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.
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00;00;08;25 – 00;00;16;12
Hello everybody. Welcome back to another Get Tuesday. I’m your host, Cody Koster with me from Chicago, Mr. John Spainhour, John how are you doing?
00;00;16;12 – 00;00;18;02
Great, Cody happy to be here.
00;00;18;09 – 00;00;38;00
We are happy to have you here on this 15th of July. We just had global dairy trade this morning. The auction as a whole was higher. Yes. Some of the big standouts. Whole milk powder up 1.8%. Skim milk powder up 2.5. Cheddar cheese down at 5.6%. Is there a certain avenue you want to start on with this one, John.
00;00;38;01 – 00;01;00;29
Yeah, I’ll just start out by saying, you know what? We’ve had several auctions in a row that have been lower, and this one kind of reversed course, right? We had four auctions in a row lower, and then finally one that’s higher. And I guess I’ll talk more about it in a minute. But what’s notable about it is, is that there are some pretty big volumes that are swinging through the gate this time of year.
00;01;00;29 – 00;01;20;19
And, you know, I think the expectation of those volumes is part of what had prices moving lower for the last four. And now we’re here and those volumes are getting absorbed, and we were able to go higher on most all of our products today. So let’s dig into the details. Yeah, absolutely. Yeah. I guess let’s just start out with cheese.
00;01;20;20 – 00;01;45;14
It’s going to be really the only one with a monumental move. Lower cheddar specifically was down 5.6%. Going to come in around a 208 per pound basis. We’ve been warned. And we’ll pass that forewarning on to our audience. You don’t. You just have to be careful when we’re looking at New Zealand cheddar in here, but it is not as heavily traded and there just aren’t that many loads that trade on this.
00;01;45;14 – 00;02;12;27
I would point out it is lower. It is a barometer that we do pay attention to. And it does say that cheddar, at least on the GDP, was down 5.6%. If we shift over to the mozzarella, though, it was only down 0.6%, and it’s still going to come in around 216. We do have to point out there that still light volumes that trade place on the mozzarella price, but this is essentially a European price.
00;02;12;27 – 00;02;34;17
So this is in line with where we would say Mars is trading and Europe at somewhere between that 215 and 225, depending on what index you’re looking at and what origin it’s coming out of. But I would say that this is a steady eddy mozzarella price. And again, still in line with what we know going on in Europe as we move to the butter side of things.
00;02;34;17 – 00;03;00;21
AMF was up 0.6, butter was down 0.4. That’s still going to keep the butter on the GDP at a 340 per pound on an 82% butterfat basis. I guess if I was comparing that to the U.S., we are still significantly lower in the US than the GDP price and still significantly lower than the European price, which is in that three 6370 area.
00;03;00;23 – 00;03;22;19
No big change out of that butter fat. I think where maybe some of the action come from today, though, is going to be as we shift towards the powders. Let’s begin with whole milk powder. Whole milk powder was up 1.8% at 39, $28 per metric ton. If we go look at where the GDP pulse was trading at, it was trading 3825.
00;03;22;19 – 00;03;48;21
So it was signaling that we were going to see the whole milk powder price move lower on this GDP by about 1.3%, when in fact we actually moved higher. And I think it was a pretty strong result out there. If we go during the auction, I would just point out that we opened with a supply demand ratio 3.5 on home up powder, not something that we see all that often, and it signaled right out of the gate, hey, there are buyers here.
00;03;48;21 – 00;04;05;07
And I think that’s just a bit of a different tone than what we’ve seen, at least what we saw in the last auction. And it just signals, hey, down here, these prices and these volumes, you had some buyers show up to take on product. Again. I think that came in better than the expectations set by the GDP pulse.
00;04;05;07 – 00;04;37;17
And if we look at where the powder futures were trading at 37, 35 and 3710. So this came in significantly over where the whole milk powder futures for trading, I would think that we would see a reaction now on the whole milk powder futures higher if we move to the skim milk powder side of things. And this is where we have to kind of dig in here and say, okay, where the total average was trading, that total average is trading about a $1.26, up 2.5% from the last.
00;04;37;17 – 00;04;58;11
However, when we dig in and look at it on a more regional basis, if we’re going to compare New Zealand prices here, I would say the New Zealand price was actually trading over 2800, and that’s going to be about $1.27. So New Zealand price was down around 125 to 123 depending on what time frame you were looking at.
00;04;58;11 – 00;05;38;08
The US was at one 2675. So the US was at the highest price in the world. We saw New Zealand today move to that dollar 27. And that is going to be, I guess, right about in line with where the New Zealand futures were trading. However, I think that with the US having been trading at a premium to those prices, right there was this thought that we were going to see the US price move lower to the New Zealand price and the EU price when in fact, in this case the US price was the highest and we saw the New Zealand price at least is coming up to that US price moving to $1.27.
00;05;38;08 – 00;05;57;28
In response, the nonfat price today moved higher to $1.27 50. So in response, we were the highest in the world. The New Zealand price moved up to our price. Now we moved back to a higher tier here at $1.27 50. And I would dare say I just doesn’t feel like that’s what people were expecting to have happened.
00;05;57;29 – 00;06;18;17
John, as we slide down to the event volume, this one is kind of a mixed bag. If you look at the whole event for the GTI from two weeks ago, it was down 6%. But year over year change up 6% with 118 winning bidders today. And the different regions are kind of the same mix of event changes down year over year changes up.
00;06;18;17 – 00;06;29;04
But I guess the one that kind of sticks out to me and tell me if I’m wrong. But North Asia year over year up 41% from last auction, down almost 20% though. So a little bit of a caveat.
00;06;29;04 – 00;06;47;18
On that one. You know it gets a little weird in here. We did see North Asia perform very strong on the last auction. They backed off of that volume. But it’s still, as you pointed out there, Cody is still 41% higher year over year. That’s a pretty big increase. They were here to buy this time. At the same point in time we had Southeast Asia.
00;06;47;18 – 00;07;15;18
They were down 12% on a year over year basis. But up 19% on a event chain. So pretty strong showings, I guess, out of both North Asia and Southeast Asia. And then when it comes down to the total volume, yes, the volume was 6% less than the last auction. But we kind of go through this where the first auction of the month or the last auction, however you want to see it, depending on the date, that is going to be the one with the largest volume.
00;07;15;18 – 00;07;34;11
And then we see the second one with a little bit less. And then this is the second one of the month with a little bit less. It’s still a big volume I guess is the way I would look at it. It got absorbed and prices went higher again, a little bit less than the last auction. So let’s let’s not negate that, but some pretty strong showings out of these big regions.
00;07;34;11 – 00;07;54;04
I would say we’re going to continue to see increasing volumes and then large volumes here for the next 6 to 8 weeks on the GDP, and that won’t be counter or seasonal, right or new. This is something that we see every year. Buyers know that. And they still showed up. And I think when we take that into account, it was a fairly strong showing on the GDP.
00;07;54;10 – 00;08;01;04
Not just because we were higher, but that we were higher during this time of year. Again, I do feel like it defied expectations.
00;08;01;04 – 00;08;07;15
Yeah. No, absolutely. John, with this auction specifically, anything else that really stuck out to you sides, everything that we’ve gone through so far, I.
00;08;07;15 – 00;08;26;18
Would just say that supply demand that I spoke about on the whole milk powder, again, not totally out of line. And it at 3.5 on whole milk powder. It didn’t have a huge effect. Now it was up 1.8%. But it is interesting that we saw the supply demand ratio be that strong during this time of year when we have such big volumes, I don’t know.
00;08;26;18 – 00;08;47;02
Well, we’ll see where it goes from here. But my sense is, is that we probably see steadied maybe a little bit higher here on the get powders moving forward on the cheese side. Like I said, we have to be a little bit careful on looking too deep into that cheddar side of things. But the mozzarella again is at least in line with what we see in other parts of the world.
00;08;47;02 – 00;09;10;10
And we do believe this to be a more representative representative of the EU. That means that the EU market is at 216. The US right now is at $1.62 50 on the block side. So still a very wide discrepancy. And it does mean that our export window should be open. Again. When we look at our butter fat, that window should be open as well.
00;09;10;11 – 00;09;32;02
And I would expect to see strong exports as we move through the year in both the butter and cheese on the nonfat side, I don’t know how much upside we can expect from here, but again, a supportive auction and coming out of the rest of the world, I don’t know how high we can go, but I do feel like it starts to put a floor in and say, you know, it’d be hard for us to get down below $1.25, at least for right now.
00;09;32;07 – 00;09;50;08
Okay, John, as always, appreciate the deep dive in the global dairy trade. We are actually going to be back, John and I with everyone in three weeks. This is one of those weird wonky three week hiatuses. So the 5th of August is going to be the next global dairy trade. That’s when John’s going to be back to talk about everything that happened on that auction.
00;09;50;08 – 00;10;07;15
To begin the month of August. We appreciate everyone doing them. Thank you so much for listening. If you have any questions, comments, concerns, please let us know. We will try to address those, but until next time, three weeks from today again August 5th next. Getty. Everyone have a great couple weeks, even better weekends and we’ll see you next time.
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