitely showed great progress for U.S. corn and soybean farmers over the course of the last week when it comes to planting, we’ve made great strides towards catching up to the five year average pace. Corn is about 70% planted nationwide compared to a 71% average. So a lot of the late planting concerns has kind of been decimated by this report’s update.
00;02;17;26 – 00;02;52;22
VERL
The window more for planting has no doubt been much tighter this year than in recent history. In fact, talking to producers in the Midwest, there’s quite a few of them that have yet to be able to string together more than 2 to 3 days of planting activity before getting put back on the sidelines by rainfall. However, a large portion of Illinois has actually missed rains that were forecasted yesterday or on Tuesday, which should allow the producers, at least in Illinois, to knock out a large portion of their estimated 3.6 million acres of corn that are left to be planted there.
00;02;52;23 – 00;03;25;26
VERL
While it’s definitely true that rain does make rain, we’ve heard of a flood of reports that the date on the calendar is kind of pushed folks to plant into marginal conditions as waiting for more ideal conditions to arrive. Is not feasible really this far into the planting season. And then additionally, the wave of heat that we’ve had over many areas of the Midwest has definitely brought about replant conversations as the top layer of soil crusted over and has kind of prevented strong emergence of the crop that is in the ground.
00;03;25;29 – 00;03;46;16
VERL
These items, as well as the uncertainties of weather forecasts as we kick off the growing season and kind of work our way towards pollination and seem to keep the funds interested in getting closer to a net neutral position on the corn market. I know you guys had talked last week about the funds getting much closer to that net neutral position.
00;03;46;16 – 00;04;04;04
VERL
They still hold a short position when it comes to corn, but they kind of continued to chip away at the block here this last week as well. And by the look at the corn market here, as we kind of reach the midway point this week, it does seem as if they’re back to purchasing more corn.
00;04;04;08 – 00;04;26;10
ERICA
So overall, as we saw in the last was the report carry out. Stocks were still very heavy from last year, over 2 billion bushels. The expectation for the upcoming crop year, again, assuming trend line yields and the crop goes well, we’re still pretty heavy. So how are producers and growers reacting to that? I mean, I know we had quite a bit of grain in the beans.
00;04;26;10 – 00;04;30;20
ERICA
You’re out in the fields. Any word on sales from the producer side?
00;04;30;25 – 00;04;56;27
VERL
Yeah. So over the course of the last couple of weeks, as we kind of take this rally off back in April, really they have been actively rewarding the market on the way up, mostly with old crop sales from the sounds of things, as we talk to end users across the country now that selling pace has slowed as folks have kind of turned their attention back towards planting and being out within the field.
00;04;56;29 – 00;05;19;26
VERL
However, it does seem as though these end users have had a flood of corn. We saw basis values really deteriorate rate across the country during the last handful of weeks or so are 2 to 3 weeks at least. And now that sentiment is changing a little bit nearby corn based ethanol plants is actually starting to strengthen up a little bit.
00;05;19;26 – 00;05;42;15
VERL
So that tells me that the producer has slowed down in their sales. They’re likely looking for that next level in order to kind of reengage. Now, I think one of the most important parts of the last couple of weeks that I’ve been touching on with producers is to just stick with their plan. Right. We created a marketing plan back in the late winter to early spring.
00;05;42;15 – 00;05;53;04
VERL
This time of the year can be extremely emotional and we’re just trying to talk to folks and keep in their mind about them and making sure that they stick with the plan that they had created previously.
00;05;53;05 – 00;06;11;02
ERICA
Thanks, bro. And for those of you who enjoy listening to Burrell’s commentary, he’s a regular feature on the grain feed. Mr. Rural No doubt. Fraser With that, let’s turn it to John. I want to talk a little bit because people have been asking me what’s causing this cheese market run. And the other question is, where are we going from here?
00;06;11;02 – 00;06;12;17
ERICA
What’s your take on the situation?
00;06;12;20 – 00;06;34;28
JON
Sure. Yeah. Anybody watching the cheese market can look back, you know, six weeks ago and see we were in the one forties and one fifties and then we just went on. I love to say it’s an unprecedented run, but in the cheese market sometimes this really is an unprecedented and we moved all the way to as high as to 11 to 12 and barrels and did touch that $2 mark temporarily in the blocks.
00;06;34;29 – 00;06;55;25
JON
If we look back and say, how did that happen? I think there were a few things that led to it. The most important of which is, I think when we look at the export report for March, it shows that we had record cheese exports. They’re just huge and monstrous. And maybe stand back from that. You can say, Well, yeah, of course, we were at 140 to 150 while the rest of the world was at a dollar 75.
00;06;55;25 – 00;07;18;29
JON
We certainly should have had those exports. I would expect to see that the April export report is going to look just about the same. We stayed at those levels during April as well. So I think we had these a record amount of cheese leaving the country or contracted to leave the country. And at the same point in time, you know, it sounds like there were several different plants around the country that may have run into some very good production issues.
00;07;18;29 – 00;07;41;18
JON
And as that has happened, that meant that there was just less finished goods into a market that was already contracted to get exported. It in itself is that the slowdown in finished goods, the most bullish thing in the world? No. The increase in exports, the most bullish thing in the world? Not necessarily. Or sometimes it can be what put the two together and suddenly we make this gigantic move all the way up and to the $2 area.
00;07;41;19 – 00;07;58;02
JON
Eric, if you were to look at it and say, why have we started to back off those prices in the last 3 to 4 trading sessions? And then where do we go from here? I would say one of the things that we have to remember is that the rest of the world is still at a dollar 75 to a dollar 85 on cheese.
00;07;58;02 – 00;08;18;05
JON
And we went all the way or above $2 on the average. That in itself is going to slow exports down and we’ve seen an increase of barrel volume here on the CME, which kind of goes back to our long standing theory. The more mozzarella exports we have, the less barrels we make for the domestic market and the less exports we have, the more barrels we make.
00;08;18;05 – 00;08;50;13
JON
And they show up back here in the domestic market. And it seems as though that’s what we’re doing. I would also point out, though, a lot of buyers buy off of the prior month’s average if they look back in April on the R average, at least that was about a dollar 55 right. Fast forward to people that are going to be cutting their June contracts here pretty soon or finalizing those numbers when they look at the May and R that’s going to come in right now at about a dollar 88, there’s a tremendous amount of sticker shock as people move towards resetting those prior month average deals.
00;08;50;13 – 00;09;15;13
JON
I think that a slowed domestic business down and we’re starting to see some of that business already start to hurt back up and come into the market. As far as where we go, I think we’re going to continue to see exports slow. We’re going to continue to see those prior month averages really slow down the demand. And at the same point in time, I don’t know that we’re going to see the finished goods, all of those finished goods issues that we spoke about get fixed suddenly here.
00;09;15;13 – 00;09;37;20
JON
I think that’s going to be an ongoing concern and it’s going to probably get worse as we go leave spring flush and get into that time period of less milk as opposed to more. So I do think there’s a pullback still in the cards, maybe to that dollar 7175 area. But I definitely doesn’t feel like we’re going to get back down to that one 4150 area where we were just a few short weeks ago.
00;09;37;21 – 00;09;44;17
ERICA
So in some ways the cure for high prices is high prices, but just not a correction all the way back to those seasonal lows.
00;09;44;17 – 00;09;45;12
JON
That is correct.
00;09;45;13 – 00;10;07;20
ERICA
Brian, let’s turn it to you. So John just talked about this run up in cheese and futures. Certainly for class three went with it. Now one day USDA released milk production. And those numbers, honestly, I would peg them a little bit bearish down 4/10 of a percent was a better number than most people had anticipated in terms of more milk being produced in the month of April.
00;10;07;20 – 00;10;15;18
ERICA
So how are you seeing the futures market reacting to that? And what is that telling us about the future of Class three and Class four?
00;10;15;18 – 00;10;33;28
RYAN
Yeah, you know, in this run up in class three areas have finally been able to walk into an arena where we could see black anchor profitability across the curve. They’re having their day in the sun for the first time in a while. When we look at this whole thing, you know, there’s adage you got to feed the bull and I look at the last ten days or so, we stop doing that.
00;10;33;28 – 00;10;51;17
RYAN
You know, John just described this four week run every week. It felt like we learned something new that had bullish, whether it was the record exports or Midwest milk was getting tighter trading premiums, the last milk report being pretty friendly. And so as you look at the last ten days, as soon as we’ve crept up above $20 milk, we know that number works.
00;10;51;17 – 00;11;09;05
RYAN
Dairies have been actively managing risk. But then things started to change a bit as we talk about the idea, as John said, watching hard Italian cheese maybe turn into blocks, blocks start to show up, barrels start to show up as an indication of less, not less, exports. We became the highest priced cheese in the world that’s starting to play out.
00;11;09;05 – 00;11;27;17
RYAN
So up here we look at this as a great opportunity. The milk production report to me was the straw that broke the camel’s back here where you just kind of punched the bull in the nose again, where. Yes, expected portions were negative point eight, maybe -1%. We came in at negative point four. I think we have to use the word bearish carefully.
00;11;27;17 – 00;11;47;24
RYAN
It’s bearish from the regard of $21 milk, 21 and a half, which is where we were trading. So we do look at this in the short term came from $21 milk. You have to keep feeding this bull market. We didn’t that report didn’t do that. So we do look at that as a miss in a reason I think for up here along with the other things we’ve talked about B reason to see this thing take a breather.
00;11;47;24 – 00;12;09;26
RYAN
As John mentioned we might have to get back to a export friendly price, which you could infer one 7180 cheese potentially. Again, that said, less is still less. We still have expectations as we roll into summer that milk will only get tighter. I personally look at this market as, hey, higher lows, higher highs, it feels like to me that’s what the cheese and class three space is transitioning into.
00;12;10;01 – 00;12;26;02
RYAN
As John mentioned, 150 cheese seems like a very difficult thing to foresee right now, especially as we’re seeing global prices in a week like this actually start to move a little bit higher. Again, those are some of the things I think we really got to keep an eye on. They’ve been pretty consistently trading, you know, 180 ish ma tie, 190 cheddar.
00;12;26;02 – 00;12;36;22
RYAN
If we could start to see price action over there and we just got a taste of what it looks like here when things get tight. I do think those were some positive notes this week on the back side of, yes, a milk report that I think does leave way for some downside here.
00;12;36;25 – 00;12;57;27
ERICA
Big thank you today to girl John and Ryan for joining me on the 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. And if you’d like to learn more about how we help people manage risk, contact us at Insights at Dot AG.
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