In the latest edition of the Parlor to Plate dairy podcast from Ever.Ag Insights, our all-star panel looks ahead to fall. How could dairy markets move as demand season picks up? What are producers thinking as margins improve – at least on paper? And how are grain markets faring as producers prepare for harvest?

Join host Erica Maedke and panelists Jon Spainhour, Ryan Yonkman and Brandon Weigel for a spirited 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;27 – 00;00;29;19

Hello! Welcome to Parler to play a weekly podcast from Everything 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 today. If you like what you hear. Please like us. Subscribe and tell a friend or two. Today it’s Wednesday, September 4th around 1:00 central time.

00;00;29;20 – 00;00;54;02

A quick rundown of the markets CME block cheddar at 223 per pound, meaning $0.16 on the week. A rocket ride barrels are also up to 225, up $0.13 on the week. Butter down a nickel to 315. Nonfat dry milk today. Closed at $1.36, rising a nickel from last week. The grains complex has also been on the rise. December corn right now at 411 a bushel.

00;00;54;03 – 00;01;18;25

November soybeans at 1021 per bushel. An October soybean meal contract at 326 per ton. It’s a new week. And another all star panel from the egg financial services team. We’ve got Brandon Wagle helping dairy producers manage their feed risk. John Spain Hauer, out of our Chicago office, helps commercial clients manage their risks. And Ryan Jackman, also in our Chicago office, helps dairy producers manage their risk.

00;01;19;01 – 00;01;34;10

It’s starting to feel like fall out there. I wore a jacket to walk the kids to the school bus stop this morning. So here in Wisconsin, it definitely feels like the seasons are changing. Today, I’d like to ask our panel where the start of fall is going to take the grain and dairy markets. So let’s start with you, Brandon.

00;01;34;10 – 00;01;37;06

Harvest is just around the corner. What are you seeing out there?

00;01;37;13 – 00;01;58;01

Yeah sure is. People are really starting to roll into corn silage, specifically in the Midwest. Southern parts of the country have been in corn silage for a few weeks now and are starting with grain corn harvest. You know, this market has seen some volatility certainly come back into it. New crop corn prices have rallied about $0.25 off their lows here in the course of the last week and a half.

00;01;58;01 – 00;02;19;24

Soybeans are off about 60 to $0.70 off of their lows. So we’ve certainly seen some underlying support come into this new crop market is primarily being driven by we’re finally catching exports. You know, we had seen China be very absent from our soybean market up until about a month ago. Our soybeans were more expensive than our competitors in South America.

00;02;19;24 – 00;02;41;27

And as prices continued to break through middle of August, we finally started to see them come to the table. Our corn and bean prices are now the cheapest in the world, and as of this morning, our soybean prices were about $0.50 cheaper than South America. So naturally, when we start to see our prices trading at a big discount to our competitors, it’s going to attract trade from our global partners.

00;02;42;01 – 00;03;00;14

You know, you lay that up against what has been a weak dollar. It also makes us look that much more attractive when we talk about exports. So we’re also kind of moving through the time of year where seasonality wise, corn and beans tend to put in their seasonal lows. If you look at the five, ten and 15 year average, really in the last week of August or early September.

00;03;00;14 – 00;03;13;19

So we’re working through all of that. And managed money has carried a very short position in grains all year. They have started to pay back some of those shorts, start to cover some of those as we do work our way towards harvest, to take some of this risk off the table.

00;03;13;21 – 00;03;17;26

So has anybody gotten in the fields yet? Any word from the field on how crops are doing?

00;03;17;29 – 00;03;36;21

Yeah, it seems like everything we’ve been hearing from the silage front is good. Tonnage is in a good spot. Quality is good. Heard from a producer in southern Kentucky. Yields are, you know, quite a ways off their grain. And they were in a pocket that was pretty tough. We know that the worst areas are going to be western Minnesota.

00;03;36;21 – 00;03;59;15

And then some of those areas in Kentucky where they were dealing with extreme moisture at the start of the year, and then really they dealt with some extreme dryness as we kind of round it out the growing season. But by and large, everyone that has started into like seed corn harvest in the Midwest has been really happy. There hasn’t been much, by the way, of grain corn being harvested so far through the eye states, but definitely seed corn fields have been as good as expected, so.

00;03;59;21 – 00;04;02;14

So we might just hit another record corn crop this year.

00;04;02;18 – 00;04;20;11

Yeah, I’m in that boat. I don’t know that it’s going to be as big as what the USDA says. You know, their current forecasts are for six bushels over our prior record. I’m not sure that I’m quite in that ballpark, but I do think we can see at least close to a record around that 177 mark.

00;04;20;11 – 00;04;41;19

So thanks, Brandon. Let’s shift gears into the dairy markets, John. And as we get past Labor Day, from a buyers perspective, to me, this is peak season. This is the time where if you need to buy something, there’s not much left to get ready for the fall peak demand. What are you sensing in terms of clients actions right now and what they’re thinking about these markets?

00;04;41;19 – 00;05;03;23

Well, I think on the cheese market you’ve got people kind of on edge here. We’ve made a move up here to the, you know, the 223 block and 225 barrel area. I get the sense that in general, you know, I think people have been kind of prepared for a rally of some sort. I think we’ve exceeded a lot of people’s, you know, expectations.

00;05;03;23 – 00;05;20;26

If you will. And I think of a lot of it seems to have been supply driven, not necessarily demand driven. I guess as we go in to the fall, I think people are looking at it to say, you know, if we’re leaving the summer here at these high prices, maybe there’s room for prices to come back down a little bit.

00;05;20;26 – 00;05;38;21

But there probably is a floor out here somewhere simply because, as you’ve said a few times, and Erica, you and I have been on a few podcasts together today already. You know, you’ve got an instance where we’re going into the demand season, people. Even if demand is relatively bad, you’re going to run into that seasonal demand where people kind of have to have it.

00;05;38;21 – 00;06;03;15

You’re probably not going to not have cheese at a Christmas party or not have dips and everything else. So we’re going to run into a demand season here that’s going to be a little hard to ignore. And I think people are preparing themselves probably for higher prices, maybe not higher prices from here, but for prices to remain elevated, especially when we look at those cold storage numbers and the prospect of the possibility of milk remaining tight through the end of the year.

00;06;03;16 – 00;06;15;02

So I think the other market people have certainly been concerned about is the butter space. And at this point, I think Europe has been very strong and lending some support. Are you seeing folks here taking action yet?

00;06;15;07 – 00;06;34;11

Well, I think it’s awfully tempting to especially for a trading company or maybe a multinational company who has exposure in both continents to be in Europe right now and say, and butter is up to $4 a pound in some cases. And then looking back here in the US and saying, here we are at 315, right? That’s a real value.

00;06;34;11 – 00;06;52;11

And traditionally we do see those markets work off each other for most of this year, the butter markets, the EU, New Zealand and US have all run kind of in tandem with each other and held a very tight correlation. It has been Europe that has really accelerated away from everybody else here in the course of the last month and a half or so.

00;06;52;11 – 00;07;11;23

I think that is going to keep buyers on guard here. We probably I don’t believe we’ve exported anything yet and it’s going to be difficult. Maybe for us to export. But I think just that price spread right now is going to keep people on guard to say, if we do go to much lower, we probably are going to export something we only sand in.

00;07;11;23 – 00;07;33;07

The gears I want to throw into that argument is New Zealand is even cheaper than we are. Their GDP yesterday went off essentially unchanged for their fat prices and they’re down into below $3 area and they have a preferential tariff. If people should be looking for anybody’s fat right now, they should be looking for New Zealand because it is the cheapest in the world and the several regions.

00;07;33;07 – 00;07;47;10

It has preferential tariffs. They did not come looking for it. We did not rally, if you will. And so it kind of says, boy maybe we won’t export. I don’t know, but I do think it’s hard to ignore that $4 price that’s trading in Europe right now.

00;07;47;11 – 00;08;05;03

Thanks, John. And for those of our listeners who want a little more insight about that GDP events, John does its own podcast with Cody Koster out on YouTube or the MRA channel, and you can catch it there. Brian, let’s switch to you and think from a dairy producer perspective. So seasonally we’re near the bottom of the annual curve.

00;08;05;03 – 00;08;16;26

We’re looking at some of the best margins on paper at least. What are producers thinking right now, especially as they go into this fall season and seeing some really good class three prices that they haven’t seen in a while?

00;08;16;26 – 00;08;38;07

Yeah, I think look, right now we’re finally getting that kind of sigh of relief that this rally is happening. I think conversations for the last few months have strongly centered around how short supply was our heifer market, and how it almost seemed inevitable that was going to matter. And now here we are. It matters, right? Malik is trading $23 in front of our face.

00;08;38;07 – 00;09;05;10

You know the right here, right now. Guys are playing catch up. We all know we’ve talked about last year enough and how tough that year was. But we’re really switching gears from, hey, waiting for the rally, having good reasons for why we should rally. Now. Here we sit and we’re really trying to bring the horns in just a little bit as we start to look at 2025, because to your point of the milk to feed relationship and even with higher costs, trust me, with a Q1 averaging $21 between class three and class four, there’s opportunity there for our dairies.

00;09;05;10 – 00;09;20;24

I don’t care what state you’re in, so we’re really trying to, you know, kind of get back on the horse here of managing risk. Not to say it’s easy to be bearish. I think John raised some good points of things. We’re watching, you know, both on the negative side let’s say what’s going on in New Zealand. But also kind of the panic happening in Europe to the upside.

00;09;20;25 – 00;09;37;15

Talk about bluetongue. We can talk about avian here. All those things. Still a lot of wild cards I think in play. But to me it’s time to dumb it down. And the reality is when we look at a curve out there again, you’ve got class three at 20 and class four at almost 22. I think that becomes an easy arena for dairies to start to become risk off.

00;09;37;15 – 00;09;57;20

Manage that risk right by your puts. Be bullish. See what can happen. Certainly the supply tightness I think everyone agrees is something that could have some staying power. Going back to the heifer situation we have and what’s going on in Europe. But up at these levels, I think demand becomes a very important thing as we are talking some version of, you know, top ten percentile on prices.

00;09;57;21 – 00;10;14;14

You have fun with Q1. I think it’s two times in the last 20 years we’ve actually been able to settle at these prices. So it’s not to say we can’t write, but like history tells us, we need to be a bull or these prices usually tend to kill demand and inspire supply. So that’s it from the dairy. And that’s kind of what we’re looking at.

00;10;14;14 – 00;10;22;13

Certainly in the short term things feel good, still look good, but really focused at this point. Finally on 2025 and trying to be smart about that curve out there.

00;10;22;19 – 00;10;42;07

A big thank you to Brandon, John and Ryan for joining me today 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, please contact us at Insights at ever.ag

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