A roundtable trading strategy Q&A

The Milk Check

With the T.C. Jacoby & Co. trading team in the office for quarterly strategy huddles, we decided to record a special Q&A discussion for this month’s podcast episode. Each trader had the opportunity to ask a question of another trader, in order to gain some insight into expectations for the rest of 2022. Their discussions, with some questions sent in by customers and via LinkedIn, produced a discussion that spanned cheese pricing, international trade and tight butter markets — among a number of other topics.Yara is bullish nonfat, Diego and Don see potential for the U.S. to move in on some of Europe’s export business, and Jared doesn’t see where extra cream for butter churns east of the Rockies might come from. T3: Welcome everybody to this month's podcast, The Milk Check from T.C. Jacoby and Company. This month, we're going to take a different approach to the podcast. Seated around the table are most of the traders in our company. We are having our quarterly strategic planning meetings and huddles. As we talk about what we think markets are doing at this time and what we think maybe they're going to do for the rest of the year. And the approach I thought we would take is have each trader ask a question of another trader at the table of what are they curious about going on in the market. Not necessarily in the products that they focus on, but in some of the other products that we trade in the company. So I thought I'd start off. And I have a question for Yara. Mexico is the largest milk powder export market for the United States. What do you expect nonfat, dry milk sales to Mexico to be like for the remainder of the year, do you think they're going to be strong or weak and why? Yara: I think it's going to be a strong and the Mexican buyers is going to support and buy a more inverse in the second half of the year. Why? This is different reasons because all the milk that Mexico produced has been reduced because it has been reduced the production. Besides the deficit, We have the production milk in Mexico. So I think it's about 3% went down the production mill in Mexico, and the weather is so hot so the cow doesn't produce more milk. Besides Mexico has been making product for export like infant formula that's increase about 45% exportation to another countries. And one of the countries, it was United States. So that's just another thing. And the other one is because Mexico has been producing products to export to another countries like whole milk powder, known federal milk, cream, butter, and they export to South America, and in Caribbean, in Asia also, the whole milk, they sell it. So the exportation has been increasing inclusive cheese because they has been exploring cheese too. So that's the main reason that I'm thinking that the Mexican customer are going to start buying more products the second half of the year. T3: Are you telling us you're bullish, nonfat, dry milk for the remainder of the year? Yara: Well, you know what? The basic consumer guys increase all the costs because to fill in the cows, all the input, like a corn and soybean has been increasing. So the inflation has been increasing too between 10 to 15% everything. So I think the price is going to be... T3: You think things are going to stay strong. Yara: Yeah, I think it's going to stay strong. T3: That's awesome. Good deal, Josh. I'm going to go to you next. You have a question for someone. Josh: Oh man. I want to break the rules already though. Like, I don't like the one person question, but I'm going to start. I think this actually kind of goes to both Bri and Don, and this didn't come for me specifically, but I think it was a really good question. Someone responded on LinkedIn with this one. The question specifically was over the past couple years, we've seen a lot of additional cheese production capacity in the US. Additionally, we're expecting more capacity to come online over the next year or two,