Take a deep dive into this week’s NDPSR report with Joe Schmit in Basis Loaded.
Questions or comments?
Contact Joe at joe@ever.ag or give us a call at (312) 492-4200.
Source: USDA https://www.ams.usda.gov/mnreports/dy… —
Music: The Return of Laín Coubert composed by Jaden Schmit
https://soundcloud.com/jaden-schmit/the-return-of-lain-coubert
(Transcript auto-generated)
00;00;00;20 – 00;00;08;25
Future trading involves risk and is not suitable for all investors. Content provided in the segment is meant for educational purposes and is not a solicitation to buy or sell commodities.
00;00;08;27 – 00;00;36;02
Hello and welcome to the April 10th edition of Basis loaded with Joe Schmidt. I am Joe Schmidt. This episode, as always, is produced by Paige Driscoll with help from the Ever AG Insights Team. It’s a glorious 65 degrees and sunny here in the Upper Midwest, just as 13 and up down in Augusta at the Masters. What better way to celebrate than with the latest from the report starting this week with butter.
00;00;36;02 – 00;01;07;10
This butter number coming in at two 8625 is a plus two to the CME. One week average of two 8438 plus two is our expected basis. So we’re in line in terms of price CME relationship. It’s interesting to get that to the two 8438. The CME was up $0.02 on the weekly average. And this is the first week higher on its run up to the high 290 level.
00;01;07;11 – 00;01;31;17
So higher prices are ahead for the CME weekly averages. It’s funny to see me volume last week was 33 loads and that went in at essentially two 9160. So you would expect as that at an elevated level, the basis would be a little bit higher than just our normal plus two. But of course the PSR lags to the moves of the CME sometime.
00;01;31;19 – 00;01;52;03
So all in all I would have to call plus two to achieve expected basis in an environment where prices are moving higher. I would have to call that a win and even more of a win. Is this volume here on the PSR north of 3.7 million pounds? So the story in the butter is average basis on higher than expected volume.
00;01;52;03 – 00;02;19;27
And all in all, we’ll call that a win for the butter manufacturer in the cheese. First up is the blocks one 4844. That represents a plus five and a half to the CME. One week average of one 4280. We traded 42 loads on the CME last week and essentially a one 4555 level. So a little bit premium. But when you back out the freight it’s probably right in line with what we’ll call essentially a 143 average.
00;02;19;27 – 00;02;46;18
So plus five and a half is higher than expected basis for the block. The manufacturer was able to call a premium. However, at that premium you’ll notice the PSR volume suffering a bit. The 2023 and the PSR average volume was right around 12 million pounds. So here we’re falling about 1.3 million short. So the manufacturer was able to call a higher than expected price, which you would expect at the low end.
00;02;46;18 – 00;03;09;20
You know, this low 40s level at the CME is kind of the low end of the recent trading range. Actually next week in both blocks and barrels should be below. We get the CME and then subsequently the low week on the PSA. So typically at the low end of the trading range we have higher than expected basis. That’s certainly true for the black.
00;03;09;22 – 00;03;30;17
But as I mentioned that higher basis we suffered in volume as a manufacturer able to move a little bit short of 10.7 million pounds in the barrel. One 5011 that’s a plus five right in the middle of our 4 to 6 cent higher positive basis, plus five right in the middle of that range. And they achieve that plus five basis.
00;03;30;20 – 00;04;13;01
While trading 29 loads at CME last week at 29 loads was essentially at a one 4635 level. So maybe even a little bit under when you back out the freight what the CME two week average was. So let’s say that the manufacturer had the discount just to say here on sales that occurred last week, that discount counter to what we saw in blocks paid big dividends for the manufacturer, because at that discounted level, at this 150 area, the manufacturer was able to move almost 16 million pounds of product, 15 826,206 so big iron on the investor, well above 2 million over our expected 13.8 million pounds.
00;04;13;04 – 00;04;36;07
So processed cheese at this 150 level, which of course is historically low or at the low end of the call it the ten year range. Buyers seem to have an appetite for more barrels that are on sale. We’ll see how that appetite persists as prices at the CME move higher in the weeks to come. Up next is way 4469.
00;04;36;07 – 00;05;09;04
So we dropped a little bit from last week’s PSR. That’s a plus three to the CME one week average. 4130. We traded four loads on the CME last week. Light volume at the CME. And that light volume has been the norm as of late. Typically when spot way prices move lower, we have big volume on the CME with an aggressive seller on this move from call at the 52 level to the 38 level, we’ve had 0 to 8 loads trade on the CME per week.
00;05;09;05 – 00;05;33;15
So prices at the CME on spot way have come off significantly on basically just offers this 4469 on this week’s and the PSR report as well. Let’s call it about 1.8 cents under the March 23rd average. So the manufacturer had to discount under prior week’s PSR to move way. And they were able to get some products sold. Look at this.
00;05;33;18 – 00;06;02;16
North of 5.8 million pounds, well above our expected 4.5 million. So even as prices are declining, we’re still seeing this higher than expected volume every week on the investor up next is nonfat one 1778. That’s a plus five and a half to the CME. One week average of one 1205 312 lows on the CME last week plus five is about double our expected nonfat basis.
00;06;02;16 – 00;06;28;04
So the manufacturer was able to call nice price. And of course you know the routine here. The manufacturer calls it very nice price. And outside this price volume suffers. And sure enough our run of 20 plus million pound weeks comes to an end. Manufacturer are only able to clear a little bit north of 13.5 million. So that higher price came in as a cost and looks like some nonfat went into storage.
00;06;28;04 – 00;07;05;17
So this is week one of four for the April pricing period currently getting and April class three 1545 with April class for all the way up at 2020. If you carry kind of CME equivalents out through the entirety of the five week May Pro saying yes, maybe five week just after we finished with the five week. You take these current levels all the way out through May getting 1620 class, three class for up at 2050.
00;07;05;19 – 00;07;28;23
We’ll see what they have in store for us in the weeks to come. Until then, I’m Joe on behalf of page and the entire Ever Insights team. Thanks so much. Try and get out and enjoy this weather. We’ll see you next week. Bye.