Basis Loaded – August 30, 2023

00;00;00;20 – 00;00;09;09
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;09;11 – 00;00;40;14
JOE
Hello, welcome to the August 30th edition of Bases Loaded with Joe Schmitt. I am Joe Schmitt. This episode, as always, is produced by Paige Driscoll. We are back after a brief late summer holiday. Let’s dive right in with the latest from the PSR. This butter number coming in at two 6930 represents a minus three to the CME. One week average of two 7205 minus three is well below our normal basis.

00;00;40;14 – 00;01;11;21
JOE
All the weight treated at the CME certainly contributing to that. We traded 70 loads on the CME last week, 98 loads the week prior. We have seen a bump in volume, if you’ll notice, the August 19th volume week at 4.6 million. That’s about 1.1 million above our expected 3.5, but certainly short of what the 98 loads would equate to 98 loads of the CME equates to £3.9 million.

00;01;11;23 – 00;01;38;04
JOE
So all of that weight went in last week and we had a big push back on contracted sales or we had that volume at the CME staggered over a few weeks. You know, it depends on when the invoice goes out to where that weight hits. The MVP I saw this week, we had another bump in volume up to 5.3, so almost £2 million above our expected any PSR volume.

00;01;38;09 – 00;02;10;26
JOE
And of course all that weight trading at the CME, if it comes from the manufacturer or it gets reported here on this report minus the freight. And I think that’s why we have this minus three basis. So to to 6930 with a negative basis on higher than expected volume in butter moving on, cheese this block number one, 9937, that represents a plus two to the see me one week average of one 9705 plus two is exactly our expected basis.

00;02;10;28 – 00;02;42;23
JOE
What’s interesting now is that that level at that 199 level and users turn their nose up a bit. This £10.8 million is well short of our expected 12.5. And if you look back at the four weeks that we use here to calculate the August expiration volume in three out of those four weeks, well below the expected 12.5, only the first week, the August 1st level is above £100,000 above that expected £12.5 million.

00;02;42;26 – 00;03;29;23
JOE
And you’ll notice that prices at the CME and the end of PSR have moved higher. However, on that higher move, the end user seems to have turned their nose up a little bit, taking only the bare minimum on forward contract agreements. And with that light volume at the ME and the high price, we are seeing lower than expected volume and a lower than expected basis story it rings true for the barrel is well one 8503 that represents a plus four and once again plus four is exactly kind of at the low end of our expected 4 to 6 positive basis range for the barrels.

00;03;29;23 – 00;03;54;15
JOE
But the barrels once again, all for weeks, used to calculate the August expiration coming in anywhere from 2 to £3 million under our expected weight. So the processed cheese end user turning up their notes at these higher levels at the CME, as I said before, in the black, when prices creep north of 170, we saw the volume tell off here.

00;03;54;15 – 00;04;28;25
JOE
Anything over 160 volume seems to drop anywhere from 2 to £3 million a week. So for all the enthusiasm that we’re seeing on the CME, the buying enthusiasm is not reflected here on the PSR, with volume seeming a little anemic at best. What’s not anemic is the way complex. Of course, this is a downtick from last week, this 2658, and that represents a minus one to the uptick at the CME of 2730.

00;04;28;27 – 00;05;02;16
JOE
So it’s a slow moving ship here in the and the PSR way prices have moved higher at the CME and we have a little bit of a downtick. What is different in the way complex as opposed to the cheese complex is we’re seeing big volume in the way £7.3 million at that minus one. So the manufacturer had this kind of a little bit but was able to move a sizable chunk of product call back to 3 million of our expected volume level.

00;05;02;19 – 00;05;30;06
JOE
Impressive for the way manufacturer to say the least. And then lastly, nonfat one 1365 that represents a plus one and a half to the see me one week average of 1/12. A little bit of a premium manufacturer was able to call however significantly lower than expected volume at that level, just barely north of £13 million. Call it £7 million short of the expected 20 million.

00;05;30;09 – 00;06;04;18
JOE
A good price is fat. And as seems to be the story on the majority of products, a good price with lackluster volume. So as I said, this is the final all week of the August pricing cycle. The last time we did this report was three weeks ago when I predicted that the ending class three price for August was going to be 1723, missed it by four 1719, not bad for three weeks ahead and the final for class four is 1891.

00;06;04;18 – 00;06;34;12
JOE
If you carry currency equivalence out through the remainder of the five week September pricing cycle, currently giving September class three, 1837, with a September class war of 1857. So that Class three, Class four spread narrows a bit for September. What’s interesting is we have a little bit of premium in the September Class three, however, that 1837 is a pretty familiar number.

00;06;34;12 – 00;07;09;00
JOE
If you look out on the Class three futures forward curve, most of the options for well into next year actually all the way through next summer, hovering around that 1850, 1840 level. So it looks like futures traders are comfortable with the current price level as the futures forward curve is holding right in at that area. But if we continue to see this lackluster volume, at some point, something’s going to have to give.

00;07;09;00 – 00;07;20;15
JOE
We will see what they have in store for us in the weeks to come. Until then, I’m Joe on behalf of Paige. Thanks so much. See you next week by.

00;07;20;18 – 00;07;45;28
JOE
This episode of Basis, Loaded was produced in cooperation with every ad 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 everything. Everything. Agriculture. Learn more at WW w dot ever dot ag.

00;07;46;02 – 00;07;47;03
JOE
Forward slash.

00;07;47;06 – 00;22;27;29
JOE
Everything.

00;22;28;01 – 00;22;37;26
JOE
This episode of Basis Loaded was produced in cooperation with ever ag. At every ag we partner with every corner of the agriculture industry, from dairy to.

00;22;37;26 – 00;22;39;19
JOE
Livestock crops and.

00;22;39;19 – 00;22;53;13
JOE
Agribusiness to deliver intelligent supply chain and risk management solutions. We are ever ag everything agriculture. Learn more at WW w dot ever dot ag.

00;22;53;16 – 00;22;55;08
JOE
Forward slash everything.