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)
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I will come to the May 1st edition of Bases Loaded with Joe Schmidt. I am Joe Schmidt. May 1st we made it. It is officially springtime in Chicago. Oh, celebration edition of spring. It is also. The ADP edition is very nice seeing all our visitors in town to discuss these dairy markets. What better way to celebrate than to really hammer in on the MVP report, starting with butter.
00;00;39;13 – 00;01;02;13
This butter number coming in at two 9745. That is a nice price. That represents a plus five to see me one week average. two 9250 plus five is about twice our expected basis. We traded 35 loads on the CME last week. So nice volume on see me. That volume is reflected here on the S&P sr north of 4 million pounds.
00;01;02;13 – 00;01;27;17
Well above our 3.5 million pound expected threshold. So the manufacturer caught a little bit of a premium here over the CME. And at that elevated level was able to move higher than expected volume. So a win win for the manufacturer and butter that 35 loads on the CME did little to pull basis down. And the final report card for butter is higher than expected.
00;01;27;17 – 00;02;13;25
Volume on higher than expected price in the cheese will start with blocks one, 57, 97. That is a plus three to the CME. One week average of one 5470 plus three is in the middle of our expected 2 to 4 cent positive basis, however lower than we have experienced as of late. That recent positive basis is a big drop from recent weeks where we were up in the plus six to plus eight positive basis neighborhood, and I have to tell you, this is not completely unexpected because the S&P block has a hard time keeping up with a rapidly moving, higher CME product, and that’s the environment that we were in during this pricing.
00;02;13;25 – 00;02;43;02
This is the second week here at the CME. The CME was up $0.09 week to week. And the PSR here you’ll see we’re only able to move $0.07 higher. So any PSR lagging a little bit behind the rapid ascension that we’re experiencing at the CME. What is interesting is that on that lower than expected basis, the manufacturer was able to move good way, almost 12.9 million pounds.
00;02;43;02 – 00;03;05;03
So about 900,000 above our expected 12 million pounds in the blocks. The manufacturer sacrificed a little bit on price. In order to move a nice amount of product. I have to call that a win as well. In the barrel on 6267, that represents a plus four to the CME two week average of one 5872. Now that CMG average was up $0.07.
00;03;05;03 – 00;03;36;22
Again, as prices at the CME are moving into a new neighborhood on that seven cent higher move on the CME two week average, the SR was also able to move up seven, so the PSR moving 1 to 1 with the increases that we’re seeing at the CME, and that certainly is impressive. However, at that elevated price level sales call it a little meager here, coming in just short of 12.3 million pounds, well below our expected 13.5 million.
00;03;36;22 – 00;04;05;24
So good basis on the barrel keeping pace with the CME but volume lagging a bit. And then the big surprise on this report I think is way 4087. That is a plus four to the CME one week average of 3665. That CME one week average of 3665 was the low week at the CME. We traded seven loads on the CME last week at some one of an elevated level.
00;04;05;24 – 00;04;36;01
But when I said that this way number was a big surprise that 4087, although it is $0.04 higher than the CME average, the manufacturer had to discount a full $0.03 under the April 13th PSR value to move way. So down three is a big shift. And how did all that movement get into an NTP based contract? I think you have to look at this sales volume for the answer because wow, look at that volume, 8.8 million pounds.
00;04;36;04 – 00;04;57;04
Just a massive amount of product changing hands. And it looks like the manufacturer had to discount in order to get it moved. They got it moved. 8.8 is a big chunk that’s well above our expected. Well, I like to say 4.5 million pounds, but lately the way volume has been coming in even higher than that, but nowhere near this 8.8 million pounds, there was definitely an extra parcel.
00;04;57;04 – 00;05;23;17
Probably moved off our shores into the export world. Manufacturer I had to discount to get that volume moved and this 4087 price on this week’s the PSR is certainly a little bit of a surprise, but it’s just a continuation of the downtrend that we’ve seen in the way complex as the investor tries to catch up to the lower values at the CME.
00;05;23;17 – 00;05;50;17
It will be interesting, as I said, that 3665 was low week at the CME. We were able to lift our head for about two weeks and then now we’re right back down in that low 37 ish neighborhood. So I would expect that way continues to hold at this price maybe move a little bit lower. But I think we’re out of the woods for the three cent lower movement under prior week’s PSR for at least a little bit.
00;05;50;17 – 00;06;20;03
And then lastly, nonfat one 1190 again, this is a big drop. Which week on the NPS are down a little bit over $0.03. That one 1190 is discount to the CME one week average of one 1420. We traded 12 lows of the CME. So that might have done a little bit to pull down that way. But similar to the way dialog here in nonfat we had a big move with week and price.
00;06;20;05 – 00;06;47;27
And that is largely due to the volume boom. Again another big volume week for the powders. Big volume weeks in both way and nonfat. Typically we expect 20 million pounds as prices have moved into the low teens. That weekly volume has up ticked from just a little bit above 20,000,002 weeks ago to a lot above 22 million last week, and then this week north of 33 million pounds.
00;06;48;00 – 00;07;14;02
So almost two weeks and one the manufacturer had the discount. But rip the Band-Aid off and know where to go. But onward and upward from that 111 price. So this is the final week of the four week April pricing period. April class three settled. We got the final in at 1550 and April class four went up at 2011.
00;07;14;02 – 00;07;38;25
If you carry current CME equivalents out through the entire five week May pricing cycle, currently getting a may class three of 1780 using a lower way than I had earlier projected. And they may close for. Let’s keep it up there 2010. So we’ll see what they have in store for us in the weeks to come. Getting everybody this week in Chicago until next week.
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I’m Joe, on behalf of page and the entire ever AG Insights team. Thanks so much. Bye.