Transcript

00;00;00;09 – 00;00;19;06
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 and welcome to parlor to plate a weekly podcast from ever again sites dedicated to offering listeners enlightening discussion and actionable intelligence about dairy markets. I’m your host, Kathleen.

00;00;19;06 – 00;00;41;29
Unknown
Woefully. We are excited to have you along for this last episode of the year and the last episode of the series. We have some really exciting new things coming in 2026, so keep your eyes peeled and your ears turned on for updates from our team in the New year. But before we get to new and exciting things in 2026, let’s talk about what’s going on today.

00;00;42;00 – 00;01;04;04
Unknown
It is Tuesday, December 16th around 10 a.m. Central Time. Here is a quick rundown of the markets. See me block cheddar sitting at around 138 per pound, $0.03 higher in the week. Barrels at 140 a penny. Drop on the weak spot. Butter trading around 147, also a penny lower. And the nonfat dry milk market is sitting at 117 down a half cent.

00;01;04;06 – 00;01;27;23
Unknown
And now for the grain markets. March corn is trading around 437 per bushel. January soybeans 1167 per bushel. And the January soybean meal contract is trading around 304 per ton. I am excited for our last parlor to plate recording, featuring an absolute dream team of a panel from the Ever AG Financial Services from our commercial team in Chicago.

00;01;27;23 – 00;01;49;26
Unknown
We have Jon Spain Hower, who is sporting a fantastic blazer today. Just staying really on brand there. John from our producer team in whatever state his feet are in Colin Kiedis and last but not least, from a grain and feed team in Platteville, Wisconsin. Brandon Weigel. Guys, I am so excited to be here with you today. We’re headed into the Christmas season.

00;01;49;29 – 00;02;13;02
Unknown
We’re nine days out from Christmas at this point. Do we have big plans? We taking big vacations like Honolulu Christmas where we stay in local. I’ll go first. Maybe I’m staying local. Don’t have anything super planned. Going to be just stuck in the little southwest corner of Wisconsin. It does sound like it’s going to warm up though, so I don’t know that we’re going to hit Honolulu temperatures, but hey, it’s not going to be below zero anymore.

00;02;13;06 – 00;02;33;19
Unknown
Looking forward to a nice Christmas here on the Chicagoland area. Going skiing for the first time, Kathleen. But the biggest goal is not to break anything. And I guess if I do, I know where it’s been hours at. So maybe I’ll crashes Christmas after. Where are you going? Skiing. Colin. Somewhere in in eastern Oregon. It’s. They told me it was beginner friendly.

00;02;33;22 – 00;02;52;25
Unknown
All right. You’ll have to report back in 2026 on our new show how your skiing trip went. Gotta love a good ski trip over the holiday season. All right. Anyway, let’s get into it today. We just had a GTI land on our desk. John. Some interesting results, particularly on the mozzarella side. Talk to us about what you saw, Kathleen.

00;02;52;25 – 00;03;27;01
Unknown
The GTI was another negative result today. I believe this is the ninth consecutive lower GTI that we’ve had. And oh feature, I would say the workhorse of the GTI I generally think of as powder. Whole milk powder was down 5.7%. And looking at that’s been down one, two, three, four, five, six. So eight of the last nine auctions, a whole milk powder has really made a move lower.

00;03;27;01 – 00;03;49;20
Unknown
Today it was down 5.7%. And was that in line with the expectations prior to this? Right in line Holmoe powder was right in line with expectations. I think we were futures were looking for right around 5 to 6% lower. So we’ll call it 5.7% right in the box I think where some of the surprises came from were skim milk powder, skim milk powder.

00;03;49;24 – 00;04;15;19
Unknown
The futures were actually forecasting was going to be a little bit higher, and it came in 2.1% lower. When we calculate what is New Zealand skim milk powder looking like. And you know, as it compares to nonfat we would say New Zealand skim milk powder this morning came in at $1.11 almost 112. So a little bit lower out here on the medium heat.

00;04;15;20 – 00;04;47;07
Unknown
Europe was down to the 106 area. That puts the US significantly higher than the New Zealand and European price. We ended yesterday’s session at $1.17. But when we go over to this is where it gets a little bit dicey. On versus expectations AMF came in 5.2% lower. We were looking for 8.8% lower based on the futures, even though we were 5.2% lower.

00;04;47;09 – 00;05;14;25
Unknown
Came in a little bit better than expectations. Butter was looking for about 6% lower came in 2.5% lower. I don’t really know how you want to judge that. Lower is lower. And Phil’s book if you want to take a line from his logic. And I think that is going to prevail here today, I would just say the fats didn’t come in quite as negative, but then when we get over to the cheese side, cheddar came in flat and it’s going to come in at a big premium to the US cheddar price, right?

00;05;14;25 – 00;05;42;24
Unknown
It’s going to come in at right around $2.11. When we go over to mozzarella though mozzarella was the big winner today if you want to call it that. From a positive price standpoint it was up 6.7%. And that is going to have that number come in about $1.54. Now, there will be some people that look at that and say, well, if the mozzarella price is rallying, doesn’t that leave room for the rest of the US market to rally?

00;05;43;01 – 00;06;06;09
Unknown
And I’ll say maybe. And I don’t want to rule it out, but I would point out that the GDP mozzarella price over the last few weeks has come in lower than where we’ve seen the ex mozzarella and the try going to mozzarella price trading over in Europe. So I feels like the mozzarella price was simply coming up to where we were seeing prices.

00;06;06;09 – 00;06;29;06
Unknown
Other price indexes trade for mozzarella. So overall though a negative value I think the overall index is showing -4.4. And if someone were to say why is the GDP down for the ninth consecutive time, I would say, well, European prices are lower and a lot of these prices are just catching up to Europe. But the US prices lower too.

00;06;29;11 – 00;06;55;06
Unknown
And if we were to sum it up and say, why are all three regions of the world under so much pressure right now? I think the word that I would settle on is supply. We just have a lot of milk supply here in the US. We have a huge amount of milk supply in the EU. New Zealand has a pretty substantial amount on a relative basis and now we’re starting to see South America pop up with some big numbers.

00;06;55;06 – 00;07;30;12
Unknown
So again, global dairy prices generally moving lower over a longer period of time. And I think all of that has to do with supply culling. That leads me to some questions for you. A lot of the curiosity that I get from folks across the industry is what happens to us. Milk production in an environment with lower milk prices here in the domestic market, lots of milk supply across the rest of the world, though that doesn’t necessarily make a ton of difference to a dairymen in Oregon or in western New York, for instance, at least on a day to day basis.

00;07;30;12 – 00;07;57;04
Unknown
But at what point do we start to see some of this supply length really impact dairies? I think that’s a great question, Kathleen. I think the thing that should really be said, and when this podcast comes out, producers are going to start to get their November milk check. And if you’re a producer who has class four exposure, then you are going to get class for priced off just about $14 milk.

00;07;57;06 – 00;08;15;02
Unknown
And that is a price to this low enough that it should impact your financial decision making, particularly if you get it for three months. Or maybe they’ll take six months, depending on the health of your business. But if you’re a producer whose balance sheet is based on class three Milk November, it’s going to come in higher than 17 bucks.

00;08;15;04 – 00;08;36;01
Unknown
And personally, from what I’ve been hearing from the producers I talked to in the West, $17 milk is not going to be sufficient to incentivize any kind of change in production levels. I think on one hand, it’s interesting to see in the past, class four producers were really not impacted by low prices for about the last four years, and that’s a significant portion of the country.

00;08;36;04 – 00;08;53;29
Unknown
And we had basically saw people really struggle in Idaho and Wisconsin that are pure class three. Now that dynamic is shifting, but again, I think if you’re looking at the milk prices producers are actually getting today, the signals are still pretty weak. The majority of dairy producers in the US. Maybe you have a better economist point of view, Kathleen.

00;08;53;29 – 00;09;16;06
Unknown
But we would say at the minimum take six months at the max. It can take what, 14 or longer if low milk prices to incentivize true culling. Yeah, I think you’re right, Colin, that it all depends on the severity and the depth of the margin squeeze on how long we can kick the can down the road. But to me, there’s a lot of curiosity and questions around.

00;09;16;06 – 00;09;42;29
Unknown
Certainly lower milk over feed margins could create some to belt tightening. But what is the role of risk management in maybe dampening some of the immediate impact of lower milk prices? Or at the same time, what is the impact of these higher beef on dairy calf prices? How is that ultimately influencing the numbers? It’s they’re great questions. Maybe some data that is interesting to our audience.

00;09;43;02 – 00;10;10;00
Unknown
We had first year heifers, first lactation heifers who were selling for somewhere around $3,300. And of course the beef market has moved a lot, but the milk market has moved a lot too. And those same cows are probably now worth more like 2000 at least. And in terms of future production, it’s clear that people are less willing to spend the money that they would have previously, whether that’s because the beef value of the cows is lower, or because the profit potential has is lower because of milk.

00;10;10;03 – 00;10;33;02
Unknown
But in terms of slaughter data or milk production statistics, or I would even say what anyone is hearing from a plant, it doesn’t sound like we’re really seeing the impact of culling decisions. And when you look at the numbers, it doesn’t seem like we should bring in. What about on the feed side? Clearly, U.S. dairy producers have had an opportunity this year to manage some risk on the feed going into 2026.

00;10;33;04 – 00;11;01;10
Unknown
Do you think that we could be in a position where feed could create a pinch point next year? Feed cost, that is, I think barring any major weather events or geopolitical issues, I don’t think so. One reason I say that is because we do have very abundant supplies of corn. Right now. We are a month removed from our January Yazdi report, where we will get our final harvest of the yield data from the US corn crop this last year, and everybody knows the crop was large.

00;11;01;10 – 00;11;25;07
Unknown
I just think the question is how big, right? The USDA currently has a 186 bushel per acre yield number forecast. I don’t know that anyone fully buys. It’s really going to be that large, but I don’t think it really has to be that large to see our balance sheet maintain around 2 billion bushels, because one of the things that I think a lot of folks are missing with this balance sheet right now is they are looking at a feed and residual use forecast that’s at 6.1 billion bushels.

00;11;25;07 – 00;11;47;14
Unknown
For reference, last year we had just a hair over 5.4 billion bushels in the year prior is a little bit over 5.8 billion bushels. So when we ask ourselves like what justification does the USDA have to have? Feed and residual used to be this high, I can’t find one because right now, by the end of 2025, the US will have imported a million fewer head of feeder cattle than a year ago.

00;11;47;14 – 00;12;06;18
Unknown
Our beef herd is still the smallest that it’s been in decades. Yes, the dairy herd is large, but not to the tune of an additional 600 million bushels of corn use over a year ago. And in fact, if you extrapolate the additional dairy head that we have on feed this year versus last year, it would only equate to about 50 million bushels of excess corn use.

00;12;06;20 – 00;12;24;03
Unknown
So even if we lose some yield off of this balance sheet in the coming report, I think there’s a lot of room to trim, feed and residual use, and it probably keeps this balance sheet compressed around 2 billion bushels. I think right now, with the news that we have in the marketplace today and keeps this core market very choppy, it keeps it very subdued.

00;12;24;08 – 00;12;43;11
Unknown
It’s going to take something fresh by way of news, to enter the marketplace, perhaps a South American weather issue, a planting issue in the spring ahead to probably drive corn prices north of five bucks. Well, a huge thanks for the team for joining me on today’s episode and sharing your thoughts with our listeners. Thank you, as always, to our media team for mixing and mastering.

00;12;43;11 – 00;13;02;03
Unknown
And thank you to the listener for joining us today. Subscribe to our channel on your favorite podcast platform to be the first to know about our new and exciting 2026 podcast lineup. And as always, if you’d like to learn more about how we help people manage risk, contact us at insights at Evercore AG. Happy holidays from the financial services team.