Host Cody Koster and Jon Spainhour take a deep dive into this week’s GDT report.
Questions or comments? Contact Jon at jcs@Ever.Ag, Cody at cjk@ever.ag, or give us a call at (312) 492-4200.
[bg_collapse color=”#004053″ icon=”arrow” expand_text=”Show Transcript” collapse_text=”Hide Transcript”]
(Transcript auto-generated)
00;00;00;10 – 00;00;08;22
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.
00;00;08;25 – 00;00;17;07
Hello everybody. Welcome back to another GT podcast. I’m your host, Cody Koster, with me from Chicago, Mr. John Spain. Howard. John, how are you today?
00;00;17;07 – 00;00;27;15
Doing well, Cody, and very excited to be here on June 3rd. It’s a beautiful day here in Chicago. And may I say, it’s finally a beautiful day here in Chicago.
00;00;27;16 – 00;00;33;24
That it is. The sun is shining, the heat is here. It feels like summer is finally upon.
00;00;33;24 – 00;00;38;00
Us after that 49 degree meh that we had. This feels wonderful.
00;00;38;01 – 00;00;53;04
It does. Yes it does. Well, we’re actually coming to everybody a little bit early today for a GTI. Usually John and I kind of do this podcast in the afternoon once everything is said and done and we have all the data kind of secured, but we are coming to you right.
00;00;53;04 – 00;00;54;22
After the GTI.
00;00;54;22 – 00;01;07;14
Just wrapped up. And as a result, for this GTI down 1.6% as a whole and leading the charge on that was cheddar cheese down 5%.
00;01;07;19 – 00;01;27;18
Yeah, actually it was a little bit of a down auction. This is the second lower auction in a row that follows on the heels of four higher auctions in a row. I’ll just throw it out there. The whole milk powder futures. At the very least, we’re expecting a bigger pullback than what we got. Note powder futures are going to be down on this.
00;01;27;18 – 00;01;50;05
There’s no way around that. They’re down 3.7%. However if we look at where whole milk powder futures were forecasting they were looking for us to be down in some case almost 15% and to be down 3.7%. Here, I think, is an important caveat here. And, you know, you don’t want to split hairs too much. Lower is lower to steal from Phil.
00;01;50;05 – 00;02;28;00
But at the same point in time, if we look at where we settle versus expectations, we actually exceed it expectations by quite a bit. I think we’ll probably see in the next few days here, the whole milk powder futures start to reverse and come back up two where prices are trading now, which on the spot, which is significantly higher than where they’re at in terms of why where the future is expecting that break down, I guess we can look at it to say that we are entering a period of the year where we’ll start to see more volume, the less on the auction, and so there’s going to be more product that needs to be
00;02;28;00 – 00;02;48;06
absorbed. And I think people had the expectation that that’s going to make prices go lower. And indeed it did go lower. Let’s not negate that at the same point in time, I do think it’s important to point out that it just wasn’t quite as low as what people may have thought. And in fact, on the opening rounds of supply demand ratios, it opened quite strong.
00;02;48;06 – 00;03;15;00
That demand signaled that there was at one point in time it was showing. We opened at a 3.5 supply demand ratio, which is a pretty healthy supply demand ratio at any point in time. But for Homer Powder to have that high of a supply demand ratio was pretty good. That ratio dropped relatively quickly once we started getting into higher prices, but nevertheless, people were expecting prices to be significantly lower than where they came out.
00;03;15;00 – 00;03;47;28
If we look at skim milk powder, skim milk powder, I would say came in at down 0.4% on the official average. But if we look at it, I would say that we saw New Zealand skim milk powder start to come down. When it came down, the nearest comparison, I would say came down to about $1.28. I think we’re starting to see that New Zealand price start to come off of being the highest in the world to now it’s at $1.28, and that is actually lower than where the US spot price is right now.
00;03;47;28 – 00;04;06;20
So the US went from if we go back earlier in the year, the US went from the highest price in the world. When we were at 140, we migrated quickly lower down to the lowest price in the world around 115. And as it stands right here, right now, today, we are probably back in that highest price in the world territory.
00;04;06;23 – 00;04;31;08
Nevertheless, I would say skim came out right around where the futures were pricing. They would be so right around expectations. So, you know, there’ll be people that say, hey, those GDP futures, they get it wrong all the time. Whole milk powder. They’ve been struggling a little bit on skim milk powder futures, though we seem to have come in right on where the futures were angling for as we move into the more fat laden products.
00;04;31;08 – 00;04;54;25
Here we see that cheese as you pointed out, Cody was down 5%. That puts the cheddar price on the GDP around 216. That’s really come off of that high. That was set 2 or 3 auctions ago. And at the same point in time, mozzarella prices went higher, 2.3% to $2.22. So we’re continuing to see strengthening in that mozzarella price.
00;04;54;25 – 00;05;09;20
We would say that’s probably our best comparative price. In regards to what price do we need to export against. Again we do export against cheddar. But the easiest apples I don’t want to call it apples to apples comparison, but.
00;05;09;20 – 00;05;10;20
Apples to apples to.
00;05;10;26 – 00;05;32;23
Apples to apples source comparison. That’s great. Yeah. Would be the US cheddar price versus mozzarella and the mozzarella price at 222 and moving higher right now the US cheddar price out of just shy of $1.96 and has been moving higher. That mozzarella price again is on the GDP. But I do want to point out that that is mainly a European price.
00;05;32;23 – 00;06;05;08
And we would say that that matches right up with the European price that we have heard of in Europe right now. So price is kind of strengthening over there. Finally, as we move into the AMF, AMF was up 1.4%. That would bring it in about $3.34 per pound. As we look to butter. It was actually down 0.1, coming in at $3.54 on an 82% butter fat, probably down more around that $3.40 on an 80% butter fat to bring it into a better U.S comparison.
00;06;05;08 – 00;06;28;02
So, you know, wrapping it all up a little bit, you know, steady on the fats if you will. Cheddar down, mozzarella up, skim down a little bit but not much. And then that whole milk powder price again lower. No way around that. Lower is lower. But just having to peek behind the curtain on that one and saying, well, that was actually much higher than what the general expectation was.
00;06;28;08 – 00;06;43;08
Well, John, we appreciate the quick wrap up because we’re doing this so early in the morning. Again, everyone, we don’t have quite all the data in front of us, but we have the hard hitting facts on the prices that John just gave to you. And two weeks from now, on the 17th of June is going to be our next episode.
00;06;43;08 – 00;06;50;09
So until then, we appreciate everyone tuning in and listening. Everyone have a great rest of the week and even better weekend. We’ll see you in two weeks.
[/bg_collapse]
The following music was used for this media project:
Music: Funky Intro 29 by TaigaSoundProd
Free download: https://filmmusic.io/song/9520-funky-intro-29
License (CC BY 4.0): https://filmmusic.io/standard-license
Artist website: https://linktr.ee/taigasoundprod
© Ever.Ag 2023, confidential and proprietary.
This episode is also available on the following
platforms:
Disclaimer: TRADING FUTURES AND OPTIONS ON FUTURES INVOLVES SIGNIFICANT RISK OF LOSS AND MAY NOT BE SUITABLE FOR EVERYONE. THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THE INFORMATION AND COMMENTS CONTAINED HEREIN ARE PROVIDED BY EVER.AG AS GENERAL COMMENTARY OF MARKET CONDITIONS. THIS INFORMATION SHOULD NOT BE INTERPRETED AS TRADING ADVICE OR RECOMMENDATION WITHOUT FURTHER DISCUSSION WITH YOUR EVER.AG ADVISOR. THIS IS A MATTER OF SOLICITATION.
