Transcript 

00;00;01;04 – 00;00;19;16 
Unknown 
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. Hello everybody. Welcome back to Realtor Get Tuesday. I’m your host Cody Costa with me from Chicagoland. Mr. John Spain. Our John how are you today doing great Cody how about yourself. 
 
00;00;19;18 – 00;00;50;27 
Unknown 
Happy to be here as always talking about global dairy trade a little bit of a mixed bag of emotions here today on GDP we had mozzarella of 6.7%. Skim powder was actually down 2.7. Whole milk powder down 6% and butter down 3%. Where do we want to start on this glorious GDP? Let’s start with the the overall index I’m showing is down about four point 4.5%. 
 
00;00;51;00 – 00;01;25;00 
Unknown 
This is the 12345678 the ninth lower auction in a row here on the GDP. So that is a pretty big statement in itself. And it wasn’t just a little bit lower. Again, it was 4.5% lower on the aggregate. As we get into some of the specifics. Well, let’s start with the fat side. AMF was down 5.2%. And again, everything comes down to the way you want to frame it. 
 
00;01;25;06 – 00;01;51;13 
Unknown 
Yes, it was down 5.2%, but I think it is worth pointing out that it was the AMF futures were looking for us to be down about 8.8%. So AMF again coming in lower but not as low as expectations. And the same thing for butter. Butter was looking for 6% lower on the futures. And it came in 2.5% lower to steal from my esteemed colleague Phil Plourde. 
 
00;01;51;13 – 00;02;20;18 
Unknown 
Lower is lower. I don’t want to take away from that fact, but I do think it’s worth pointing out, just not as bad as expected. As we moved to cheddar. Cheddar came in exactly unchanged at 0.0, and when we look at that on a dollars per pound basis, that comes in at about 211, $2.11, which is substantially higher than the current US price of one 3975. 
 
00;02;20;24 – 00;02;52;21 
Unknown 
On the block side of things, going to mozzarella, mozzarella is going to be the of the major categories. The only positive today it came in 6.7% higher. And as we always try to stress on here seems like mozzarella when we’re comparing US prices. Mozzarella is the commodity that we want to pay attention to the most. It’s the most fungible when it comes to comparing our ability to export again, up 6.7%. 
 
00;02;52;23 – 00;03;18;28 
Unknown 
And that is positive. There’s no taking away from that. What I would say, though, is that compared to where we have seen the indexes and Europe trade and where Troy Gona has been showing prices trade for EU mozzarella for the last few weeks, this is very consistent. In fact, I guess one could say I’m surprised that it was a as low as it was for the last few auctions. 
 
00;03;18;28 – 00;03;42;06 
Unknown 
Or maybe that it didn’t rally on the last auction to catch up with Troy Garner and some of those other ex indexes. But for sure, on the GDP, mozzarella was up almost 7% today, putting it at 150 for a pound. When we get to the powder side, skim milk powder, I think this is the one that’s probably the biggest surprise on the day. 
 
00;03;42;09 – 00;04;15;28 
Unknown 
Skim milk powder was looking for a little bit higher out there, to be honest with you. I was looking for about plus 2% on expectations and as it turns out, it came in 2% lower. And I think that’s interesting just because, you know, that was not one that the market seemed to see coming. When we break it down from a regional perspective, which I think is important, and we look at New Zealand Skim, we’ll call it one 11.5 to 112 on a dollars per pound basis. 
 
00;04;16;00 – 00;04;43;14 
Unknown 
If we go up and look at the EU price where that traded, that one is the one that I think caught people maybe a little off guard that traded at 105. So we’ve got the EU skim at 105. We’ve got New Zealand just shy of 112. And here we are with the U.S. price at a substantially higher price at one 16.25 coming down today from 117. 
 
00;04;43;17 – 00;05;04;16 
Unknown 
And then finally let’s go to whole milk powder. Whole milk powder was again, what I consider to is what I consider to be the workhorse of the GDP or the bellwether of the of where the index in general is going to go. It was down 5.7%. I think this is the eighth auction in a row. That home up powder has been lower. 
 
00;05;04;18 – 00;05;31;15 
Unknown 
And this was substantially lower again down 5.7 futures had it just about right, to be honest with you. Futures were looking for a down about 5%. And again here we are down 5.7. So right corn. It almost about right there. But all in all the aggregate today was down 4.4% John. So I should have asked you before we got going was a lower genética. 
 
00;05;31;17 – 00;05;51;09 
Unknown 
What we were looking for not looking for, but what was expected going into this auction based on futures action the past week. Again, the fats were looking for way worse than what we got. Whole milk powder was right up, was looking for this negative. And then skim milk powder was actually looking for a positive and then caught it on a negative run here. 
 
00;05;51;12 – 00;06;12;05 
Unknown 
So I guess when I add all that up, I think the futures were we were expecting a lower auction, and I suspect an argument to be made that on the aggregate, we ended up a little bit better than what futures were expecting. If we move to the purchases by region. Looks like China was back in a little bit of a way. 
 
00;06;12;05 – 00;06;39;05 
Unknown 
Kind of rounding out the end of 25 here. Maybe not. What was the caveat there? You had said last time, they’re here, but not here in a huge way for SE. Yeah, I’d say China. They did quite a bit of purchasing here today. I’d say they were in line. My data is a little rough here at this moment in time, but they were in line generally with where we were at around this time last year and definitely did more than they did on the last auction. 
 
00;06;39;08 – 00;07;00;09 
Unknown 
I mean, you say if China was here and they were here in a rather large way, how do we go lower? I would say in general, prices have been held up by purchasing out of Southeast Asia and the Middle East and Middle East, particularly moving from a bit player more to center stage over the course of the last 3 or 4 months. 
 
00;07;00;12 – 00;07;23;14 
Unknown 
And this auction, they were gone. Really step back their purchasing. And then when it comes to Southeast Asia, this is some of the lowest purchasing they’ve done. And several months as well. Was China there? Yes. Where the where the other countries there. I would say they backed off substantially here. And that Chinese purchasing just wasn’t enough to hold things up. 
 
00;07;23;17 – 00;07;46;17 
Unknown 
What I would say is if we look at the seasonal pattern as we cross into the new year here, we should expect Chinese purchasing to step down at a seasonal pace. Okay, so now that being said, we’re going to have less product for sale, right from a seasonal standpoint as well. So I think it’s important to keep all of that in mind here. 
 
00;07;46;22 – 00;08;29;25 
Unknown 
But I would be looking for the idea that Chinese involvement on the exchange is probably going to move lower as we move into the next few months. Well, John, will this last global dairy trade of 2025, is there anything else that stuck out in your mind to this auction specifically? I guess if you were to take the fact that US prices are substantially lower in general than they were at different times of the year, if you were to look at where European prices are, and if you were to look at where the recent down move in New Zealand prices and say what is responsible for these lower prices, I think a very easy direction to 
 
00;08;29;25 – 00;09;03;22 
Unknown 
point to or in would be supply. We have, enormous supply here in the US. We have an even bigger supply coming out of the EU right now. New Zealand milk production numbers are up fairly well as well. And then finally, now we’re starting to see South American milk production starting to increase. And I think if you go back in time, it’s just so very rare that we see all of these production regions pumping milk at us or at a growth rate all at the same time. 
 
00;09;03;25 – 00;09;29;15 
Unknown 
Normally it’s the US is enjoying an increase in milk while Europe is struggling, or New Zealand has a drought or the other regions are down but New Zealand up. This is one where all of our major production regions are seen. Pretty decent size increases in milk supply, and at this point in time, it’s hard to imagine that we’re going to see that milk supply turnaround in the immediate short term. 
 
00;09;29;18 – 00;09;49;22 
Unknown 
And does that mean that we won’t see milk production slow down? The answer is low prices care low prices just as much as high prices cure high prices, right. Or at low levels. We’re going to buy in some demand. We’ll probably see milk supply start to contract at some point, but it’s hard to imagine what point that’s going to be, at least right now. 
 
00;09;49;25 – 00;10;11;24 
Unknown 
And if we keep that in mind, I think that’s what’s responsible for why prices are at where they’re at. I saw a chart earlier and some work that insights did and the Fresh Agenda team, and when we look at cheese demand on the global stage is grown quite a bit. Right. The demand side of cheese has actually grown, but there’s just more of it out there. 
 
00;10;11;26 – 00;10;38;01 
Unknown 
Right? There’s just a lot of this product out here. And that’s overwhelming that growth in demand. So let’s keep that in mind and and expect as long as we have this big milk supply sitting on us, we’re going to see probably more and more auctions like this. And at the same point in time, when we do see milk supply contract, we probably see prices go back up simply because this doesn’t seem to be a function of demand as much as it is a function of supply. 
 
00;10;38;08 – 00;10;57;13 
Unknown 
John, thank you so much for your insight. The GDP that’s going to wrap up the last one for 2025. We’re actually going to be back together in three weeks. January 6th is the next global dairy trade. Starting off a new year. Same us, same information, just in a new year. We appreciate everybody tuning in. We hope everyone has a great Christmas. 
 
00;10;57;18 – 00;11;08;15 
Unknown 
Very happy holidays a fantastic New Year. We will see you guys January 6th for another global dairy trade auction. Until then, have some great holidays folks. We’ll talk to you later.