Transcript

00;00;01;09 – 00;00;23;12
Unknown
Futures 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. Welcome to Ag Smarter The Dairy Feed brought to you by Ever.Ag. Each week we bring you clear, timely insight across dairy, grain and feed markets focused on what’s moving, why it matters, and what it means for your operation.

00;00;23;13 – 00;01;02;21
Unknown
I’m Jim Matthews. I’m joined today, as always, by the one and only Miss Kathleen Wolfley. It is 10:15 Chicago time on Tuesday, July 7, seven-seven. We have a big week here in the commodity markets, especially following that three day Independence Day weekend. Hope everyone had a lovely Independence Day weekend here in the United States. Kathleen. There’s a lot to chew on today as we had a big run in the grain markets yesterday.

00;01;02;22 – 00;01;29;25
Unknown
We had the U.S. soccer team do not very well last night. We have a report on Friday, but I think speaking of stuff to chew on, should we chew on some cheese? I was really wondering where you were going with that. And sure, let’s chew on some cheese, Jim. Or I guess the better thing to say is that there’s a lot of consumers out there that aren’t chewing on any.

00;01;29;26 – 00;01;56;12
Unknown
Oh, no. Domestic demand continues to struggle, and we’re looking at QSR foot traffic based on Placer.ai data that’s showing ten consecutive weeks of declining foot traffic. Restaurant sales I think are traffic is doing maybe a little bit better. I think there’s just a lot of consumers out there, Jim, that aren’t stepping foot in their local burger chains, and we’re seeing that in some of the June traffic data as it relates to retail sales, too.

00;01;56;14 – 00;02;22;14
Unknown
We’re just not seeing a lot of follow through at retail sales have been pretty lackluster pretty much all year. Promotional activity hasn’t been all that aggressive to move the needle. So I think generally, as we look at the demand picture for cheese, people aren’t signing up to throw a couple extra slices in their in their carts, and they’re not leaning into pizza consumption like we’ve seen in the past.

00;02;22;16 – 00;02;52;22
Unknown
Kathleen, is this potentially a trend then for the second half of the year? I know we cannot predict the future, but we’re past the halfway point, right? July 1st was we are now in the second half of 2026. Holy cannoli! That is just wild to even say out loud. But it’s true. And what’s also wilder is that these little stinky little children of ours are going to be back in school in the next, let’s say, somewhere between 6 to 8 weeks.

00;02;52;25 – 00;03;13;19
Unknown
And that’s also wild. But are we going to pick up any consumption here as we move through the second half, where we worried that maybe this is a trend that’s going to last through the rest of summer and into that school year? I’m generally concerned about the state of demand here in the U.S., but I think there are a couple of bright spots, or at least a couple of bullish items that I’d like to call out.

00;03;13;20 – 00;03;39;21
Unknown
Number one, the job market is doing okay. People have jobs. That means that they have money that’s coming in, right? The second thing is a gas prices have come down. We’re looking at, if I’m not mistaken, the average gas price in the U.S. was below $4 a gallon last week. So ultimately we are seeing some tailwinds as we consider how much people are spending on filling up their tank every week compared to where we were sitting a few weeks ago.

00;03;39;21 – 00;04;03;16
Unknown
So perhaps that helps to bring by side interest back to the marketplace. Puts a little bit more spending into restaurants compared to what we’ve seen in the last ten weeks, but there’s also a bright spot into the international market. We saw May export sales of cheese at 135 million pounds. That was up 18% year over year. So we’re on a winning streak into the international market.

00;04;03;17 – 00;04;36;03
Unknown
Our prices are so competitive, and I think that that should help to keep the pipelines full through the second half of the year for cheese exports. That ultimately is helping to keep the U.S. market more balanced than it would be if we didn’t have these export sales. But even still, there’s a lot of cheese around. Prices are in the dollar $0.40 per pound range, which is on the the lower end of of the historic range, or at least the historic me in the last 5 to 10 years range.

00;04;36;05 – 00;05;04;27
Unknown
I guess in my expectation, Jim, the cheese markets could stay relatively subdued. Sure, there’s opportunities for upside as we consider it’s summertime. It was hot last week. We tend to have heat stress concerns in the U.S. that could make that fresh cheese availability turn tight in the U.S. and potentially even in the European markets. But I think that there are enough headwinds and there’s enough supply in the marketplace that could limit some of the upside potential in that marketplace.

00;05;04;27 – 00;05;22;08
Unknown
I’d also note that as we consider the butter market, butter has been finding a little bit of support here recently. We’ve got a lot of supply out there in the fat space. Exports have been firmer. Domestic demand has been firmer. So I think that may be helping to clean up that market to some extent as we roll into the second half of the year.

00;05;22;08 – 00;05;47;10
Unknown
But again, I’m watching potential for heat stress, a knock back of components there as well for potential for for some bullish upside. Okay. Well, I think the really interesting points on gas prices being down for one and having maybe a little extra change in the pockets than what we were worried about. I mean, think of our conversations here, Kathleen, over the last 2 to 3 months.

00;05;47;10 – 00;06;10;06
Unknown
Well, there was a lot of hey, where is that? Where’s the money in the consumer’s pocket going? And we were looking at crude oil pricing and we were looking at gas pump pricing here in the States. It wasn’t looking pretty. I think we were pretty concerned over spending ability from the American consumer as they wrapped up their school year, went into the summer.

00;06;10;14 – 00;06;40;06
Unknown
We know beef prices have been high, but that gas price entering those summer months was frightening. And now as we enter, you know, this first half of July, at least, crude oil is in the $70 per barrel range, if not lower here. So that is helped. Gas prices come down. So yeah, maybe some a little extra money to spend hopefully as we hit the school year and don’t burn it all in school supplies and other items.

00;06;40;06 – 00;07;09;28
Unknown
But yeah it’s going to be fascinating. Kathleen I’ll tell you what. You know, we had a pretty wet July 4th here, at least in the Chicagoland area. Our barbecue plans were scrapped. However, the Matthews, of course, did their job and went out and bought a crap load of pizza. Oh, well, it was my pleasure. Bill’s Pizza in Mundelein, Illinois, if anybody is listening from home, fantastic.

00;07;09;28 – 00;07;41;19
Unknown
But yeah. So we’ll see what happens with the rest of the year here. You talked about heat stress, Kathleen, and I think I’d like to talk about that for a minute on the crop side of things, because as we were going into the Independence Day holiday last week, we were discussing grain pricing being at contract lows. Corn had really driven its way down into the four 30s and four upper 40s for December.

00;07;41;19 – 00;08;04;17
Unknown
Corn futures coming out of Independence Day that three day weekend, I think we also talked about how funds can get a little jittery about taking risk off the table when you have the markets closed. We have three different holidays between end of May and beginning of July, where markets closed for an extra day for each holiday. Funds can get a little jittery around there.

00;08;04;18 – 00;08;29;28
Unknown
They also get jittery around heat, and it makes them concerned that if they are over short on this thing, then they need to de-risk cover those shorts. And for them, that means buying some of these futures back. And they did so yesterday, on Monday in a really, really big way. You had beans up over $0.50 a bushel depending on the delivery month.

00;08;29;28 – 00;08;54;09
Unknown
You had corn in the $0.15 higher depending on the delivery month. It was quite the way to come out of that three day weekend and start this new week, especially given how arguably bearish the June 30th reports were for the grain markets. So things are really interesting at the moment because you do have heat coming back to the Midwest in a big way.

00;08;54;15 – 00;09;16;25
Unknown
And so we had some rain in between these two big heat events. I think what people are now debating was, is that rain a good thing? I think some people say, yes, of course. Like as long as you maintain some water, that’s okay. The excess moisture discussion though is out there. And then to have the excessive heat directly after that.

00;09;16;26 – 00;09;37;25
Unknown
We’re starting to wonder now what this truly does for corn during what is now some key pollination stages and ear filling stages approaching it is July. That is the time to talk about these events. For beans, it’s more of an August pod filling discussion. But you know, then part of the conversation yesterday was, well, what’s driving beans then?

00;09;37;25 – 00;10;06;09
Unknown
If this is a heat corn discussion? I think there was rumors, and we’re waiting to see true confirmation from the U.S.DA of the Chinese stepping in to buy some new crop bean purchases for, let’s say, that setback nov type of delivery window. So we have yet to see that hit the actual U.S.DA data. We’ve seen some of the wires hit on some of these rumors.

00;10;06;09 – 00;10;28;07
Unknown
So we’ll see if that gets confirmed. But I think then also what we referenced earlier, Kathleen, is going into the end of this week. We have a report. So what will funds do with some of that. Let’s say updated data from the June 30th report that now gets baked into July. WasD to give us a refresher on what ending stocks look like.

00;10;28;07 – 00;10;49;29
Unknown
Because again, as of now, there’s nothing super bullish about corn stocks here in the United States. But it’s a futures market. We’re looking forward. We’re wondering what these weather events do to yield. We saw crop ratings dip a little bit in yesterday’s report. So you know things have been fantastic. But they did drop slightly for both corn and beans.

00;10;49;29 – 00;11;22;24
Unknown
So it’s going to be an interesting stretch here. It always is I think some folks who’ve been in the industry you here phrases such as, you know, we end up we end up killing the U.S. corn crop three times before this thing’s harvested. I don’t know what the actual number is in terms of how many times we do try to kill it, but let’s say we are currently in one of those situations where based on some weather, some fun positioning, and some U.S.DA reports, we are certainly trying to take our first stab at this for taking some yield off this thing.

00;11;22;24 – 00;11;51;25
Unknown
So that’s how things are looking in grain. We’ll see what happens here at the end of this week Kathleen. All right. Well, I guess to sum it up for dairy producers, the things that they should be watching are the weather, upcoming laws. And on the dairy side. Take a look at where we’re landing on tree, see where we’re landing on, on heat stress in the U.S. and in the rest of the world, and generally just continue to keep an eye on these markets and manage risk where it appears appropriate.

00;11;51;27 – 00;12;36;08
Unknown
That’s exactly right. And I believe, Kathleen, that Jake Kingsley also makes note on managing risk when you have the opportunities to do so. On this week’s words from Wichita. Should we hear what Jake has to say? It’s not words from Wichita, it’s words from Wichita. But yes, let’s hear from Jake. Hello everyone. It’s Monday, July 6th and markets are off to a hot start after the long weekend, with corn finishing the day $0.16 a bushel higher and soybean meal $9 per ton in the green weather seems to be a primary driver with a hot and dry forecast over the next two weeks in the U.S., as well as some similar concerns for the European crop.

00;12;36;08 – 00;13;05;05
Unknown
Plus, the El Niño forecast continues to strengthen, which likely means some adverse weather, typically hot and dry during the critical portion of the growing season in South America during their next crop cycle. We’re also learning of some significant damage to Ukrainian rail export infrastructure, which will inevitably tighten supply out of that region. China continues to buy Canadian canola products at a very aggressive clip, and our corn exports very possibly will get a bump higher in the WASDE later this week.

00;13;05;10 – 00;13;26;08
Unknown
We’re already outpacing our current projections with a couple of months left to go in the marketing year, so that would be very justified. Last week we had our acreage and stocks reports. There wasn’t a whole lot of change other than a haircut to the corn inventory in the stocks report, slightly lower than expected. So we’ll see how that plays out in this week’s WASDE.

00;13;26;08 – 00;13;47;07
Unknown
And whether this is more of a typical seasonal bounce higher in the first part of the month, that tends to trend lower as we get closer to August, or if we’re now needing to adjust for some new fundamental developments and potentially tighter balance sheets, according to this week’s Crop conditions ratings, which are just out now, we are still in good shape, so this could be a temporary blip.

00;13;47;07 – 00;14;10;17
Unknown
But this is why we manage risk and when opportunities in front of us. We try to take advantage early on. Well, that’s going to do it for this episode. If you found today’s episode helpful, please be sure to like, subscribe, and share it with a colleague or friend who could use some market clarity right now. And for all of you avid listeners out there, just as a heads up, No Ag Smarter: The Dairy Feed next week due to a couple vacations.

00;14;10;17 – 00;14;16;01
Unknown
We’ll catch it in a few weeks. We’ll see you next time on Ag Smarter The Dairy Feed.