Transcript

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 Market, the dairy feed brought to you by Ever.Ag. Each week we bring you clear, timely insight across dairy, grain and feed markets. Focus on what’s moving, why it matters, and what it means for your operation.00;00;26;08 –

00;00;54;07
Unknown
I am so excited this week to have a special guest riding along the one and only Jake Kingsley from the infamous words from Wichita. Jake, thanks for joining me on the dairy feed. Well, thanks for having me, Kathleen. First time back on the mainstream since the viewers have missed you this thing around a little bit. Well, Jake, well, Jim is off doing Jim stuff.

00;00;54;10 – 00;01;28;08
Unknown
We had two USDA reports. I’m curious, what did you think it seemed like? At least on the weak side. Things got a little interesting. Yeah, certainly an interesting little set of reports here today. So we had our quarterly stocks report that we get every few months. And then we had our Planted Acres report, which lets us know what the final acreage that the farmer actually put in the ground was during this planting window we had over the last couple of months.

00;01;28;08 – 00;02;05;00
Unknown
Here. It’s the follow up to the prospective plantings that we got there on March 31st. There were a couple of adjustments there, nothing too wild. I think the market had pretty well anticipated most of what occurred there. We essentially added a little over half a million acres to the soybean crop, and a little bit to the cotton crop, and most all of the loss was accounted for in wheat, which was down right about a million acres from what had been anticipated back in March.

00;02;05;00 – 00;02;32;06
Unknown
So a little bit of a shuffle there. But again, I think the market had been expecting most of that change. Corn didn’t really see much movement at all in that data. Where corn did get a little exciting was over there in the quarterly stocks, where the number came in a just over 100 million bushels below what the market had been expecting.

00;02;32;09 – 00;02;58;20
Unknown
Most of the beans and the wheat came in just right in line with anticipated release. And so those couple of moves there had wheat perked up pretty good. Everything was jumped up just right after the report released. In fact, it was kind of hard to figure out what was going on. The USDA sites were crashed and we couldn’t get the data for a couple of minutes.

00;02;58;22 – 00;03;19;28
Unknown
So the market was kind of jumping around, I think maybe trying to figure out what was happening there, but finished the day with corn up at 6 or 7 since there and beans up just a few cents. We had a pretty strong finish though. It’s been on a heck of a slide over the last couple of months, so it was due to catch about somewhere.

00;03;20;01 – 00;03;41;17
Unknown
I think it even traded $6 on the nearby month on the Kansas City contract yesterday, so a little bit of a spike here doesn’t hurt anything. All in all, balance sheets remain very healthy across all those commodities and the futures markets, as far as feed buyers are concerned, are still in a pretty attractive spot to end of the day.

00;03;41;18 – 00;04;07;13
Unknown
Jake, I’ve been thinking a lot about dairy price or margins here recently because we have seen futures prices for class three and class four moved quite a bit lower in the past month. And I was wondering at corn prices in the 410 to 415 ranges on the on the nearby soybeans that are trading one around 300 bucks, a little higher than that per ton.

00;04;07;14 – 00;04;40;27
Unknown
Also on the nearby what’s the thought process for producers, either on the dairy side or even on the livestock side that are looking to manage some of that risk? So for us, we have a very little exposure remaining through September for most of our dairies, like you said down there, flirting with $4 nearby futures on corn and $300 in soybean meal, those just get to be very low end of the historical range.

00;04;40;27 – 00;05;06;28
Unknown
Those are nice round numbers that create a little bit of a psychological hurdle for the market to jump over. And so with dairies having marketed a fair bit of their milk at pretty good values, they were looking to get feed booked up and cover some of their expenses. And so we’ve been very comfortable going out through September on all of that sort of stuff.

00;05;06;28 – 00;05;36;08
Unknown
And, you know, we’ve had a very healthy break from the highs that we were trading in both corn and soybean meal futures just a few months ago. Earlier this spring, we were pretty strong up there at $5 corn. And in the 333, $40, $340 soybean meal range, for new crop December contracts. We’re well off of those numbers at this point.

00;05;36;08 – 00;06;08;20
Unknown
We were putting topside protection in via some sort of call strategy, or some folks even taking some futures ownership on the way down. And now that we’re down here and we seem to be kind of bouncing off of $300 soybean meal and, you know, for 34, 40 ish corn, there are folks beginning to take their very first layers of physical feed ownership with their vendors.

00;06;08;22 – 00;06;32;11
Unknown
The Midwestern basis values, especially on corn, are pretty attractive. They’re down around some of last year’s low numbers. So folks are stepping in and doing that, applying some futures to it, and then waiting for an opportunity to get some sort of inexpensive put on it if the market allows, so that they can get cheaper corn later in the year.

00;06;32;11 – 00;06;55;22
Unknown
But there are places where getting protein just outright purchased and priced at these levels makes a lot of sense. You’ve had some opportunities to get some good basis values similar to last year, they’ve since perked up with the industry going through its shutdown cycles for repairs and maintenance. You’ve had China stepped back into the Canadian market in a pretty healthy way.

00;06;55;22 – 00;07;18;09
Unknown
That’s certainly created some support there. There have been some issues with a little bit of production in South America and some rejected vessels going into Europe and that sort of thing. So all of that kind of perked us up off the lows. But there have been opportunities to buy feed or at the very least put very attractive ceilings on your feed exposure for next year.

00;07;18;10 – 00;08;09;26
Unknown
In fact, we’re even dabbling with December of 2027 futures in some cases. If we can do it very cost effectively this early. All right. Well, thinking about 2027, Jake, from a dairy perspective, we saw a bit of a rally in the class four market over the last few days. Today we’re looking at Q1 2027, class four prices that are in the 1850 ish range, which is roughly a 75 cent move ish from the recent lows into that we made maybe 15 days ago, seem like late last week into early this week, we had a buy side interest come back in the nonfat market, had a bit of interest, come back into butter, which I think

00;08;09;27 – 00;08;40;12
Unknown
perk things up, but unfortunately didn’t last very long. We’re seeing a bit of slippage in both butter and nonfat today. It’s filling mostly into the Q3, Q4 time frame at this point in time as we look at class four. But generally, I think that the market tone on class four is still pointing to potentially weaker prices as we roll through the second half of the year and potentially even on into first half of 2027, in the class three space.

00;08;40;18 – 00;08;59;25
Unknown
Similar story. And that we saw a bit of a push higher in late last week and early this week, but it doesn’t seem to be holding on. I think ultimately, as we look at the class four space, the class three space all keeps coming back to the same dynamic. There’s a lot of supply out there, particularly from a cheese perspective.

00;08;59;26 – 00;09;22;05
Unknown
They got a lot more milk going to cheese plants. We have a lot more milk going into butter powder plants and domestic demand, at least on cheese side, doesn’t seem to be keeping up, forcing us to really push into that export market and stay competitive. And oh, by the way, Europe has a lot of product on its hands as well that it’s trying to move into the international market too.

00;09;22;09 – 00;09;51;14
Unknown
We saw a GDT Pulse print today. It was the pulse auction. We’ll have the full GDT auction next week. But generally this week’s pulse auction was quite a bit weaker on the New Zealand product. So I think that from a skim nonfat dry milk perspective, there’s some weakness that’s resurfacing in that marketplace as well. Generally, my sense in the dairy market is that supply is plentiful and that demand is trying to keep up.

00;09;51;15 – 00;10;14;22
Unknown
That could put some pressure on milk prices as we roll through the second half of the year and on into next year, I just don’t know. As though I see a dramatic shift in the milk supply dynamics as we roll through the next 6 to 9 months here in the US market. Given the fact that beef returns are still very, very lucrative for dairies to hold on to as many cows as they can.

00;10;14;23 – 00;10;45;08
Unknown
Okay, Kathleen, you’ve kind of looked at the next 6 or 9 months out into the dairy market there. Is it too early to get way out front 12 and 18 months into the future in the dairy market? Jake, from my perspective, it’s not too early to start looking into the middle of 2027 or end of 2027, but each specific operation is different in risk tolerance, what type of coverages they’re looking for on the milk side.

00;10;45;08 – 00;11;12;03
Unknown
So I advise producers that are intrigued or interested in looking at 2027 at this point, especially as they’re aiming to manage some feed risks, to work with their brokers and dairy agents to really think through. What is the dairies aim for managing risk and margin exposure, etc., to try to make sure that they’re making a plan for that future time frame.

00;11;12;05 – 00;11;46;19
Unknown
Prices on the dairy side are not all that exciting. Well, that’s that’s a fair point, Kathleen. And the reason I ask is I mentioned, you know, we’re looking at December of 2027 on some feed stuff, and I think we have some legitimate concerns that far out for our group. And like you said, working with your advisor and making sure that what you do and makes a lot of sense and likely leaves you with some flexibility with this much calendar in front of us still.

00;11;46;21 – 00;12;30;09
Unknown
But what we’re watching is the availability and price of inputs for this South American crop that’ll go into the ground later this year, and how that may impact their ability to produce. Also, this El Nino forecast typically produces hotter and drier growing conditions in a huge part of the South American growing region. There’s another swath of Brazil that gets kind of too much rain, but it’s usually an El Nino turns into less than ideal growing conditions across the Southern hemisphere there.

00;12;30;09 – 00;13;04;19
Unknown
So those are a couple of factors. We’re watching early. And, you know, we’ve had a couple of years in a row of really good production here in the US. Brazil and Argentina are now maybe three years straight without any serious production hiccups. We’re probably due for something here. And so if if all three of those pieces kind of come together at once, we don’t have to sit here and project 5 or $6 corn or $400 soybean meal today.

00;13;04;19 – 00;13;30;00
Unknown
But at the levels we’re seeing, it’s hard to stay on the sidelines for too long. Well, Jake, appreciate you joining us on the dairy feed. But before we leave today, can we do some trivia, going back to the old grain feed trivia. I know we don’t have Jim here, so it’s not going to be nearly as exciting, but I did have a couple questions for you, if that’s okay.

00;13;30;02 – 00;13;43;07
Unknown
Are you game? I suppose so I didn’t study, but I’ll do my best. Okay, okay. True or false? Fireworks were invented in ancient Egypt.

00;13;43;10 – 00;14;12;20
Unknown
I think. False, I think they were from China. That is correct. That was a false question. They were invented in ancient China around 200 BC. Okay, okay. That’s one one for Jake. Okay. Next question. How many original copies of the Declaration of Independence were printed on July 4th, 1776?

00;14;12;23 – 00;14;45;05
Unknown
My gut says like 200, but I’m thinking like seven. Your gut was right. 200. An estimated 200 copies of okay, the Dunlap broadsides, as I’m going to tell you that that I’m getting all these questions from AI. So please don’t fact check me. But according to AI and estimated 200 copies, known as the Dunlap Broadsides, according to AI, they were an estimated 200 copies, but today only 26 are known to exist.

00;14;45;09 – 00;14;51;06
Unknown
Okay, okay, okay, let’s come up with one more.

00;14;51;08 – 00;15;02;24
Unknown
Oh, yes. There’s some tricky ones on here. How many times is the Liberty Bell in Philadelphia tapped each Independence Day?

00;15;02;27 – 00;15;27;28
Unknown
21 and 13 times to honor the 13 original colonies. That makes sense. Well, Jake, thank you for playing along. Trivia. I’ll be sure next time. The next time we have a holiday, I will come up with some real stompers for Jim, and maybe we can have you back for a real round of trivia. That sounds good to me.

00;15;28;01 – 00;15;43;27
Unknown
Between now and then, that’s going to do it for today’s episode. If you found today’s episode helpful, please be sure to like, subscribe, and share it with a colleague or friend who would use some market clarity right now. We’ll see you next time on the dairy feed.