Basis Loaded – July 26, 2023

00;00;00;20 – 00;00;09;19
VOICEOVER
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00;00;09;22 – 00;00;44;01
JOE
Hi, welcome to Humid Chicago and the July 26 edition of Basis Loaded with Joe Schmitt. I am Joe Schmitt. This episode, as always, is produced by Paige Driscoll. And what we do here is break down the latest from the NDPSR report. Starting with butter. This butter number coming in at 2.5232 is a plus one. To the CME me one week average of 2.5115 plus one, a little bit lower than our expected basis.

00;00;44;03 – 00;01;10;00
JOE
So you could see that that price level is a little bit of a disappoint. However, considering we traded 57 loads at the CME last week, that equates to 2.3 million pounds at essentially a 252 value. That’s a lot of weight to change hands at the CME and could have been part of the reason why we have lower than normal basis.

00;01;10;00 – 00;01;41;10
JOE
I think the biggest factor is that the CME was up four in the end the NDPSR up eight so basis went from a minus three last week recovering all the way to plus one. So prices on the in the NDPSR are getting closer to where they historically should be in a force improvement over last week’s basis. All in all, I would have to call that a win for the butter manufacturer.

00;01;41;10 – 00;02;13;01
JOE
Up next, cheese. This block number coming in at 1.4491 represents a plus seven and a half. To the CME one week average of 1.3750. We traded 18 loads at the CME last week at an elevated level, so that might have gone a little bit of the ways in giving us this higher than expected basis of seven and a half over of course well over our expected two to four cent and positive basis.

00;02;13;04 – 00;02;41;01
JOE
It’s interesting even with that weight that we traded on the CME last week, the sales volume here on the NDPSR are coming in well below our expected 12 and a half million, so higher than expected basis in the blocks on lower than expected sales volume. This block number will be interesting to watch as we head into next week’s report, which of course is the fifth and final NDPSR release for the July pricing.

00;02;41;03 – 00;03;15;11
JOE
The CME Weekly average increased $0.11. So it will be interesting to see how much of that big gain at the CME gets into next week’s on the NDPSR. And then up next in the barrel 1.4302 that represents a plus five and a half to see me two week average of 1.3755. So you’ll remember I said that I see me block average 1.3750 the see me two week barrel average 1.3755 essentially parity between the two varieties of cheese.

00;03;15;16 – 00;03;42;04
JOE
The only difference is that we’re as the blocks were able to post a seven and a half positive basis here in the barrels only five and a half over. So that’s right in the middle of our expected 4 to 6 cent positive basis. We traded just a meager 12 loads last week at the CME and 12 is on a normal week is a pretty respectable sales volume.

00;03;42;04 – 00;04;14;27
JOE
However, compared to what we’ve been doing at the CME in the barrel lately, it feels like a pittance. Next week I mentioned the change in the block using the two week average in barrels. We have an 8.2 cents increase in the barrels for that fifth and final week of NDPSR pricing for July. So it will be interesting to see how basis reacts as prices at the CME have now begun their violent move higher opposite to the block.

00;04;14;27 – 00;04;51;06
JOE
The barrel volume here, 1,000,000 pounds over our expected 13 and a half million. So even with seemingly meager volume trading at the CME, the barrel reported NDPSR volume still well over expected 13 and a half million impressive volume on maybe a little bit higher than expected basis in way 2544. That represents a plus two an exact two to the CME one week average of 2344.

00;04;51;11 – 00;05;30;09
JOE
We train the 43 loads on the CME last week at 2465. The 43 loads equates to essentially 1.7 million pounds. When you take the 1.7 million pounds that we treated at the CME the last week, you add the previously contracted 4.5 level, that takes you to a volume of 6.2 million pounds. So the fact that our sales volume here in the in the NDPSR is north of 7.8 million leads you to believe that in addition to the CME volume and the previously contracted sales, that there was an additional 1.5 million flat price sale.

00;05;30;15 – 00;05;58;07
JOE
And the fact that the that this week’s driveway release is down more than $0.02 from the July 8th NDPSR level of 2757, that would lead you to believe that the trade at the CME and that flat price sale possibly an export sale went a long way in really pulling that NDPSR way price down.

00;05;58;09 – 00;06;31;26
JOE
And then lastly nonfat, 1478 down $0.02 from the July 15th NDPSR number. So a little bit of a reality check for nonfat. At that discounted level, the manufacturer was only able to move 16.8 million pounds. So a disappointment, their disappointments all around and nonfat, except when you take this handpiece our price and compare it to the see me one week average of one 1056 then you come up with a plus 4 positive basis, a little bit higher than maybe someone had expect.

00;06;32;01 – 00;07;08;26
JOE
So as I said, this is week four or five for the July pricing cycle. Currently getting a July Class three of 1380, the movement at the CME and Cheese went a long way, in my opinion, of affecting the final settlement value. If the Class four price, if you carry out currents CME in the next week is 1830. So 1384 class three 1830, Class four, we’ll see what they have in store for us in the weeks to come.

00;07;09;03 – 00;15;33;12
JOE
Until then, I’m Joe on behalf of Paige. Thanks so much. See you soon. Bye. This episode of Basis Loaded was produced in cooperation with ever.ag at ever.AG. We partner with every corner of the agriculture industry from dairy to livestock crops and agribusiness, to deliver intelligent supply chain and risk management solutions. We are ever.ag everything agriculture Learn more at WWW.ever.ag/everything.