In this week’s Parlor to Plate dairy podcast from Ever.Ag Insights, our expert panel dive into the most important things right now in dairy and grain markets. How will President-elect Trump’s inauguration and potential trade policies impact grain markets? What can we expect from the upcoming December USDA Milk Production report, and how might California’s dairy output rebound after challenges in late 2024?
Join host Kathleen Wolfley and panelists Britt O’Connell, Kevin Peterson, and Tiffany LaMendola for a spirited discussion.
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Questions or comments? Topics you’d like to hear us discuss? Contact us at [email protected].
Show Transcript
(Transcript auto-generated)
00;00;00;00 – 00;00;20;26
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. Hello and welcome to Parlor to Plate a weekly podcast from Average Insights, dedicated to offering listeners enlightening discussion and actionable intelligence about dairy markets. I’m your host, Kathleen Wooly.
00;00;20;27 – 00;00;42;05
We are excited to have you along. If you like what you hear, please like us! Subscribe and tell a friend or two to timestamp today’s recording. It is Wednesday, January 15th, around 1030 Central Time. Here’s a quick rundown of the markets. CME Block Cheddar closed at $1.90, down $0.02 from last Tuesday. Barrels finished at $1.87 a penny higher.
00;00;42;06 – 00;01;08;08
Spot butter at 258, a half cent lower on the week. And the nonfat milk market finished at $1.37, mostly unchanged. And now for the grain markets. March corn is trading at 478 per bushel. March soybean sitting around 1048 per bushel. And the March soybean meal contract is trading near 303 per ton. It’s a new week and yet another star studded panel from the ever AG financial services team.
00;01;08;08 – 00;01;26;16
From our green team in Platteville. We have Brett O’Connell from our commercial division in Chicago, Kevin Peterson. And last but not least, Tiffany Lum and Ola from our producer team. Guys, thanks for joining me today. Thanks for having us. Before we get started, I got to tell you, I’m stuck in a bit of a rut. I really need some new music suggestions.
00;01;26;16 – 00;01;47;04
So as we start the new year, what are you guys listening to? Well, my husband just got us tickets to go see Cody Jinks in the summer, so that’s been on our playlist lately. Nice, nice. What about you, Kevin? I’m a hip hop and rap guy myself, so typically Jay Cole for me. All right, how about you?
00;01;47;07 – 00;02;11;05
You know, Kathleen, music’s really not my thing. I’m much more in podcasts, so I’ve been Parler to play all the time. 20, 25. It’s a really good recommendation. So, listeners, you’re already here again. Like us. Subscribe and tell a friend or two. That’s Brit’s recommendation. Well, guys, let’s get started for today. I want to know what is the most important thing right now.
00;02;11;06 – 00;02;41;09
Brit, let’s start with you. You know, I think after the last report that came out last Friday, which was an absolute zinger, USDA took corn yield for the 24 crop down by 3.8 bushels to the acre. Totally a big surprise and shock to the market. But there’s a lot going on in the grain markets. So the thing that’s going to be most relevant in the short term here is what is President Trump, when he becomes inaugurated on Monday, say there is a lot of speculation around how is trade and tariffs going to be handled as it relates to grains.
00;02;41;09 – 00;03;04;17
And so I think most immediately, that’s what the market is going to be paying attention to. I think just secondary to that, it’s going to be Argentinian, whether they’re moving in some of those critical phases of their crop growth, and they’re dry down there. And so with rains in the two week forecast that the market is going to be watching to see if those come to fruition and or underperform expectations.
00;03;04;17 – 00;03;23;00
So I think those are the things right now that the grain markets are watching. But if we thought 2025 was going to be a quiet year in the grain markets, that was all upended on Friday and things are going to be exciting as it relates to president elect Trump and the potential for tariffs. Do you think that any of this is baked into the markets already?
00;03;23;01 – 00;03;43;11
You know, I think to an extent it is. But I think markets never like uncertainty. And so I think with certainty is going to give the market a bit of a license to make a directional move that’s more assertive than what it’s been able to make. We’ve seen March corn really hold the line here at 480, which is our 100 day moving average.
00;03;43;11 – 00;04;08;17
And if we break through to the top side of that probably means, you know, five and maybe even going to test that. 550 territory that we certainly haven’t seen for a while in A15 balance sheet could justify a move like that. But I don’t know that the market has necessarily fully baked that in. I’d even go as far as to say, you know, I think, well, right now it feels like it’s got a far more bearish element to it.
00;04;08;17 – 00;04;27;10
I think long term this could be friendly or for U.S. commodities, no different than coming out of the trade War of 18. And then as we moved into 20 and China started trying to make good on the phase one trade agreement. So we’ll see. There’s going to be a lot of elements that we have to watch here to this.
00;04;27;11 – 00;04;45;23
Thanks, Brett. Tiffany, how about on the dairy side of things. Maybe ahead of myself a little bit here by a week. But it’s been the center of all of my conversations lately. So I’m going to have to go with milk production. We will get the December milk production report next Friday, the 24th. The US was starting to post some gains.
00;04;45;23 – 00;05;09;02
We had about three months of small year over year gains until November came and my home state got hit especially hard with bird flu. California, down 9.2%, really pulled that US number down into a negative one. But if you had set California aside, the US would have been up again 0.8. So I think a lot hinges on, you know, performance out of California again in December.
00;05;09;02 – 00;05;29;24
My eyes are going to be on, you know, do we continue to see growth in some of those areas like Texas, Kansas, South Dakota, areas of new plant capacity, growth coming? And I think in particular, cow numbers two, we were starting to kind of rebuild the herd. And so we seemed like we were setting a runway for stronger milk production growth this year.
00;05;29;24 – 00;05;49;28
So that is a highly anticipated report. And I think we’re all very curious on how things will land. Thinking about that runway for growth. Tiffany, what’s your sense of pretty sure margins today? Yeah. Well, as Brett just noted, last Friday took the wind out of the dairy producer sales a little bit. I mean, it was really feeling like the costs were finally coming their way.
00;05;49;28 – 00;06;06;22
And that might be one less thing to worry about shortly. Run back up in Warren. I mean, I was looking at the numbers yesterday. I guess you could kind of say a one for $1 for dollar, or the 75 cent move or bushel of corn. My rough math was saying that added about $0.50 100 weight. So their cost of production.
00;06;06;22 – 00;06;25;19
So you know, it’s not nothing and that’s just corn. So I think that is a bit of a bummer. So now it certainly hinges on kind of what these milk prices do. Last three has been very volatile here lately for seems to be hanging in there. So I think there was definitely some optimism building. I don’t know that we burst that bubble totally, but we’re enough to keep a close eye on it.
00;06;25;23 – 00;06;43;23
Thanks, Stephanie. Kevin, how about from your perspective, what’s the most important thing right now? Yeah, I think to piggyback on what Tiffany is saying. I mean, I really do think it is that no question for next year. I mean, obviously with this new capacity that has come online and is, you know, the other massive plant is set to come online here within the next month or two.
00;06;43;23 – 00;07;04;20
I mean, it’s really can they get the milk to make the cheese. And then on top of that, you know, let’s say they do. What are we going to do with that excess cheese? I mean we have been running a little low in production last year in terms of cheddar. So if we can make some more cheddar with the new plant in the middle of the United States, are we going to be able to export any excess?
00;07;04;20 – 00;07;22;23
And I think to Fritz point about Trump is when we start talking about trade wars, kind of where does that put us there, especially with a trade partner like Mexico who is, you know, extremely strong in taking cheese from the US. So I think that’s something to look at. Know Canada is also another good trade partner is just right here.
00;07;22;23 – 00;07;40;11
I’m just speaking of close ones. I know Trudeau is stepping down and it sounds like, you know, maybe the conservatives might have the better position in their next election. So maybe that helps things go a little more smoothly there. And then when we talk about Europe and the rest of the world, you know, especially on cheese, we definitely have the upper hand right now.
00;07;40;11 – 00;08;00;24
But it’s still going to be try to book those deals, you know, long term. So I would say, you know, that’s kind of what I’m looking at there. But I do have a question for Tiffany. You know, all summer prices have been really good, especially on that class three side name in class four. But you know, hearing still continued beef on dairy and really not raising those heifers.
00;08;00;24 – 00;08;20;09
So where do we think that puts us next year in terms of milk growth? Hearing a lot of new build dairies coming on line for these facilities. But I still just wonder again with high margins. Well, a lot of what I’m hearing is operations are still beefing those with grade cattle prices and stuff. So where do we think that kind of puts us in 2025 in that situation?
00;08;20;15 – 00;08;38;01
Yeah, that trend doesn’t seem to be stopping anytime soon given the dynamics and all the different markets. I mean, certainly some of these dairies that were poised to grow or come on line for some of this point capacity seem to have found some cows. So, I mean, maybe that was part of tightening up the market at a time.
00;08;38;01 – 00;08;57;25
Yeah. I don’t know that growth comes on the back a lot more cows. To your point, we will get an updated report here at the end of January. So that’ll be kind of good to know. Fresh data replacement heifers. But it has been astonishing how much producers and you know I think we need to differentiate too between total flow and milk solids within that flow.
00;08;57;25 – 00;09;17;29
So even though like for instance, the November we were down 1% on milk production flow, total solids and that milk was still up 1.3. So the dairy producers probably go around the edges where they can increase flow and certainly have been on a trajectory of pushing solids within that milk, too. So I guess that’s where I see growth coming from.
00;09;17;29 – 00;09;43;01
I think in some years where margins have been like this on paper, we would have seen, you know, plus three plus 4% milk production growth. I don’t think we’re anticipating that. But growth nonetheless. And then also to one more quick thing, I feel that some questions over the last two weeks about this, I think some in the industry, maybe newer, are looking at those California wildfires and just seeing California and fires and are asking about milk impact.
00;09;43;01 – 00;10;02;17
You know, maybe Tiffany, as you’re from California, maybe just speaking quickly on how that is not an issue for milk production in California. Yeah, thankfully, what’s happening in the LA area isn’t too close to major dairy production centers. I mean, we used to have a few more dairies down in that Chino Valley, you know, which isn’t too far away.
00;10;02;17 – 00;10;25;11
But generally there aren’t a lot of dairies at risk here, and even friends and the very South Valley, how many skies are still clear? So in terms of smoke impacts, you know, we’ve heard of that impacting production before, not picking up anything along those lines I’ll add to from the demand side, a thing is this is the question that we’ve asked internally of how much of a potential demand impact could there be from these fires?
00;10;25;11 – 00;10;47;09
Because clearly there are tens of thousands of people that are displaced by these fires and could be displaced for a long time. And our initial read is that we likely won’t have any sort of major impact, at least right away. Certainly, it could shift to how people are purchasing product, more reliance on restaurants, but people still have to eat regardless of where they are.
00;10;47;11 – 00;11;11;15
A big thank you to Kevin, Tiffany, and Brett 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 you, the listener, 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.ever.ag
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