WEBVTT
00:00:11.599 --> 00:00:12.800
Welcome to Cap EDC.
00:00:12.880 --> 00:00:29.600
Here's the top stories of Collector Daily today, which is Friday, October 16th, and we're going to talk about how protein demand is impacting whey prices, rising cost of beef replacement heifers, and how that's impacting the herd rebuild and what to consider before taking grain to town this fall.
00:00:29.839 --> 00:00:30.960
So let's get to it.
00:00:31.120 --> 00:00:43.280
Starting off in dairy with an article on dairy herd management, protein powder demand has been the front and center focus for dairy markets lately, despite supply measure, as continued high milk production looms over the markets.
00:00:43.439 --> 00:00:55.920
Over the last week, dry whey climbed to 88.5 cents per pound in the spot market Tuesday, crushing the all-time high from February 2022, which was 86.3 quarter cents.
00:00:56.159 --> 00:01:08.000
All while grade A non-fat dry milk spot price inched its way higher to 227 per pound, approaching its all-time high of 229.5 set just this spring.
00:01:08.560 --> 00:01:09.359
While the U.S.
00:01:09.519 --> 00:01:22.560
has an abundance of raw milk supply, nonfat dry milk supply is currently limited due to high demand for high protein products like whey and ray protein, diverting milk to class three.
00:01:23.120 --> 00:01:32.560
Export demand has also been strong due to the nonfat dry milk lows set back in July and August, causing many countries to secure purchases with the U.S.
00:01:32.719 --> 00:01:37.040
at that time, as there are many areas of the world seeing dairy shortages.
00:01:37.280 --> 00:01:53.680
Milk has also been diverted to class one for schools, causing a supply chain bottleneck as the market tries to figure out what school demand will be after the government started allowing whole milk back in schools, which left less product available for drying.
00:01:54.079 --> 00:02:06.560
Protein-rich foods have been the main focus as they generally have the highest margin rates, so manufacturers have placed a higher priority on sending milk supplies that direction and only leaving what's left for drying.
00:02:06.799 --> 00:02:12.800
This has been the perfect storm to allow nonfat dry milk to rally near historic highs.
00:02:13.360 --> 00:02:19.680
The only caveat to watch with nonfat dry milk is the old adage that high prices cure high prices.
00:02:19.840 --> 00:02:20.879
Currently, the U.S.
00:02:21.039 --> 00:02:25.599
is significantly higher priced than many alternative international competitors.
00:02:26.639 --> 00:02:33.759
And as we saw when the record high was placed in May, the market came down just as fast, if not faster, than it can rally.
00:02:34.879 --> 00:02:42.879
Main message is that GLP1's diet culture and world demand have put protein consumption on the forethought of consumers.
00:02:43.120 --> 00:02:48.159
New product creation as well as marketing has developed a niche market that's here to stay.
00:02:48.400 --> 00:02:50.080
High milk production in the U.S.
00:02:50.319 --> 00:02:55.759
allowed for innovation to create new demand for products that will hopefully be here to stay.
00:02:58.080 --> 00:03:08.719
Switching over to cattle markets, as cattle producers weigh herd expansion, rising replacement female costs could make rebuilding more challenging, according to University of Nebraska economists.
00:03:09.199 --> 00:03:19.840
Their annual beef cow replacement forecasts reported cow costs have increased as much as 300 bucks a head on average, raising the investment required to purchase replacement females.
00:03:20.319 --> 00:03:29.199
Randy Sayner, who's a UNL uh extension educator, says profitability depends on having a positive difference between all revenues and costs.
00:03:29.439 --> 00:03:35.280
So we want to make sure that a cow pays for herself so when the revenues come, we're not pulling from them.
00:03:35.680 --> 00:03:44.960
He said producers need to avoid spending too much on replacement heifers or cows this fall because those purchases can affect profitability for several years.
00:03:46.960 --> 00:03:56.479
Finishing up in commodity markets, we've seen a recent price setback in the grain complex, with corn, soybeans, and wheat all making a downward turn in late September and early October.
00:03:56.639 --> 00:04:04.639
This may be providing an opportunity to retain ownership of forward-sold bushels or bushels that will be sold and delivered at harvest.
00:04:04.960 --> 00:04:08.240
Often people ask for the best way to re-own.
00:04:08.400 --> 00:04:16.160
Unfortunately, there probably is no best way, as best is relative to the risk tolerance of the buyer as well as potential return.
00:04:16.639 --> 00:04:25.759
What may be termed advanced strategies, such as bull call spreads, long fences, and racial call spreads have merit and should be discussed with your advisor.
00:04:26.240 --> 00:04:33.920
Ag is the one industry in the world that allows the participant to sell the product they're producing and have a means to retain ownership.
00:04:34.160 --> 00:04:38.800
So ownership can be a fixed risk position or unlimited risk.
00:04:39.040 --> 00:04:45.920
For example, a call option provides the buyer the right, not the obligation, to be an owner of the underlying futures.
00:04:46.160 --> 00:04:56.240
Some people prefer using futures, on the other hand, which is very straightforward because when you buy a futures contract, position either goes up in value or down.
00:04:56.720 --> 00:05:01.680
Either make money or lose money depending on where everything settles out.
00:05:02.000 --> 00:05:10.560
If you believe prices may go higher and want to retain ownership, then determine what type of risk you're willing to incur and develop a strategic ownership strategy.
00:05:11.040 --> 00:05:12.800
Knowledge, of course, is power.
00:05:12.959 --> 00:05:17.040
Invest time to understand the pros and cons of futures and call options.
00:05:17.279 --> 00:05:23.680
Discuss your goals, tolerances, and needs with your advisors so they can help you fine-tune a strategy that's right for you.
00:05:24.000 --> 00:05:31.279
Set targets to exist in advance so if your goals are achieved, you have an exit already in place to reward your position.
00:05:32.959 --> 00:05:34.000
Well, that's all for now.
00:05:34.079 --> 00:05:35.279
As always, thanks for tuning in.
00:05:35.360 --> 00:05:37.600
If you found it useful, please drop me a comment.
00:05:37.839 --> 00:05:43.759
Check out the lecture at daily.com for all the stories behind these topics, and don't forget to sign up for a newsletter.
00:05:44.000 --> 00:05:48.079
I'll be back Monday with more business news across Africa Financial Markets.
00:05:48.879 --> 00:05:51.279
I'm Mike Opperman and goodbye for now.
00:00:11.599 --> 00:00:12.800
Welcome to Cap EDC.
00:00:12.880 --> 00:00:29.600
Here's the top stories of Collector Daily today, which is Friday, October 16th, and we're going to talk about how protein demand is impacting whey prices, rising cost of beef replacement heifers, and how that's impacting the herd rebuild and what to consider before taking grain to town this fall.
00:00:29.839 --> 00:00:30.960
So let's get to it.
00:00:31.120 --> 00:00:43.280
Starting off in dairy with an article on dairy herd management, protein powder demand has been the front and center focus for dairy markets lately, despite supply measure, as continued high milk production looms over the markets.
00:00:43.439 --> 00:00:55.920
Over the last week, dry whey climbed to 88.5 cents per pound in the spot market Tuesday, crushing the all-time high from February 2022, which was 86.3 quarter cents.
00:00:56.159 --> 00:01:08.000
All while grade A non-fat dry milk spot price inched its way higher to 227 per pound, approaching its all-time high of 229.5 set just this spring.
00:01:08.560 --> 00:01:09.359
While the U.S.
00:01:09.519 --> 00:01:22.560
has an abundance of raw milk supply, nonfat dry milk supply is currently limited due to high demand for high protein products like whey and ray protein, diverting milk to class three.
00:01:23.120 --> 00:01:32.560
Export demand has also been strong due to the nonfat dry milk lows set back in July and August, causing many countries to secure purchases with the U.S.
00:01:32.719 --> 00:01:37.040
at that time, as there are many areas of the world seeing dairy shortages.
00:01:37.280 --> 00:01:53.680
Milk has also been diverted to class one for schools, causing a supply chain bottleneck as the market tries to figure out what school demand will be after the government started allowing whole milk back in schools, which left less product available for drying.
00:01:54.079 --> 00:02:06.560
Protein-rich foods have been the main focus as they generally have the highest margin rates, so manufacturers have placed a higher priority on sending milk supplies that direction and only leaving what's left for drying.
00:02:06.799 --> 00:02:12.800
This has been the perfect storm to allow nonfat dry milk to rally near historic highs.
00:02:13.360 --> 00:02:19.680
The only caveat to watch with nonfat dry milk is the old adage that high prices cure high prices.
00:02:19.840 --> 00:02:20.879
Currently, the U.S.
00:02:21.039 --> 00:02:25.599
is significantly higher priced than many alternative international competitors.
00:02:26.639 --> 00:02:33.759
And as we saw when the record high was placed in May, the market came down just as fast, if not faster, than it can rally.
00:02:34.879 --> 00:02:42.879
Main message is that GLP1's diet culture and world demand have put protein consumption on the forethought of consumers.
00:02:43.120 --> 00:02:48.159
New product creation as well as marketing has developed a niche market that's here to stay.
00:02:48.400 --> 00:02:50.080
High milk production in the U.S.
00:02:50.319 --> 00:02:55.759
allowed for innovation to create new demand for products that will hopefully be here to stay.
00:02:58.080 --> 00:03:08.719
Switching over to cattle markets, as cattle producers weigh herd expansion, rising replacement female costs could make rebuilding more challenging, according to University of Nebraska economists.
00:03:09.199 --> 00:03:19.840
Their annual beef cow replacement forecasts reported cow costs have increased as much as 300 bucks a head on average, raising the investment required to purchase replacement females.
00:03:20.319 --> 00:03:29.199
Randy Sayner, who's a UNL uh extension educator, says profitability depends on having a positive difference between all revenues and costs.
00:03:29.439 --> 00:03:35.280
So we want to make sure that a cow pays for herself so when the revenues come, we're not pulling from them.
00:03:35.680 --> 00:03:44.960
He said producers need to avoid spending too much on replacement heifers or cows this fall because those purchases can affect profitability for several years.
00:03:46.960 --> 00:03:56.479
Finishing up in commodity markets, we've seen a recent price setback in the grain complex, with corn, soybeans, and wheat all making a downward turn in late September and early October.
00:03:56.639 --> 00:04:04.639
This may be providing an opportunity to retain ownership of forward-sold bushels or bushels that will be sold and delivered at harvest.
00:04:04.960 --> 00:04:08.240
Often people ask for the best way to re-own.
00:04:08.400 --> 00:04:16.160
Unfortunately, there probably is no best way, as best is relative to the risk tolerance of the buyer as well as potential return.
00:04:16.639 --> 00:04:25.759
What may be termed advanced strategies, such as bull call spreads, long fences, and racial call spreads have merit and should be discussed with your advisor.
00:04:26.240 --> 00:04:33.920
Ag is the one industry in the world that allows the participant to sell the product they're producing and have a means to retain ownership.
00:04:34.160 --> 00:04:38.800
So ownership can be a fixed risk position or unlimited risk.
00:04:39.040 --> 00:04:45.920
For example, a call option provides the buyer the right, not the obligation, to be an owner of the underlying futures.
00:04:46.160 --> 00:04:56.240
Some people prefer using futures, on the other hand, which is very straightforward because when you buy a futures contract, position either goes up in value or down.
00:04:56.720 --> 00:05:01.680
Either make money or lose money depending on where everything settles out.
00:05:02.000 --> 00:05:10.560
If you believe prices may go higher and want to retain ownership, then determine what type of risk you're willing to incur and develop a strategic ownership strategy.
00:05:11.040 --> 00:05:12.800
Knowledge, of course, is power.
00:05:12.959 --> 00:05:17.040
Invest time to understand the pros and cons of futures and call options.
00:05:17.279 --> 00:05:23.680
Discuss your goals, tolerances, and needs with your advisors so they can help you fine-tune a strategy that's right for you.
00:05:24.000 --> 00:05:31.279
Set targets to exist in advance so if your goals are achieved, you have an exit already in place to reward your position.
00:05:32.959 --> 00:05:34.000
Well, that's all for now.
00:05:34.079 --> 00:05:35.279
As always, thanks for tuning in.
00:05:35.360 --> 00:05:37.600
If you found it useful, please drop me a comment.
00:05:37.839 --> 00:05:43.759
Check out the lecture at daily.com for all the stories behind these topics, and don't forget to sign up for a newsletter.
00:05:44.000 --> 00:05:48.079
I'll be back Monday with more business news across Africa Financial Markets.
00:05:48.879 --> 00:05:51.279
I'm Mike Opperman and goodbye for now.
