The Milk Check

Milk production is up 4.2% year over year, components are climbing and prices are falling. As holiday orders wrap up and we head into the long winter, The Milk Check team digs into whether dairy markets have already found a floor, or if there’s still another leg down to go. With milk products everywhere (except for whey), the Jacoby team shares where the market is and where we’re going. They churn through: Butter at $1.50 and what heavy cream and higher components mean after the holidays Why cheese feels like a calm before the storm, and how far Class III could grind lower Nonfat and skim: long milk, growing inventories and buyers shopping the cheapest origin Why whey proteins are the outlier, with tight supply, strong demand and GLP-1 tailwinds Global milk growth, clustered demand (Ramadan, Chinese New Year, Super Bowl) and who blinks first between the U.S. and Europe In this episode of The Milk Check, host Ted Jacoby III is joined by Joe Maixner, Jacob Menge, Diego Carvallo, Josh White and Mike Brown for a rapid-fire market session on butter, cheese, nonfat and proteins. Listen now for The Milk Check’s latest market read on butter, cheese, nonfat and whey. Got questions? We’d love to hear them. Submit below, and we might answer it on the show. Ask The Milk Check Ted Jacoby III: Welcome back, everybody, to The Milk Check podcast. Today we’re gonna have a market discussion. It is November 10th. We are in the last couple of weeks of the quote-unquote busy season, starting to get a feel for what we think is gonna happen to dairy markets as holiday orders are filled, and we transition into the long-term period of the year. In the last few weeks, we’ve actually seen prices drop, but it feels like butter’s kind of dropped down to about a $1.50/lb and seems to find at least a brief floor. We’ll talk to Joe and find out if Joe thinks we’re gonna stick around here for a while. The cheese market was up in the $1.80s/lb. It’s dropped to a little below $1.70, starting to hit a little bit of resistance. Jake will share with us a little bit about what we think is happening with cheese going forward. Nonfat dropped a little bit down to [00:01:00], about what Diego, about a $1.10/lb and had a little bounce off its floor. Meanwhile, the whey complex just continues to go up. We’ll check in with Josh and find out what’s going on there. Well, let’s go ahead and start with milk production. We just got released today, the September milk production, and it says it’s up 4.2%, which is a very, very big number. It’s November; milk is longer than it usually is this time of year. Usually, it’s quite tight, and it’s not quite tight, but I wouldn’t call it long. However, all the signs are there that once we get past the fall holiday order season, milk could get quite long. If September milk is up 4.2%, I think it’s safe to say that if that continues, we will be quite long milk as we transition from the typical seasonal tightness of the fall into the winter and the flush of the spring. 4.2% is a big number, and that’s not even taking into account the fact that the solids in the milk are up as well. That’s not the kind of tone that a dairy farmer wants us to set as we’re talking about what supply and demand looks like, but there’s a lot of milk out there, [00:02:00] Joe, does that mean there’s a lot of butter out there, too? Joe Maixner: Well, there’s still a lot of butter out there; sounds like there’s going to be a lot more butter coming soon. If milk’s up 4%, cream was heavy all of last winter and into last Spring, extremely heavy. If we have higher components, more milk, and we’ve got a full amount of milk coming outta California as well after coming off of bird flu last year, there’s just gonna be that much more cream in the system and more getting pushed back into the churns. So, it’s a very good possibility that we’re gonna go even lower than where we currently are. Volume seems to be trading well. The cream demand has been fairly steady, going into cultured products and the shorter shelf-life products. Cream’s still long, but it’s not swimming yet. Ted Jacoby III: Will we hold this $1.50 area through Thanksgiving, you think? Joe Maixner: Yeah, it seems like we’ve hit a spot where buyers are willing to step in. So, there’s a good chance that we could hang around this $1.50 area for the next couple of weeks. Once the last little spurt of holiday demand is over, we’re gonna take another leg lower. Ted Jacoby III: Okay. Jake, what about [00:03:00] cheese? Jacob Menge: I think we had a little reprieve from some cheese bearishness with the holiday demand. It’s tough, though, especially with this wall of milk that’s headed our way. Does it seem like the bottom’s ready to drop out? Probably not yet. But it still seems like it’s a possibility. It almost seems like the call before the storm. Ted Jacoby III: What you’re saying is: we’ve already dropped quite a bit, but we’re in typical low points, but it’s possible, considering the amount of supply coming our way, that there’s still another cliff to negotiate, and we could go a lot lower when it comes to Class III milk and cheese prices. Jacob Menge: If you zoom out a ways, going back to mid-2022, we’ve really not liked to go below that $1.55 level on futures. We’re kind of at another support level at this $1.65. Those seem like our two support areas, historically, for the last 3, 4 years. So, it’s probably gonna be one of those grinds lower if we move lower from here, versus that $1.85 to $1.65 was almost an air pocket drop. [00:04:00] It seems like the market’s gonna have to earn it if it moves lower from here, but it does seem like a possibility. Ted Jacoby III: When we get down to these levels, this usually tends to form the floor, and if we have so much cheese out there and so much milk out there that we’re gonna go lower from here, it’s probably not an air pocket drop; it’s probably a grind lower from here. Jacob Menge: Yeah, I think our lows, on the futures, for the past 4 years have been that $1.55. Don’t quote me on that, gimme a couple of cents on either side of that. But that means we got a dime from here to hit those five-year lows, you know, besides COVID. There’s a lot to be said for technical trading at those levels. So, it would take a big fundamental kind of wave supply to get us to crack that. Ted Jacoby III: Got it. Thank you. Diego. What about nonfat? What’s the international market doing? We know we have a lot of milk in North America. We have a lot of milk everywhere. And what does it mean? Diego Carvallo: Customers are also seeing the data, and it seems like they’re in no rush to buy nonfat. Right. Nonfat seems to be the product that is 00:05:00 consistently available. We haven’t seen a very tight market in several years. So, it seems customers are more concerned about other products like WPCs or maybe cheese, other products besides nonfat. So, they’re staying very hand-to-mouth. They’re being very flexible when it comes to origin and just buying spot and from the origin that offers them the cheapest skim milk powder delivered price, which, in most cases, for the past few months, has been either European or New Zealand product because of the shipment time, transit time, and tariffs. Ted Jacoby III: Has the inventory in the U.S. been building as a result? Diego Carvallo: Yes, it has, Ted. Yep. Inventory has been building. I was looking into the milk production numbers for September. California was relatively stable compared to the previous year. I think we grew by 2.5% versus the previous year. But the strong impact from avian [00:06:00] influenza was actually in October. So, that’s when we might see a big jump between California production for 2024 and California production for 2025. So, I thought the Milk Report was pretty bearish for nonfat. Next month could be as bearish or even more. I still believe that we’re gonna see a lot of product going into the dryers, and that’s gonna add pressure, and that’s gonna increase inventories for U.S. products. Ted Jacoby III: What does milk production look like in Europe? Diego Carvallo: They’re actually up quite a bit. I think their September number was also stronger than expected. I can’t recall the exact number, but it was stronger than expected, even though they have cut down on the farmer price, the FrieslandCampina, which is the number one benchmark. It still seems like, with corn moving lower, there’s still a number that incentivizes more milk production. For the next few months until we see a stronger cotton price, we’re gonna see plenty of milk from the U.S. and from Europe. Ted Jacoby III: [00:07:00] Okay, thanks. Appreciate it, Diego. Josh, so what about the protein market? Josh White: Yeah, same story. I don’t know why everybody else is having so many problems with their products because whey proteins are in demand and it continues to be very strong. WPC 80, WPI demand is outpacing supply. People are trying to book forward and can’t. By all reports, the demand on the consumer level remains pretty good. It’s a bit of an outlier. It’s definitely a mystery. A lot of the discussion centers around GLP-1 adoption in the U.S. Compared to a year ago, I think I read this morning, something like 12% of Americans are allegedly using GLP-1-related drugs for weight loss. Assuming that’s an accurate statistic, that’s a noteworthy number of people. There was a lot of discussion last year that as people come on things like Wegovy and Ozempic, at what moment do we mature to the point that people beginning their cycles of taking the drugs equal those coming off of those drugs? There’s just been a lot of headlines about more affordable access to these types of products. If that continues, that shifts this curve even a little bit further up. [00:08:00] What can reverse that trend or slow down the demand for the whey protein side? I think it takes a production response. I can imagine that any manufacturer that’s making whey-related

Butter’s slipping, cheese feels heavy, but the protein complex is flexing hard. In this Milk Check market roundtable, Ted Jacoby III brings together Diego Carvallo, Jacob Menge, Joe Maixner and Josh White to unpack what’s driving the mixed messages in the markets. Listen to hear: Why butter could fall below $1.50 before year-end How global health trends are powering whey protein demand Why cheese exports are getting harder to move Whether dairy’s bearish mood could trigger a short squeeze It’s a classic Milk Check market roundtable. Listen now to The Milk Check episode 86: Bears in Butter, Bulls in Protein. Got questions? Got questions for The Milk Check team? We’ve got answers. Submit your questions below and we’d be happy to get back to you or answer your question on the podcast. Ask The Milk Check Ted Jacoby III: Hey everybody, welcome to The Milk Check. We’re gonna have an old-fashioned market discussion today. We’ve got a lot going on in dairy markets right now. It’s the middle of October. Markets are moving, but not in the direction that they usually move in October. It seems like everything wants to go down right now, and we’ll start with the product that seems to be most bearish today, the one we’ve been talking about a lot lately. Joe, what is going on with butter? Joe Maixner: Butter is interesting today because we’re actually up. Long-term Sentiment really hasn’t changed. There’s not really a whole lot new to talk about on the butter. Markets aren’t linear, so we’re gonna have these choppy trades here and there where some buying comes in and things get pushed. But there’s plenty of butter still out there. There’s plenty of butter being offered out there. Right now, there’s a good amount of demand, but we’re anticipating that that’s fairly short-lived. We’ve got [00:01:00] holiday demand for another couple of weeks here, and then that should probably tail off. We’ll see what happens after that. Ted Jacoby III: So we’re a $1.60 and a $1.65 today. It’s Friday, October 10th. Felt like a little bit of a dead cat bounce after really dropping pretty hard earlier in the week. Is that what it is? Is it a dead cat bounce? Joe Maixner: I wouldn’t call a quarter of a cent on spot a dead cat bounce. The moves on the futures are 3¢ to 5¢ moves with a 10¢ plus move intraday. There’s no shortage of volatility. Ted Jacoby III: What do you think will be happening in the next month? You think maybe we’ll bounce off this, go up a little bit for the next couple of weeks? Then all the orders that need to get filled for the holidays get filled? And then what? Joe Maixner: I think we take another leg lower. I think we’ll be sub $1.50 before the end of the year. Ted Jacoby III: I agree. We’re at prices so low that a year ago it would’ve been really hard to imagine we’d ever get here. And the idea that we could even go lower from here just seems unbelievable, but that’s the market we’re in right now. Joe Maixner: Less than 24 months ago, we were all talking about $4 butter [00:02:00] coming, and there was not enough fat to keep up with demand. And now we’re potentially going to the $1.40s. There’s so much fat that we can’t consume it all. But we also have to remember that this is all cyclical, and at some point, these low prices are gonna cure the low prices. Ted Jacoby III: Meanwhile, let’s talk a little bit about protein. The more bearish we get on butter, the more bullish the protein markets seem to get. What’s going on in the protein markets right now? Josh White: I think we gotta define which we’re talking about with protein because if it’s protein with over 34% protein, it’s pretty hard to find, particularly with the whey proteins. If it’s 34% or under, most unstandardized non-fat dry milk is quite a bit above 34%, so maybe let’s say 40%, it seems like we can’t find a bottom. So, really, two very different markets at the moment. So, if we start on the high end of the market, we’ve experienced over the past two years now a continued move higher and the appreciation per unit [00:03:00] protein for whey protein products, in particular WPC 80 and WPI. We want to credit certain things as catalysts, like GLP-1 adoption in the U.S., but I think we gotta be even bigger than that.  Health and wellness are worldwide. We’re seeing strong growth in demand. People are paying attention to what they eat. Clearly, they’re concluding that whey proteins supplemented in many, many products is a good way of increasing your protein intake. That doesn’t seem to be changing, and although we’re talking about very, very high prices in the U.S., Europe also has very, very high prices. Josh White: And as of late, it’s leaving additional markets, other markets, the import markets for these products, wanting more. We’ll see an additional load or two of product available in the U.S., and it’s sold to a U.S. customer before the international customer even gets a look at the price. I don’t see that changing. And the reason I can confidently say that is because we’ve got customers who are looking for purchases further out than they traditionally would. Normally, that’s a quarterly [00:04:00] traded product. About a month from now, in November, that’s typically when we’d be talking about Q1 prices, and as of today, we’ve got customers that are asking for any product available and willing to commit to the second quarter of 2026. In addition to that, there are things that have disrupted the supply chain. In 2025, we had several new facilities coming online, and not all of them have come online as expected, so we’re anticipating some additional supply of WPC 80 and WPI. Some of it is materialized, and some of it has not yet. But this isn’t a supply-shortage-driven issue. This is truly a demand, new demand creation, and we’re seeing that in a lot of different areas. We’re seeing incremental growth in the normal segments like sports, nutrition, shakes, things like that. We’re seeing inquiries on a weekly basis from consumer packaged goods products, looking to infuse protein into some of their traditional snack foods and products like that. Even this week, the headlines coming out like [00:05:00] Starbucks introducing new protein coffees. These are all new drivers. This is all happening at the same time that we’re seeing increasing demand for acidified whey proteins going into beverages. There’s just more demand right now than we have supply. It’s gonna take the market a while to cure that issue. We have a lot of cheese production in the U.S., so it’s not an issue that we don’t have the whey solids available, but do we have enough processing of these high whey protein products? Not yet. Also, when you’re in a very, very tight market, just like Joe mentioned, “low prices will cure low prices,” at some moment, lack of supply, high prices will cure high prices. I’m not sure how that’s gonna shake out as we go into 2026, but right now it feels like, at least for the first half of the year, we’re gonna remain very, very tight whey proteins. Now let’s shift down the complex a little bit. Anybody who can’t afford to pay for WPI with these new applications is looking to trade down. WPC 80 is, as mentioned, very, very firm [00:06:00] and in very, very tight supply. Those that might have traditionally used WPC 80, maybe not instantized WPC 80, but regular WPC 80, are finding that they can’t compete with the new demand creation in that category, and they’re trading down. That’s already impacting alternative proteins. We’re seeing more inquiries for vegetable protein and other products in high concentration. The other half of that story right now is we are big producer in this country, traditionally of WPC 34 and then shifting out of the way complex into the milk protein complex, we are increasing our production of MPC 70s, MPC 85, MPI, but we still make a lot of non-fat dry milk, and that is a totally different story. Diego Carvallo: When it comes to the non-fat complex, I think it follows the same story as most of the other products. There’s a lot of milk in the U.S. and in other milk sheds, and a lot of that product is ending up in non-fat or skim. We’re expecting that the price during the [00:07:00] first quarter of next year is gonna be heavily under pressure because the U.S. is probably gonna have 10% or 15% more nonfat production than it had in 2024 just because of what happened in California, right? It’s almost inevitable unless we go into a steep discount to European and New Zealand products that we start building inventory. Because Mexico itself cannot sustain the U.S. from building inventories if we have such growth. A lot of discussion around how much milk are the cheese plants gonna take out of that strong growth that we’re seeing? And as a summary, the conclusion where we have arrived is that even with the cheese plants growing and taking 3% to 4% more milk this year, we’re still gonna have double digit growth in milk availability and milk going into the dryers. Yeah, definitely the picture is not bullish. Prices could go and test the $1, maybe $1.05 during the flush [00:08:00] or maybe before the flush. And yeah, hopefully after that we see a demand reaction, demand creation, and some multi-nets, just building length, some traders building length and inventory starting to stabilize or move lower. When it comes to the MPCs, what Josh has mentioned is something that we are already seeing. I was at a trade show in Mexico this week, Food Tech, and I had a very interesting interaction with a customer where they told me that they were in desperate need for WPC 80 and because nobody was able to offer a spot load, because most of the loads are staying domestic. Because it’s easier obviously, to sell to a domestic customer than an international customer. They were desperately trying to buy something and when I mentioned that maybe there are some other options for them, maybe better protein or MPC, they immediately jumped and they were very proactive and ve

Does perfect weather mean bad news for dairy? In this episode of The Milk Check, Ted Jacoby III and the Jacoby team welcome guests from Cefetra Dairy, Henk-Jan Bouwman, Head of Account Management; Martijn Goedhart, Managing Director; and Veljko Perovic, Commodity Market Analyst and Derivatives Trader. Together, we unpack why the world is swimming in butter and what it means for producers, traders and processors heading into 2026. You’ll hear: Why too much 80% salted has the U.S. sloshing in inventory How Europe went from record highs to €2,000-per-ton losses When demand might finally catch up with supply Click play below and listen now to The Milk Check episode 84: Swimming in Butter – Global Insights from Cefetra Group. Got questions? Got questions for The Milk Check team? We’ve got answers. Submit your questions below and we’d be happy to get back to you or answer your question on the podcast. Ask The Milk Check Ted Jacoby III: Welcome everybody to The Milk Check, a T.C. Jacoby & Co. podcast. We have a really exciting episode today. We are going to be discussing the U.S. and European butter markets and how that’s going to affect global butter supply, global butter demand, and obviously price. We are joined today by our good friends from Cefetra Dairy. We’ve got Martijn, Henk-Jan, and Veljko from Cefetra Dairy. Really looking forward to this discussion. Joe, we’re gonna start with you. What’s going on with the U.S. butter market? We’ve just dropped in the last two months, what, 60, 70¢? I feel like the bottom just dropped out. What’s been driving this, and how’s this gonna play out going forward? Joe Maixner: Well, long story short, there’s too much 80% salted sitting in inventories, both in trader’s hands and in manufacturer’s hands. There was a lot of product built earlier in the year when there was a great carry in the market [00:01:00] and when cream was plentiful. All of that product is coming back to the market because cream is still plentiful and manufacturers aren’t needing it for micro fixing. Demand has been good, but not great. Ted Jacoby III: Is it safe to say that even if we’re having good butter demand in the U.S. right now, it doesn’t compare to the increase in supply we’re dealing with? Joe Maixner: Absolutely. We’re so much higher year over year on fat component and milk production that we just physically can’t consume as much butter as we’re producing. Ted Jacoby III: Mike Brown, my question for you is this, we’ve come down from $3.50 two years ago, $2.50 earlier this year, now we’re at a $1.75. We’ve talked a lot about on this program how the genetics have dairy cows producing a lot more butterfat than they have in years past, and that’s a trend that has really changed the supply side dynamic for butterfat in the U.S. At a $1.75, does that trend change? Mike Brown: The genetic trend of course won’t change ’cause it’s permanent . People have been making decisions to improve fat content of milk for a long, long time. It’s been [00:02:00] emphasized because of the high value of fat. And so it’s already built into not only the current dairy herd, but the animals that will be replacements over the next two or three years. On the feeding side, that’s another story, but most folks I talk to say a $1.50, $1.70 fat probably isn’t gonna make a lot of change in feeding and management on a dairy farm. You may see some of those higher expensive fat additives that are used to increase fat used a little less heavily, but the trend overall will be there. Will the rate of gain continue to be as high? I think is a good question, but I don’t think the trend toward gaining fat’s gonna change certainly in the next two, three years. Ted Jacoby III: So, this is a question for both Mike and Gus. One of the rumors I’ve heard is that there have been some raw milk buyers out there who have been talking about putting caps on butter, fat percentage in milk, or at least what they’ll pay for. If that does happen, is that going to affect the increases in butterfat percentages in the milk? Gus Jacoby: I haven’t seen anything but your cheese make yield formula pay prices have some sort of discount for fat [00:03:00] at those higher levels. That’s the only thing that I’ve really noticed in the industry that’s in some way penalizing that increased fat in milk production. Other than that, I’m not aware of anybody who’s discounting fat in any other ways. Mike Brown: What I’ve seen is consistent with what Gus has seen so far, but there’s lots of things going on in the background. Federal Order fat is priced off the Grade A butter market, and that price is what it is. Most cheese plants can’t begin to recover that value of fat, particularly if they’re in the spot market with any extra cream or certainly with whey cream. So, they’ve been losing money. I particularly have seen out West, where the added value for the extra fat has been decreased. There’s plants looking at: should we be pricing it off what our whey cream is worth rather than the butter market? ’cause that’s more what the value really is. The other thing you’re seeing, I think, is even within formulas, should we be deflecting from fat a bit and putting more weight on protein because that’s what we really need to make the cheese. Not necessarily lower the price, but try to send some signal to producers to focus more on protein. ’cause the focus has certainly been [00:04:00] on fat with the high-fat markets. Most of your cheese plants cannot recover that value, particularly when you get fat that’s more than 130%, 140% the price of cheese. When butter gets that high, it’s a real money loser . Ted Jacoby III: Joe, one last question you before we bring our friends from Cefetra into the conversation.  Milk production is up, percentage of butterfat in the milk is up. Looks like we’re gonna have even more butterfat next year than the excessive amount we had this year. What do you anticipate from this butter market over the next 3, 6, 9 months? Are we at the bottom now? Can we go lower? Joe Maixner: We probably need to go lower before we stabilize and rebound. I personally don’t think that we see a two in front of the butter price before second half of twenty six. Ted Jacoby III: that’s an answer I can live with. I think dairy farmers can live with it probably at this point, too. They’d love to see a 2 in front of the butter market. Having said that, it’s safe to say we’re swimming in butter right now. We’re swimming in butterfat on this side of the pond. Let’s switch to the other side of the pond. We’re seeing record-high butter prices as recently as nine months ago. [00:05:00] What’s happened since what’s going on right now in Europe when it comes to butter? Martijn Goedhart: I think what’s happened here is that we were underwhelmed by the output of milk in general in the first half of the year, driven by the aftermath of some diseases. That pushed prices up to record high levels, especially on the fat side. At some point in time, we saw the spread between EU and U.S. butter widening. That also made us buy some U.S. butter for import into Europe. And that coincided with production going up, driven by good margins and cheese hampering a bit. That basically gave us our perfect storm. In the last three months, we lost about €2,000 of value per ton on the butter, which is huge. And this is still lingering on because just like in the U.S., we almost call it like a second peak in terms of output because some cows started calving later due to the blue tongue aftermath. So, we definitely have more milk than in a normal season. This caught us a bit by surprise. That also means that now the liquids are trading below the commodity equivalent, which is also unusual for the time [00:06:00] of year. I feel like we’re in a perfect supply storm at the moment because it doesn’t matter which region you look at, everything is looking absolutely perfect, and not even only from the milk side, but also from the bulk commodity side and vegetable commodities. That also doesn’t help the sentiment, makes buyers wait, makes suppliers look for buyers because they also don’t want to store it. Supply pressure is still here. We stabilized a bit. But that’s what happened, basically. Ted Jacoby III: So, if I’m hearing you correctly, in Europe right now, we’re getting perfect weather. Grain feed supplies are really good, therefore, we’re producing more milk. By the way, the same thing’s happening here in the U.S., and I’m pretty sure New Zealand’s in a pretty similar boat. They’re starting up their season and it’s going pretty smoothly so far.  We’re gonna have a lot of milk this year. A lot of milk solids, a lot of butterfat. That also means we’re gonna have a lot of grain, so we’re gonna be able to feed all the cows, all they need to be fed. Ted Jacoby III: It just feels like we’re just going into that classic situation we go in every five or six years where we’re just gonna have a lot of everything for the foreseeable future. Josh White: Can I ask a question though, on the European [00:07:00] side? It seems pretty clear that supply has outperformed expectations in terms of butterfat. Like I think every one of us agree with that statement. Different reasons out of the U.S. than out of Europe. It seems, the U.S. is structurally, genetically producing more. Europe got tight, did not expect ample supply growth in 2025 and is now being surprised with outperforming milk production expectations. From that standpoint, this is a excess supply driven issue. How much of the radical price change in Europe is also a slowdown in consumer demand because of how high the price got or is that really not an issue? Henk-Jan Bouwman : The demand is, I would say, not sufficient enough to absorb all the supply. And that’s internal European market. What we also see, in a little bit of a wider lens from a demand perspective, is that a lot of the export clients we used to have for butter, as European butter-producing count

Butter is down. Powder is heavy. Cheese is struggling. But whey proteins? They’re the shining star. In this episode of The Milk Check, host Ted Jacoby III sits down with Josh White, Gus Jacoby, Diego Carvallo, and Jacob Menge to break down what’s really moving the dairy market this fall. We cover: Why WPC 80 and whey protein isolate remain in tight supply How weak butter, powder, and cheese are reshaping herd economics What today’s demand means for dairy markets heading into 2026 They’re the shining star now, but can whey proteins hold at $10/lb without burning out? Listen now to hear Jacoby’s take on what’s in the stars for dairy this year and beyond. Got questions? Got questions for The Milk Check team? We’ve got answers. Submit your questions below and we’d be happy to get back to you or answer your question on the podcast. Ask The Milk Check Ted Jacoby III: Welcome, everybody, to the September edition of the Jacoby Market discussion on our Milk Check podcast. Today, we’ve got Josh White, head of our dairy ingredients group. We’ve got my brother Gus to talk about what’s going on with milk, cream, and UF milk. We have Diego Carvallo on our international business and nonfat business teams. And then we got Jacob Menge with risk management and trading strategy. So, Gus, let’s go ahead and start with you. It’s September. This is usually the time of year when everybody is shipping a lot of milk into the Southeast. How do things look in milk, and what’s going on in cheese and UF right now? Gus Jacoby: Certainly, Ted, milk has gotten tight as it typically does this time of year. I wouldn’t say, though, relatively speaking, for mid-September that we’re all that tight. Obviously, milk production reports have been up recently; there’s more milk than we had last year. Yes, we’ve added processing capacity in [00:01:00] certain regions of the country, like the western portion of the upper Midwest, and, of course, the Southwest. However, in many areas, early fall tightness does exist. But it’s a bit longer than last year. Where we really need to look at, though, is the component area and some of the products, such as sweet cream. That’s certainly very long. We know about butterfat being much higher today than it was just a couple of years ago. And I would say the cream markets, which typically in early fall draw some pretty high multiples, those multiples are tempered to a fair amount. Cream can be had at a time when it is typically tough to find. So, there’s no doubt that what we’re seeing out in the marketplace, and I would say from coast to coast, is more cream than what we’re used to. And certainly, more of a buyer’s market in the fall than it ever has been, at least in the history of the industry that I’ve seen.  Now, on the flip side, the protein markets are a bit interesting. I wanna let Josh speak on the powder side, but we are seeing that UF milk is having a strong comeback. People need protein, whether it be for fortification [00:02:00] needs and natural cheese, whether it be for health and wellness shakes, whether it be for what have you. That product is getting a lot of attention. And certainly, the one area that I’m seeing this fall that’s got some tightness to it. Ted Jacoby III: Josh, what are you seeing on the protein side in your neck of the woods? Is what Gus is seeing with UF milk translating all the way over into dried proteins? Josh White: The most interesting of the product categories right now and the one gaining the most attention is in the whey protein sector. We’re feeling pressure across a lot of the storable dairy products right now, but the one that remains very tight are the WPCs, in particular WPC 80 and whey protein isolate. The storyline hasn’t changed a whole lot from prior discussions. We went into the year, and there was some trade disruption that masked how tight the market was. We knew a lot of capacity was coming online this year to respond to the demand signals that we’ve been seeing unfold over the last several years. But where we stand today, in September, with a line sight to the end of the year, is [00:03:00] it doesn’t feel like our production out of the U.S. is meeting not only the U.S. demand, but the global demand. This is more of a global situation than just a U.S. situation. The key production regions for the higher whey proteins suitable for sports, nutrition, health, and wellness applications, and others come from Europe and the United States. And in both markets, prices are very high right now. Whey protein isolate had stabilized as we went into the third quarter, somewhere on either side, at $10 a pound for WPI instant. Today, there’s a lot more discussion anecdotally that we’re seeing prices closer to $10.25 or even $10.50 per pound in certain instances. Whether it’s the driver or it’s the entire market, that certainly had an effect on WPC 80 prices. WPC 80 is a product that we have seen more production come online. Whereas, with WPI, we’ve seen people really trying to drive yields, trying to [00:04:00] just push as much product through their whey protein isolate dryers as they can. Whereas, WPC 80, again, new production coming online, but that hasn’t gone smoothly in every case. As a result of that, the market is now really responding with prices above $5 a pound. If we go back in history, that’s a demand-killing price. The question is, is that still a demand-killing price? As the majority of market participants would argue that the per unit value of protein in whey protein products is continuing to appreciate, and the demand we’re seeing is that. The demand is not only strong demand in the sectors we’ve been selling to, but we’re also seeing a lot of inquiries for WPI and WPC 80 going into like consumer packaged good applications and a lot for trials, which suggests to me that people are really looking for new product development in that space to capture some of this demand movement that we’ve seen out there. And that’s [00:05:00] also gonna change a little bit the elasticity of the product. Some of these products that it’s going into, protein is a very important price element, but it’s not as high an inclusion rate as you might see in protein shakes or something along those lines. So, it’s a bit unclear to me how that unfolds. But right now, we’re staring into a market where the U.S. is driving prices higher. Europe is at a higher price, and the rest of the world is scrambling to catch up and get the protein that they want. What that means and how that drives decision-making for the dairy processor, in particular, the cheese plants, is yet to be seen, but it’s certainly impacting their interest in bringing milk in or making cheese in order to get to this whey protein. And so, I would kind of volley that back to you guys. How important is that from a cheese processor, as we look right now, in September, when milk is seasonally at its lower annual levels, and some of these plants can decide whether or not to remain full.  How [00:06:00] are the cheese plants handling this when they want the whey protein? But cheese feels like it’s a little heavy? Jacob Menge: Ted, you wanna take that hot potato? Ted Jacoby III: I look at it this way. When milk is plentiful, like it has been this year, they’ll grab the milk where they can, because worst-case scenario, you can dump the cheese onto the CME if you’re a big cheddar plant. And you can discount it at least to some extent as a mozzarella plant. I think it’s been harder for the mozzarella guys this year because historically, you’re making low-moisture part-skim mozzarella, you’re spinning off all this cream, you’re getting $3 plus a pound on the cream. That makes it a little bit easier to make sure you still extract the value from the milk when you’re selling off the cream. But now, the butter price is $1.85, $1.82 after today. And so, it’s a little bit of a different equation. There’s a limit to how much you can discount the mozzarella to make sure it clears. This year, however, I think there’s been an opportunity in that the export market has been strong enough, so they’ve been able to go ahead and move that [00:07:00] mozzarella into the export market, so they can keep clearing it and then continue to make money making WPC 80 or WPI. I think the bigger issue may be next year, 12 months from now, because if the cheese price and the butter price stay low, ’cause right now at 3.4% milk production increases and even more on the top of that in terms of components, I think there’s a very real concern that we’re gonna see some really low cheese and butter prices in Q1 and Q2 of next year. And given how valuable those dairy cows are if they sell them for beef, I think we could see some very high slaughter rates, which will lead to some pretty significant decreases in milk. You may, by this time next year, have some very real competition for milk in certain sectors of the country. In that environment, what’s a cheese plant gonna do if the cheese market is still relatively weak, but they can make money on the whey, they’re gonna have to pay a bigger premium for the milk, it’s the only way they’re gonna be able to get what they want. And so, I think you [00:08:00] could create a very real opportunity for those sellers of milk to really push for a higher premium and extract it because they can extract it out of the whey. Jacob Menge: You both have said something kind of interesting. Josh said it without saying it, and I guess I wanna poke you a little bit, Josh, on it. You kind of alluded to it, but for now, this demand seems almost limitless. Elasticities might be changing. And then, Ted has just hinted at: the situation kinda works today, but down the road it might not. And so, I’m curious, Josh, what do you see being the thing to take the wind out of the sails of this protein market, and I’m not talking necessarily over a 5 to 10-year period. I’m more talking about what the next pullback looks like, and does that line up wit

Are you leaving calf money on the table? Not long ago, a Holstein bull calf might have earned you 50 bucks, if that. Today, thanks to high beef prices and better breeding tools, that same cow might deliver a $1,000 calf instead. Beef-on-dairy isn’t just a trend; it’s changing how progressive dairies manage their herds and drive revenue. In this episode of The Milk Check, host Ted Jacoby III talks with CoBank’s Corey Geiger and Abbigail Prins about how dairy farmers are rethinking breeding strategies and how those decisions are reshaping herd structure, replacement numbers, and profitability. Why some farms are holding onto cows longer How sexed semen and genomics are guiding breeding calls And how beef calves are becoming a serious income stream Whether you’re breeding for replacements, premiums or profit, this episode unpacks how to make herd decisions that pay. Listen now to hear why the value of a cow’s uterus might be higher than ever. Got questions? Got questions for The Milk Check team? We’ve got answers. Submit your questions below and we’d be happy to get back to you or answer your question on the podcast. Ask The Milk Check Intro (with music): Welcome to the Milk Check, a podcast from T.C. Jacoby & Co., where we share market insights and analysis with dairy farmers in mind. Ted Jacoby III: Welcome everybody to this month’s version of the Milk Check, a T.C. Jacoby & Co. podcast. Really excited today to have two special guests from CoBank, Corey Geiger and Abbi Prins. We are going to talk about breeding to beef and the profitability of the dairy farm, and how that dairy farm profitability has changed over the years as this trend has come about, and what it means for the future of dairy. Excited to have this conversation, Corey, Abbi, thank you so much for joining us today. So Corey, what do you do? Corey Geiger: CoBank is actually short for cooperative banks, so we’re the bank of cooperatives. We’re part of the Farm Credit System. Abbi and I are part of the knowledge exchange division, so we have a group of 10 economists who work in dairy and animal protein, consumer package goods, digital infrastructure, and farm inputs and crops. I’ve been at CoBank for two years now. I have just started my third year with CoBank, and Abbi joined our team about a year ago. She can tell you a little bit about herself. Abbigail Prins: Thanks, Corey. I also joined CoBank about a year and a half ago. I helped cover the dairy and animal protein sectors, come from a very heavy dairy and agriculture background, originally from Tulare, California, based out of Minnesota now. We’re excited to be on the podcast with you today, so thank you for the invitation. Ted Jacoby III: Abbi, Corey, thank you so much for joining us. Really appreciate it. So our topic today is going to be about breeding to beef and the dairy farm profitability, and how the whole breeding to beef trend has been affecting dairy farm profitability. Give us a little background on this trend of how more and more dairy farmers are breeding dairy cows in order to get cows to enter the dairy herd. More and more dairy farmers are breeding to beef and how is that affecting the dairy breed right now? Corey Geiger: I have a broad background, having been in the editorial team of Hoard’s Dairyman for 28 years and a past president of Holstein USA, and this is a journey. It really involves a triple play. The first part of that triple play was gender sorted semen coming onto the scene. Then genomics came on the scene, and then it all kind of came together with the beef on dairy movement. Now, economics always enters the equation because if I were to come back and have a conversation with my late grandfathers and say, “We’re breeding some of our prize Holsteins to Angus,” they’d throw me out the window, thinking I fell on my head. But gender sorted semen came along. Fertility rates really improved in dairy cattle, and I think that’s another part of the story for fertility and conception rates, and we landed up with more dairy replacements. Those prices dropped tremendously in about 2015 and almost fell to under 1,200 a head. At that time, beef prices started climbing, and a new opportunity opened up. Abbigail Prins: We start to see beef prices rise, followed by the introduction of beef semen purchases by dairy producers. Of course, this was not actually confirmed by the National Association of Animal Breeders, which started tracking this until 2023; however, the trend began in 2015, 2016, and 2017. We start to see more of these beef semen purchases,, and we see them being implemented into the dairy industry. We then yield these beef on dairy cross animals. They just start their career on the beef track right away instead of the secondary career after being in the milk industry and having that extra revenue generator I think was a very important piece for dairy producers to take advantage of and try to figure out strategically on the dairy farm, where’s the money going to come from and how can we best utilize the dollars that are coming back from all of our animals, whether it be from milk sales or cattle sales. Ted Jacoby III: The surprise to me was that the beef price started going up because if you think of it on a real, simplified level, if you’ve got more beef cattle coming into the beef herd, then why wouldn’t that cause an oversupply of beef cattle and cause the prices of beef cattle to start going down, but the opposite has happened since. What’s the dynamic that’s causing that? Is that simply an increase in demand for beef, or is there something else going on in the beef side of the business right now? Abbigail Prins: This, I would say, starts back to 2019. We see the peak of the beef cow cycle, so that was the most recent time that we had the highest number of beef female cows; that number we’ve been liquidating ever since. And when you have a low supply and high demand, that means the price is going to go up, according to a straightforward economic equation. So, where these animals come into it is that if we see this decline in the beef cow herd, if there are fewer females available, that means that fewer calves are going to be born in the preceding years. And then we’ve seen this transition since the late 1990s, where beef quality has skyrocketed. We are seeing record amounts of prime and choice-grade beef, and as a result, we have extremely high consumer demand. We continue to see retail beef prices hitting records nearly month after month. They just keep going back to the meat case and buying more beef, which has caused cattle prices to really skyrocket and hit record levels nearly every week with regard to live and feeder cattle futures. And so that’s where we’re seeing this beef price really start to take off. Corey Geiger: Three bench posts to keep in mind total cattle inventory and that counts all beef cattle and all dairy cattle is at the lowest since 1951. The beef cow herd is the lowest since 1961, and feeder supplies the rest of us, which we would call those steers, are at the lowest levels since ’72. When you take those three data points and look at consumer demand and where we are today, limited supply, strong demand equals record prices. Ted Jacoby III: Did this really strong demand for beef start just before COVID, or has this increased beef demand been coming for a while yet? Abbigail Prins: I think it’s been a gradual shift in demand. I think the initial push started back in the 1990s to improve meat quality. Of course, that takes time, as we see gestation lengths in cattle are nine months, and then you still have to raise them until they can become part of the beef supply chain. I think that was the initial starting point where we see quality go up, and then just this gradual introduction back to consumers of we have this incredible quality of beef for you to be able to consume. I’d say it’s been a really big shift, probably over the past decade or so, and then moving into what it is today. Ted Jacoby III: When COVID hit, it was just kind of that perfect storm of everything is already tight, the demand for beef was already good, now everybody’s locked up at home, and all they want to do is cook steaks because they can’t go to the restaurant. They have a special meal, and the next thing you know, the beef herd drops a significant percent that just started the cycle, and when you’re talking about a herd, once it’s low, there’s no way to just snap your fingers and get that number back to where it needs to be, correct? Abbigail Prins: Sure. I definitely think that COVID kind of exacerbated the situation a little bit, and I definitely agree that COVID hits, you can’t go to the restaurant anymore, you’re going to buy a Pit Boss or a Traeger grill, and you’re going to start making all of those restaurant-quality dishes at home. I think because we’ve seen such a drastic change in price for food at home and food away from home, with regards to some of the CPI numbers that we’ve been seeing, that consumers would rather spend the money and “I can make a great steak at home. I don’t necessarily need to go out to a high-end steak house because I perfected it during COVID.” So I think that definitely brought it to an extreme very quickly. But yeah, I completely agree. Ted Jacoby III: Abbi, I think you’ve hit the nail on the head. I can tell you, for the last five years, when I go to a steak place, I don’t order steak. I can cook a great steak at home. I’ll usually order the fish or something that I’m not anywhere near as good at making as I am at grilling a steak at home. It makes perfect sense to me. So now we’re in a situation where the beef cattle herd is the lowest it’s been in, what did you say, Corey, 50 years? Corey Geiger: 1951. Almost 75, right? Ted Jacoby III: Jeez. So even though we are not only adding new beef cattle inventory from beef cows, we’re also adding new beef inventory from dairy cows. We’re still behind the eight-ball trying to ca

The school bells are ringing in some changes for milk. Are you ready? Tune in to The Milk Check as the Jacoby team churns through the latest supply and demand dynamics in the August milk market, including: Why the usual summer heat dip in milk production feels normal, despite 3.3% higher year-over-year numbers Why cheese prices are holding steady and how New Zealand’s production could impact exports Why protein products are powering ahead with strong domestic and international demand Why nonfat dry milk remains stuck in a flat market Whether you’re a farmer, processor, or trader, tune in to The Milk Check to learn where we are and where we’re headed as we head into the holiday season. Click below to listen to The Milk Check episode 81: From Summer Heat to School Coolers. Got questions? Got questions for The Milk Check team? We’ve got answers. Submit your questions below and we’d be happy to get back to you or answer your question on the podcast. Ask The Milk Check Ted Jacoby III: Welcome, everybody, to The Milk Check. We’re recording this particular podcast on August 5, 2025. We’re having a classic market discussion today, and with us are Josh White, head of our dairy ingredients group; Greg Sheer, who heads up our milk marketing group; Mike Brown of Jacoby dairy market intelligence; Tristan Suellentrop, and me. We’re gonna just quickly speed through all the products and talk a little bit about what the demand and supply looks like as we transition from the heat of the summer into the fall. This time of year, what we’re usually watching: the weather is hot, milk is starting to get a little bit tight, and then school starts up in a couple of weeks, so the bottling plants start needing more milk. We start shipping milk to the Southeast, and that tends to start a progression of tightness, not only in the milk supply, but in the supply of all dairy products as we get into the fall and the holiday season. So, we’ll go ahead and start with Greg. Hey, Greg, can you tell us a little bit about what’s going on with milk right now? Greg Scheer: We do see seasonally tightening milk supply. Production has been hit by the summer heat like it usually does. Maybe a little more heat in the Northeast than normal. We’re seeing that in the Mideast and Midwest and all the way into the South and Southeast. We have some comments from some of our producers that maybe a little bit older cow herd has caused the heat to be a little more significant than normal. But we don’t see an overabundance of that normal seasonal weakness in milk production. We’re seeing solid demand, and we’re starting to see a draw to the Southeast as schools will be starting up soon in the South and moving North when the schools start. So, that filling of the pipeline is going to really tighten the market, as it normally does seasonally at this time. So, tight spot markets and premiums throughout the Northeast, Mideast, and Midwest. We have the normal heat in the Southwest. Maybe a little less than usual in California, in the very west, but seasonally we’re trending where we typically are this time of year, and we’re about to get to the tightest time of the year when schools start to fill that pipeline for the school milk. So, expect firm spot market prices going forward. Even though production may bounce back a little from recent heat as we move into the end of August and September, depending on the weather this month. Ted Jacoby III: The Milk Production Report for June said we were up 3.3%. Does it really feel like we’re up that much in a lot of the parts of the country, Greg, where we’ve got milk, or does it just feel like a classic deep summer transition into fall tightness? Greg Scheer: It felt like that in June that we were up that much. It doesn’t feel like that now, which is normal. We had a heat wave in June, all of a sudden it went from being kind of cool and rainy to a hot spell that kind of kicked off the summer. That may have hit production a little earlier than normal, and it wasn’t really a gradual warmup. It just feels normal seasonally as we head into the rest of August. I just feel like it’s gonna be tight like it normally is, and it’s gonna be hard to come by spot loads once schools start filling for school needs. Ted Jacoby III: It almost feels like what you’re saying is that the increase in milk production generally has been offset by the increase in heat this year. And it’s just setting us up to roll into the fall feeling pretty normal. Greg Scheer: That’s what it feels like to me. Most of the milk supply that we know the best is that of the upper Midwest, the Mideast, the Northeast, and even sending milk to the Southeast. So, in those areas, for sure, it feels like a classic seasonal pattern that we’re in. Ted Jacoby III: Got it. Josh, what do you think that’s gonna do to the butter powder plants? Do you think it’s going to tighten up our butter and non-fat supplies, or do we have plenty of inventory out there right now? Josh White: I think it’s a complete tug of war, Ted, because we went into the year feeling like we’ve got a lot of extra cream. We’re clearly feeling the impact of dairy farmers learning how to manipulate the components in milk, particularly butterfat. That’s put us in a situation where we’re out seeking international customers for our [00:04:00] butter fat in the U.S.. Then, all of a sudden, we enter these summer months, and there’s a lot of anticipation over major processing plants coming online, particularly in the Southwest. And it’s a giant question: how quickly do those plants finish their ramp-up? Where are they in their ramp-up process? Are economics driving the ramp-up process over the next six months? And where is that milk coming from? If you look at the U.S. on a 12-month holistic view, it seems like we got a lot of milk. To Greg’s point, as we get into the third quarter here, it feels almost like we could experience a bit of a whiplash. From what we’ve felt over the past 60 days. The heat set in in July. Maybe it’s seasonally normal. The processing plants that I mentioned are starting to bring in more milk intake. Where is that milk coming from? We’re at our seasonal low in milk production. Our comparables for milk against last year were impacted by the bird flu, which affected milk production. So, our comparables are maybe [00:05:00] a little distorting at times. And when you aggregate all of that together, I’m not so sure that we’re sitting on cumbersome volumes of dairy solids in the third quarter. Now, measure that against the demand climate, and I think that might tell a different story. Greg Scheer: While we look at milk production as volume, we see lower components, which is normal during the summer, so definitely lower milk production, but also lower components. That leads into what Josh was saying, too, about reducing solids in dairy products. Ted Jacoby III: So, to clarify, Greg, when you say ‘less components,’ you mean seasonally, not annually. Greg Scheer: Yeah, the heat in the summer, it’s typical for butter, fat, and protein to drop, and that’s definitely what we’ve seen this summer as well. Alright, cool. Ted Jacoby III: I was listening to Josh speculate about demand, Mike, and it made me think of a question I should ask you and ask you to harken back to your Kroger days. How much of an increase in milk demand would Kroger and Kroger’s milk plant see when we would transition into the fall? What kind of bump is that from a Class I standpoint? Mike Brown: Really, very little because Kroger doesn’t bottle any milk for schools. So, milk is fairly consistent. You will see some seasonal changes in spring in parts of the Southeast. For the most part, they’re more stable than most. But, interestingly, you’re talking about this ’cause I was just looking at that from the standpoint of working on pooling strategies for a couple of our customers. From July to September, your demand for Class I goes up roughly by around 10%. As far as total milk supply, you think schools are what, around eight or so? That’s kind of what you’d expect it would be. Okay. Of course, they fall back again in the summer, and they fall back a little bit over the holidays. As far as consumer retail sales, most of the shift you see in late summer is due to the start of school. There isn’t so much for home. Ted Jacoby III: So, is there much of a change in fluid milk demand at the home level when kids are home for the holidays versus when they go back to school? Or do they consume cereal pretty much in the same [00:07:00] volume during the school year as they do when they’re off for summer break? Mike Brown: They bump a little bit, but you also counter that with vacations. People take vacations in the summer, and they tend to eat out more; as a result, food service establishments don’t use as much milk. Milk is a product that is definitely consumed at home, unlike some other dairy products, which have a huge part in food service. I’ll have more on that because, as I’m working on figuring out how pools are going to look, Ted, I’m getting into month-to-month changes. So, ask me next month, I’ll have better information for you. Ted Jacoby III: August is the transition month every year. Maybe everybody goes back to school in September, but all the milk plants get ready for everybody to go back to school in August. Mike Brown: That’s definitely true. That prep is starting. To Greg’s point, what we’re seeing out West, talking to some of my cheese friends out there, is: milk is still strong relative to a year ago. It’s seasonally weaker; components are seasonally weaker; that’s normal. They haven’t had quite the heat wave that the Mideast and parts of the East have had, or even parts of the Midwest, but they’re still very strong year-over-year. Whether it’s still 3.3%, [00:08:00] no one’s willing to say, but they still say it is a strong year-over-year. So, we should have adequate milk. I think it gets back to the point that’s been bro

GLP-1s like Ozempic and Wegovy are changing how Americans eat, and that has big implications for the dairy industry. In this episode of The Milk Check, host Ted Jacoby III welcomes Paul Ziemnisky, leader of nutrition and industry growth platforms at Dairy Management Inc., and Dr. Chris Cifelli, vice president of nutrition research for the National Dairy Council. Together with the Jacoby team, they unpack what GLP-1 appetite-suppressing drugs mean for dairy demand, and how our industry can win. We cover: How GLP-1s suppress hunger and how dairy’s fat + protein combo supports satiety How protein quality matters more than ever, and why dairy still leads the pack How R&D teams are turning classic dairy products into high-protein, low-sugar solutions From gut health to GLP-1 support, this episode dives deep into one of the most important trends shaping dairy today. Join us for The Milk Check episode 81: The Ozempic and GLP-1 shockwave hitting U.S. dairy. Intro with music: Welcome to the Milk Check, a podcast from T.C. Jacoby & Co, where we share market insights and analysis with dairy farmers in mind. Ted Jacoby III: Hello, everybody, and welcome to the Milk Check. Excited to be here today. In addition to our usual suspects, Josh White, Mike Brown, and my brother guest, Jacoby. We’ve got two special guests today. We have Paul Ziemnisky, leader for nutrition and product science, technology, innovation and industry growth platforms at Dairy Management Inc. Again, we have Dr. Chris Cifelli, vice president of nutrition research for the National Dairy Council. Guys, thank you so much for joining us today. Thank you for taking time out of your busy days to talk about GLP-1s and how it’s affecting the dairy industry. We really appreciate it. What are GLP-1s and why are they good for dairy? Dr. Chris Cifelli: I’ll start with what they are and then Paul can talk about the consumer point of view. One of the key things whenever we eat food is that feeling of satiety, the feeling of fullness we get during a meal and then the satiation that occurs between meals until we get those body cues again that we’re hungry and we want to eat. Unfortunately, in the environment we’re in with stress and different factors, our body is a lot off schedule, so we tend to eat a lot more than we may need to on a daily basis. What GLP’s are, glucagon like peptide is the official name, it’s an appetite suppressant. So, when you eat and especially when you eat fat and protein, the body will release GLP-1 naturally, and that’s what starts making you feel full. What these pharmaceuticals are, are ways to keep the levels of GLP-1 up in your body so you feel less hungry throughout the day more naturally. And what that’s going to do is you’re not going to snack quite as much. You’re not going to have those cravings maybe for sweet salty snacks during the day. But with that appetite suppressant, it means that every calorie really then matters when you’re eating throughout the day, and that’s really where dairy can win. Paul Ziemnisky: To build on that, what it means for dairy is, I think Chris used two magic words, fat and protein. I think fat’s been vilified since this early ’70s, late ’60s, and we’ve put a lot of effort in investment in proving the value of fat, especially dairy fats. I think you’re going to see in the next six months, the acceleration of an acceptance of fat into things like the dietary guidelines and other uses. And the protein side of the equation, we’ve got the highest quality protein by far. We’ve got science behind the highest quality proteins and the efficacy of that. And then by the way, consumers, when they purchase anything, taste is number one factor. So, when you look at taste, price, value, health and wellness, we deliver on all those three sweet spots for that consumer. And so, you see things like yogurt on fire because of that, because they can have yogurt and they enjoy the taste and it’s got all those signs behind it with gut health and immunity. You see things emerging like cottage cheese. Cottage cheese is fermented, cheese is fermented, and I think we under market and under leverage that. Chris and I have been on the road working with our cheese peers talking about let’s play up the protein and the fermentation, and some of the health benefits of that to drive new occasions. Then you see other things popping too in the space like creamers, which are adjacent to the GLP piece, but that fat in the keto and that satiety. And so, we’ve been working to dust off the decades of science to actually build a health and wellness playbook for the industry to use how to talk about these in a modern way with consumers. The great thing in the playbook is we actually tie the messaging and claims to science evidence, and so this is all the way approved through the USDA. So, we’re packaging out if you want to talk about weight management, you want to talk about performance, you want to talk about gut health, we’ve done quad studies with consumers at the different age cohorts. So, if you are a parent with a two-year-old, we’ve done studies with them. If you’re talking to a boomer, here’s how you talk about dairy at these different needs states and moments. And so, worth this fulcrum where it all adds up to where about 60 plus purchase decisions at the home, is a health and wellness decision. And just to dollarize that for our farmers, that’s $350 billion being spent in these high priority areas. And our share in those $350 billion are small today. But if we get three share points of these spaces, that’s the size of the yogurt category today. So, we can double the yogurt category. And the great example of that is look at the probiotic sodas. They launched. They don’t have any science like we do on yogurt. But they’re the $2 billion category in five years, yet kefir’s only $250 million. Yogurt’s sitting around $6.5 billion. So, there’s a lot of significant upside us playing in some of these spaces and GLP’s one of those spaces. There’s even a bigger macro in the health and wellness space opportunity. Ted Jacoby III: Is protein really the biggest driver behind some of those health and wellness spaces that we want dairy to become a bigger part of? And why protein? You mentioned, Paul, when you were talking, he goes, “We’ve got the best protein.” Why is dairy the best protein? Paul Ziemnisky: I’ll let Chris answer the why and I’ll talk to the spaces if that’s okay, Ted. These spaces, when you start to carve out that $350 billion, you’ve got physical, athletic performance, sustained energy, childhood growth and nutrition, then you start to keep going around these areas of weight management. Those are $50 billion segments right there, and protein is the key driver. When you look at muscle growth, performance, protein is essential to fueling the growth. Then you get into the gen Y and millennials are recognizing they need that protein for that sustained energy. So, that’s where you’re seeing the growth of creamers and all this. They’re pounding it. They’re not drinking coffee, they’re drinking dairy with coffee. And so, we’re seeing these other spaces of how do they stay satiety, energized, healthy. And then as you start to even age out, the boomers are recognizing they’ve got the most disposable income. You’ve got this big group of 80 million people, they’re trying to stay healthy. And so, you’ve got pre-aging occurring from the millennials and gen X, who don’t want to get to the point where they’re fracture risk and all that, so they’re consuming more protein because they’re seeing what’s happening to their parents. And then you’ve got the parents who are seeing what’s happening to their friends. And so, you look across all these age cohorts, proteins is this key driver for different needs states of each of these age cohorts. And Chris can talk through the science now. Dr. Chris Cifelli: From a nutrition point of view, I grew up building with Legos, so yeah, all these different pieces. For protein, there’s 20 amino acids, nine of which are essential, and dairy has all those. So, whey and casein are both complete proteins, so they have all the essential amino acids we need and they have them in the right proportions to support muscle growth and development, and all the other functions that protein do in the body. When it’s packaged, whether you’re talking milk, cheese, yogurt, cottage cheese or just isolates, it’s very bioavailable, so you’re not worried about any digestibility issues. You’re not worried about it being outcompeted by other nutrients. Our body takes it in. What makes dairy really unique is you have the whey and the casein. So, whey being very fast acting, it’s absorbed very quickly. It’s great for muscle recovery after exercise. Whereas casein, a little higher in tryptophan, a little slower digestion, so you’ll feel a little fuller, but then at the same time a great protein before bed because of the tryptophan may help you sleep and recover overnight. There’s all this unique layering to it that really sets it apart from other sources of protein, even ones like egg that also have a lot of amino acids in them as well. Ted Jacoby III: How many different proteins are in milk? Dr. Chris Cifelli: Just the two main classes of whey and casein, and then a lot of different peptides and other things in there. But generally speaking, those are the two main protein classes. Ted Jacoby III: With whey proteins being a lot smaller, more easily digestible, and the casein being a lot bigger and therefore a lot slower to be digested. Dr. Chris Cifelli: Generally speaking, yeah, that’s a good way of thinking about it. Laddering it back or taking it back to the GLP-1 discussion, when you lose weight, especially weight rapidly, your body doesn’t care if you’re losing fat or muscle, so you’ll start losing both. And that’s why protein’s so important. So, as you’re eating meals or you’re needing that snack, all these dairy foods, whether they’re

En este episodio de The Milk Check, le damos la bienvenida a Ruth Aragon al equipo de Jacoby, quien se une a sus colegas de muchos años, Miguel y Yara. Es una reunión basada en décadas de experiencia, relaciones sólidas y un enfoque compartido: fortalecer la presencia de Jacoby en toda Latinoamérica. Acompáñanos mientras el equipo analiza: Cambios en los patrones comerciales y el crecimiento de las exportaciones de queso en México, Centroamérica y Sudamérica Por qué más compradores en Latinoamérica están optando por importaciones directas — y qué significa eso para los productos lácteos estadounidenses Dinámicas de mercado: desde la incertidumbre arancelaria hasta la volatilidad climática Un apetito creciente por las proteínas lácteas en toda la región Desde leche fluida hasta productos terminados, Ruth aporta una experiencia que abarca toda la cadena de suministro. Juntos, este equipo ampliado está listo para ofrecer más valor a los clientes de la región. No te pierdas el episodio 80 de The Milk Check: Bienvenida, Ruth: fortaleciendo a Jacoby en Latinoamérica.

In this week’s episode of The Milk Check, the Jacoby team convenes to dissect a dairy market that feels balanced – barely. From milk still trickling in past the flush to range-bound commodity prices, this episode covers the major trends shaping the back half of 2025. Cheese exports are keeping Class III in check Culling numbers are down as producers are keeping heifers longer Global butterfat advantage fading with tighter GDT spreads WPC, WPI demand stable, but new production capacity looms And what if prices fall off the edge? From trade risks to recession fears, the industry feels one light push from price chaos. Listen now for insights on margins, milk flows and market forces. Got questions? Got questions for The Milk Check team? We’ve got answers. Submit your questions below and we’d be happy to get back to you or answer your question on the podcast. Ask The Milk Check Intro (with music): Welcome to The Milk Check, a podcast from TC Jacoby & Co., where we share market insights and analysis with dairy farmers in mind. Ted Jacoby III: Hello everybody, and welcome to this month’s version of The Milk Check podcast by TC Jacoby & Co. This week, we will have a classic market discussion. It is June 9th, so we’re approaching the midpoint in the month of June 2025, and joining me today are Diego Carvallo, our Director of Dry Dairy Ingredients Trading. Jacob Menge is our vice president of risk management and trading strategy. Josh White, our Vice President of Dairy Ingredients. Mike Brown, our VP of Market Intelligence. Joe Maixner, our director of dairy ingredients and resident butter expert, is also there. I think we’ll go ahead and start with milk. It’s the middle of June. We’re past the flush, but milk is probably a little bit heavier than we expected. Milk production has been up. We know what is going on. The dairy farmers are making money, and they’re keeping cows. Their culling numbers are down, and so we’re seeing cow numbers up, maybe a little bit surprisingly, given what we know about the heifer replacement numbers, which means they’re keeping them for an extra lactation, that is keeping milk solids output maybe a little bit lower than we expected. But the solids are still up as well. So as a result, we’re seeing milk still on the long side, not too much out of what is normal for this time of year, and I wouldn’t be surprised as the weather in the upper Midwest starts to heat up, we start to see that milk production drop off a little bit and everything get a little bit tighter. We just haven’t quite reached that high temperature yet. And so that’s what we’re seeing in milk. Jake, how does that translate into cheese? What are we seeing in the cheese market right now? Jacob Menge: It’s funny, I think from the last time we had a market discussion to today, the message will be very similar, which is a lot of mixed signals on the cheese side. You can talk to certain people who say, Hey, our orders are way down. And then you might talk to somebody else, saying, Hey, our orders look pretty good, meaning the demand is there. I think it’s a bit of a tale of two cities regarding how exposed you are to the export market. Exports have been the thing that has been keeping us afloat on the cheese side. I think domestically, we’re not doing great. I would say that the prices that we’ve been seeing, this kind of upper 190s, mid to upper 190s, we’ve come off in the past week or two, but I think that mid to upper 190s did hurt demand on the export side. I think that’s kind of where we’re at. I would say good, not great. It just seems like we’re going to be range bound a bit on the cheese market just given this kind of pendulum swing of our prices move too high, which kills exports a little bit, but if we go down even just a little bit, you think the export market comes back in, so that’s the feel we’ve got right now. Ted Jacoby III: How is the dollar affecting exports? Jacob Menge: Yeah, I think it’s helped certainly. That is probably the biggest risk to hurting exports going forward, but we don’t have a particularly strong dollar. I wouldn’t say we’ve a particularly weak dollar, but yeah, I would say that has been a catalyst, if anything. If I had to pick a direction of whether it could hurt or help exports moving forward, I would say if the dollar strengthens, it’s much more likely to harm our exports than the dollar weakening further in helping. Ted Jacoby III: So, Mike, I have a question for you. You’ve been looking at some of our milk production numbers lately. Have we been seeing milk move from class four to class three with these new cheese plants, or even though we’ve built some of these new cheese plants, are we still seeing milk production remain in class four? Mike Brown: Well, more of it’s remained in class four I think, than some of us expected because some of the startups have been slower than expected, so you still have some class four plants, particularly in the south central US that are balancing some of that market. So I think that the opportunity to move more milk into cheese than we currently have exists. So much of this key is exports, and one thing we did see last week with the GDT is we saw how the spread between US and world cheddar prices get a little tighter, which makes me a little nervous about exports moving forward, but we have the opportunity to move more milk into cheese and that milk is basically ready to move into cheese when those plants demand it from what I’m understanding, talking to some of my powder friends in the Southwest. I think that there is still some opportunity for that to happen. We’ve also seen the spread between three and four has remained relatively tight compared to some recent years, which means that the incentive to move milk one way or the other isn’t maybe quite as great. It will be demand-driven and in my mind, those cheese exports going to keep that milk moving into the cheese plants, because they have been the key to the growth of cheese sales. Ted Jacoby III: Thanks, Mike. So, Diego, on the other side of the coin, non-fat and our powder market, is there any reason to see powder prices strengthening in a way that would pull some of that milk away from cheese? Diego Carvallo: I doubt it, Ted, because of the investment and the medium—and long-term plans these companies have for those new facilities. My expectation is that milk will be pulled from class four. Ted Jacoby III: So, as milk tightens up, would you expect that the class four plants will lose milk and that the cheese plants will keep it? Diego Carvallo: Yeah, there’s going to be exceptions, but I think that’s a general rule. Ted Jacoby III: Okay. Have we seen any pickup or any strengthening of international demand for non-fat and skim milk powder? Diego Carvallo: Not right now, and it’s because Europe is significantly more competitive than the US, but whenever we see Europe, the market tightening up, we will probably see a market that could move higher fast. At the current moment, the Europeans are the most aggressive in Asia, and at the same time, demand hasn’t really picked up, so for that reason, we have been range-bound for the longest time. Ted Jacoby III: Joe, if we’re making skim milk powder, that means we’re usually making either butter or cream and the butter fat market in the US been the talk of the year with cream multiples getting down into the 70s earlier in the year. We’ve been having a fair amount of butter exports. What do you think this butter market’s going to do going forward? Joe Maixner: Well, I think we’re going to continue to have exports and we’re continuing to penetrate new markets with multiple products. It’s not just 82% anymore that a lot of these markets are taking. They’re taking 80%. AMF has been extremely strong in the export markets. As long as cream continues to be readily available, which it has been for the entire first half of this year, we’ll continue to be a player in the world market. That coupled with the massive discount from the rest of the world. Ted Jacoby III: So what would you expect the butter price to do? Are we going to stay right around here or you think we’ll get higher or are we going to have one of those classic years where everything stays right around here, but we have this one, two week spike sometime in September? Joe Maixner: It’s a hard question to answer, Ted. I think we’re probably looking at more of a traditional year only because of the amount of exports that we’re able to put on the books. Otherwise, I think that we would be significantly more flush with inventories because domestic demand has been good, but it hasn’t been great. I think that if we can continue to get product out of the country, we should have a relatively stable butter price. Ted Jacoby III: I thought you said it was a normal year? Stable butter price and normal year don’t go hand in hand. Joe Maixner: Normal pre-COVID, how about that? Ted Jacoby III: Joe, that still doesn’t work for me, but I understand what you’re saying. We’re going to stick right around here. We’re probably going to have a relatively stable market that people should expect to stay in this range going forward, at least right now. Joe Maixner: Yeah. Take 2016 to 2019, for example, we spent the better part of almost four years in about a 40 cent range. Ted Jacoby III: Got it. I like the sound of that. I think the market would like a stable butter price. Everybody, we will be right back after these messages. Center commercial (with music): If you’re a dairy producer or a cooperative looking for a better market for your milk or you’re a food manufacturer hoping to strengthen your dairy procurement or risk management strategy, please reach out to TC Jacoby & Co. We’ve been building worldwide relationships with all sides of the dairy supply chain for over 75 years. Tap into our expertise for unlimited free consultative support and we’ll develop a sales or procurement strategy that hits all of your targets

Are you missing the biggest leap in dairy performance since the milking machine? From fertility breakthroughs to Holsteins with 4.5% components/5% fat, today’s cows are not your grandparents’ cows. In this episode of The Milk Check, we sit down with Nate Zwald, president and CEO of Progenco, to uncover how genetics is quietly reshaping the dairy industry. We tackle: Why genetic progress is accelerating and how that changes your herd strategy The rise of gender-selected genetics and the fall of dairy bull calves What makes a cow “better” — and how to breed more of them Why embryo technology could be the next big leap Listen now to the latest episode of The Milk Check to learn why cows engineered for fire in the belly could have improved lifespan, higher fertility, better fat composition and a better life. Got questions? Got questions for The Milk Check team? We’ve got answers. Submit your questions below and we’d be happy to get back to you or answer your question on the show. Ask The Milk Check Special Guest: Nate Zwald, president and CEO of Progenco The Jacoby Team: Gus Jacoby, president, fluid dairy ingredients & dairy support Mike Brown, vice president of dairy market intelligence Ted Jacoby III, CEO & president, cheese, butter & dry ingredients Intro (with music): Welcome to The Milk Check, a podcast from T.C. Jacoby & Co., where we share market insights and analysis with dairy farmers in mind. Ted Jacoby III: Welcome, everybody, to the podcast. This month’s version we have a special guest. We have Nate Zwald, former CEO of ABS Global and current president and CEO of Progenco. Joining us from the Jacoby team is Mike Brown, our VP of Market Intelligence, and Josh White, our VP of Dairy Ingredients. Nate, we’ve asked you on this podcast today because you’re one of the foremost experts in bovine genetics out there, and we’ve been talking a lot about some of the changes in cow genetics and how it’s been affecting our dairy markets. It’s something we’d love to learn a lot more about. Why don’t you start us off? Tell us a little about your background, and we’ll go from there. Nate Zwald: Yeah, sure. Well, first of all, a pleasure to be here. I appreciate being asked and appreciate that introduction. I’ve had a long career in dairy genetics, starting with growing up on a farm and learning about dairy genetics from where it should be learned about, in a barn with my dad, thinking about milking cows and recognizing that the next generation of cows was going to be better than the current generation of cows. And that was a pretty fun thing to see firsthand. When you think about having a daughter of a cow out in the heifer yard, that’s going to be better than the cow you’re milking today. And I think that’s the whole idea that we think about when we think about genetics is making better animals faster and trying always to make sure that the next generation is going to be more productive, healthier, happier, better for the farmers, better for the community, and better for the world and the next generation than the cows are in this generation. And we’ve seen tremendous progress through time in doing that compared to when I was a kid milking cows thinking, “Hey, I hope the heifer is going to be better than the cow herself.” Because here we are, we’ve gone through so many technologies like selection for fitness, longevity, and fertility, and then we went through genomic technology that’s had a huge impact on the industry. And then more recently, sex semen and the use of beef on dairy cows have all had substantial changes to the genetic progress curve compared to what seems like not that long ago from my standpoint, just milking cows in the barn with dad. Ted Jacoby III: So, currently, what are some of the major trends in genetics that the dairy producer is either utilizing or needs to be aware of, that are coming down the pike? Nate Zwald: Well, I think some of those things that I mentioned, I mean, when you start thinking about the early 2000s, we were going through this time and the shift from selection really for production, which was primarily fluid milk production, and how the cow looks. From a dairy judging perspective, the show cows must be better than cows that don’t look like show cows to thinking about the data and saying what makes a cow live a long, happy life and what makes cows be more productive for their owners? And does that mean that she’s got to be taller and sharper and milk more in terms of fluid milk production, or does that take on a little different thing? Is it the cows that just love to live? If you think about today’s environment, everybody loves those cows that are first to the parlor. They want to get milked. And those cows that are just always happy, they’re the ones that go and they eat, they sleep, they milk, and they love their life and they love doing it for their owners every day. And then not only do they eat, sleep, and milk, but they do it most profitably and productively possible. That’s been through a series of genetic advancements, and really, that started with looking at those type characteristics and saying, is it type that makes a cow more profitable, or is it things like, does she get pregnant quickly? Does she have an easy calf? Does she live a long time? Is she that kind of aggressive animal that has that fire in the belly to live? And I think it’s more the latter, those things that you can’t necessarily see physically and phenotypically in the cow. And that was probably the starting point to a whole series of things that kicked off a tremendous amount of genetic progress, where when we think about cows today versus cows 20 years ago, it’s amazing the amount of change we’ve had. And that doesn’t mean they all look like show cows today, but it means they’re more profitable animals. They’re producing a tremendous amount of more components, which is probably something that you guys and your listeners deal with regularly now. And that’s because of the selection, what we’re selecting for, it’s how we’re selecting for with genomics, but then it’s how you implement those things. And that’s probably the most recent thing, probably something that kind of came about quicker than what anybody was ready for, is how dramatic the impact of breeding your best animals to sex semen and your worst animals to beef semen would be in how dairy cows change and how quickly that happened. Ted Jacoby III: And so what are some of the results you’re seeing from your point of view on that subject? Nate Zwald: So the first thing is we reversed the trend from what was perceived 20 years ago as Holstein cows that were difficult to get pregnant and didn’t live as long as we wanted them to. And a lot of that came back to their health, their fertility rates, and ultimately then because of those things, their longevity. So we’ve changed that trend. That was the 30 or 40-year trend where we were making cows that milk more and looked better, but they were getting less and less fertile, especially Holsteins. Jerseys, to some degree, too. And so you think back to that time, many people thought they had to cross-breed to solve that fertility issue in Holstein cattle. Through genetics, we can make better cows faster. When you define better correctly, and you say better means they have to get pregnant and they have to live a long, profitable life. When we changed that and implemented that and redefined what was better, we made that progress. And so we reversed that trend and now cows are getting more fertile every generation and producing more pounds of milk, but also especially more pounds of components. And I think that was a lot due to the genomic revolution. So not only did the AI companies and the genetic companies make more progress with the bulls and the genetics that they had for sale and offer, but then dairy farms started implementing the genomic technology on their females. They started testing those females and that allowed them to make decisions. Any information isn’t valuable unless you use that information for something. And so for a while, there were a lot of farms that did genomic testing and didn’t use the information correctly or in a way that advanced genetic progress, meaning better cows faster. But more recently, with the advent of sex semen, people started doing what they should do, and that is breed the best of sex and leave the rest for beef. And so when you think about a bell-shaped curve of your dairy, whether you have 10,000 cows, 1,000 cows, or 100 cows, you’ve got this nice evenly distributed bell-shaped curve of animals. You got the best ones on the right-hand side of the curve, and you got the worst ones on the left-hand side of the curve. And when you think about using sex semen and you just think about, I can get a female replacement from all my best animals and equally importantly, I don’t have to get any dairy replacement from all my worst animals, the progress of genetic progress, the speed of genetic progress absolutely doubles if not triplicates, because bell shaped curve has a lot of variation in it. There’s a lot of spread between your best animals, your average animals, and your worst animals. And you think about that genetically, there might be up to a thousand dollars of difference just genetically between your best and your worst animals in your dairy. And before the use of sex semen and beef semen, there was an equal chance that that worst animal was having a heifer calf, and your best animal was having a bull calf as the opposite of that. And today, you can ensure that your best ones have female calves and your worst ones do not have a dairy replacement. And that’s the part that even I underestimated the impact that would be on the breed and on the industry in terms of genetic progress. And part of that reason is why we see Holstein herds that are averaging well over 4.5% components, potentially in some months, at the time of the year, up to 5% fat. When I wa

It’s May 8th. Do you know where your tariff is? When the tariff winds shift, the Jacoby team is there to help you steer your strategy. Tune in to the latest episode of The Milk Check with special guest Will Loux from the U.S. Dairy Export Council, as we cover: Tariff tensions – How will ongoing trade talks between the U.S. and China impact dairy exports? Shifting trade strategies – How are global buyers adjusting to new tariff realities, and where does the U.S. stand in this complex landscape? Innovation and adaptation – What moves should U.S. producers and buyers make to adapt and thrive amidst tariff uncertainty? Don’t miss this conversation as we explore how tariffs are reshaping the dairy trade and what the future holds for U.S. dairy exports. Listen now to The Milk Check episode 77: Tariff talk with Will Loux from the U.S. Dairy Export Council Intro (with music): Welcome to The Milk Check, a podcast from TC Jacoby & Company where we share market insights and analysis with dairy farmers in mind. Ted Jacoby III: Welcome, everybody, to this week’s version of The Milk Check. It is May 1st, 2025. Once again, we’re going to revisit the topic of tariffs and international trade. And as everybody knows, it’s a shifting landscape. We have a special guest today, Will Loux from the US Dairy Export Council. Will is Senior Vice President of Global Economic Affairs. Will, thanks for joining us today. Will Loux: Thanks for having me, Ted. Good to be on. Ted Jacoby, III: We also have some of our usual suspects. Mike Brown, VP of Dairy Market Intelligence, Miguel Aragon, our director of Latin America Cheese Sales, and Josh White, our VP of Dairy Ingredients, and Tristan Sellentrup. Thanks for joining us, guys. So Will, we’re going to start in the obvious place. What is DC’s attitude about everything that’s going on in tariffs, especially with regards to dairy? Do you see anything changing anytime soon? Is there anything in the works? What’s the landscape as you see it? Will Loux: There’s a lot of uncertainty. We were talking about several different types of tariffs that are effectively going on because we have our bilateral relationship with China where we have very high tariffs both for products coming into the US and China has very high tariffs for our dairy products going out, but we also have the 10% universal tariff. We have the steel and aluminum tariff. We have the USMCA question marks between Canada, Mexico, everything else. So right, now I would say there’s about four different tariff balls being juggled all at once. And as far as where we’re going in DC, I think that’s anyone’s guess where obviously within national milk and the Export Council, very hard at work these days. Very grateful. Jaime and Shauna and Tony Rice on our trade policy team get to live this every day while I get to check out, I guess, what’s happening in the markets. Ted Jacoby, III: There’s been rumors that China and the US are talking and they’re trying to work out some things that could lower those tariffs. What are you hearing? Will Loux: Good question. Right now, at least what we’ve heard is there are talks, at least attempting to. I don’t know how far along these talks have gotten. When we look at the tariffs between the US and China right now, there probably needs to be some sort of path to de-escalation, but this is also something that when we had the first round of retaliatory tariffs between US and China, that lasted 18 months. So I personally don’t necessarily expect this to change overnight. That would surprise me. There are a lot of things that would surprise me these days in DC, but I would expect this to be in for the long haul. Whether it stays at 125%, I don’t know, but at the same time finding an off ramp for what seems to be at least somewhat of a strategy towards decoupling the US and China in a lot of ways continues to be at least very much forefront and likely to stick around. Ted Jacoby, III: One of the things that we’re curious about since roughly 17% of all of our weight production in one form or another has been going to China. And a lot of it goes to feed the pigs because 50% of all pigs in the world are in China, and keeping the Chinese population happy seems to be highly correlated to their access to pork. Is there any possibility that they’ll make exceptions to some of their tariff rules for things like whey permeate just to make sure that the pigs can continue to be fed and they keep their population happy? Will Loux: It’s certainly possible. They made that exception last time around with the last really six months effectively of that earlier trade war between the US and China. This time around, it is certainly possible but I’d also say China is also likely to seek alternate sources too just like they did last time. They can find at least some of that sweet way that they’re after from Europe. Turkey is now getting more involved. They still buy quite a bit from Belarus. Argentina ships them a decent amount of whey. They’ve also been stocking up a decent amount of whey before this happened that I think they’re actually sitting on ample stocks to at least see them through some of this disruption. Again, supplemented elsewhere. Lactose is probably the one where they buy about 70% of their lactose needs from the United States. Again, I don’t necessarily anticipate them giving exemptions. It’s part of a much bigger conversation as to whether they start giving those exemptions, but again, they’re going to look to Europe who’s really the only other game in town. Europe could pull back from their sales to New Zealand, Japan, India maybe as well. That’s their biggest market outside of China. I think there’ll be some trade shuffling a little bit within this too. Permeate, we are probably the main game in town here, but again, it’s is this cost-prohibitive when you’re adding 125% tariff at least right now? And can they make due, at least for the time being? Because Chinese consumption isn’t all that great either. So it’s not exactly like there’s this huge surge to build up the hog industry within China today either. Ted Jacoby, III: Josh, what are you hearing on the ground right now with our contacts in China? Josh White: Yeah, a lot of mixed messages. I think that generally speaking over the past few weeks, it’s been a lot of paralysis. Most were saying the situation’s fluid. It’s changing. We don’t maybe fully understand it. I think the industry well recognizes that a big lever to pull in trade discussions is probably not whey permeate and the trade. But as you mentioned a moment ago, it’s a pretty important ingredient to the Chinese pork industry, particularly the younger animals, and that’s a recovering industry after the swine flu issues that have previously experienced. So there was some optimism that let’s let the situation evolve, let’s see if we can come out of it if there’s some type of resolution, and we can conduct business as usual, just with a pause. A couple of things that have helped that most are reporting that at the end of last year around the time Trump won the election, the Chinese started to take action pretty quick. On some of the higher value products, they were out seeking alternatives, but on the ones, as Will mentioned, that they’re buying from the US like permeate, they did a little bit more stocking. We’re not talking stocking in the traditional sense of building large warehouses full but more days in inventory than they had been operating off of. At the same time, that sparked a price movement in the US and the whey permeate price increased significantly by about a dime and moved higher. Well, that allowed people to de-stock in the US as well. So we entered this issue with inventory space. Within the actual processing facilities, that’s being tested now. We’re right at the cusp where some people are now running into issues or they’re a week or two away from running into issues. Many processors did their best to extend that by going out and making some sales or front-loading other contracts to other parts of the world, or in some cases feeding it back to the dairy cows where it makes sense to do so. But that just buys a little bit of time. There’s a lot of this co-product, as we like to say, but effectively the by-product of the by-product that has to find a home. ADPI, for instance, has a task force out there right now that has been working on what are new innovative ways that we can use permeate, but none of those are going to be quick solutions. As a result, I heard at least this past week, was the ADPI trade show, a lot of people talking. I at least picked up on a few different processors that are resuming some shipments and working in conjunction with their Chinese customers to try to figure out how to make it work out of necessity, maybe not the pure economics of it. We haven’t experienced that capitulation point yet where we have to make a decision, but we’re really close to it for a lot of different US processors. Another thing that I would ask Will on is we had also picked up a headline this past week. It’s a headline. I haven’t studied it at all, but that Walmart told some of its Chinese vendors to resume shipments. Any insights to what might be happening there? Do we think that these trade relationships are just looking to bear the cost out of a need, or is there at least some hope that there’s some positive dialogue happening between the two countries? Will Loux: I didn’t see necessarily that headline or anything else. I would be surprised if Walmart has any inside knowledge as to what’s going on. I suspect it’s probably out of necessity simply because the US and China are highly integrated economies and a highly integrated supply chain. And for a company like Walmart, you can’t turn on a dime where you’re sourcing from. There are select products that maybe you can shift some of that production if that one company has a plant in Vietnam or elsewhere, but it’s not necessarily a on

In this week’s episode of The Milk Check, we strap in for a wild ride. From tariff chaos to spring flush milk surpluses, the market is anything but predictable. Join Ted Jacoby and the team of experts as we cover key topics, including: The spring milk flush and its impact on processing plants Cream demand firming up but still long Butter market volatility and how cream shortages are affecting prices Tariffs and how they’re impacting the international dairy trade Our team of experts break down the current dairy climate and offer insights on navigating these turbulent waters. Listen now to The Milk Check episode 76: Tariff talk takes dairy on a wild ride. The Jacoby Team: Brianne Breed, senior vice president, cheese trading Diego Carvallo, director, dry dairy ingredient trading Gus Jacoby, president, fluid dairy ingredients & dairy support Jacob Menge, vice president of risk management & trade strategy Joe Maixner, director of sales, dairy ingredients Josh White, vice president, dairy ingredients Miguel Aragón, director of international cheese sales, Latin America Mike Brown, vice president, dairy market intelligence Ted Jacoby III, CEO & president, cheese, butter & dry ingredients Intro (with music): Welcome to The Milk Check, a podcast from T.C. Jacoby & Company, where we share market insights and analysis with dairy farmers in mind Ted Jacoby III: Welcome everybody. It is April 11th, 2025. We’ve had a lot going on in the last couple of weeks. Trump initiated some tariffs, took some tariffs off, and raised some tariffs. I think we landed in various different spots when the dust started to settle, and I’m pretty sure that the dust hasn’t settled yet. So, this market discussion could be completely out of date by the time we get back on Monday. I’ve asked a lot of my traders to join us for this discussion. My brother Gus is representing the Fluid Group and talking a little about milk and cream. We’ve got Diego with international sales and non-fat. We’ve got Brianne here to talk about cheese. We’ve got Joe here to talk about butter, and we’ve got Josh here to talk about whey, as well as Miguel to help Bri with cheese. And then we’ve got Mike Brown joining us. And so we’re just going to go around the horn and talk about our various dairy products. Obviously, we can’t avoid the topic of tariffs today. Let’s start where the milk starts, and start with milk. Gus, what’s going on in milk right now? Gus Jacoby: Well, we’re in the middle of the spring flush. So, in areas like the Mideast, Northeast, and even areas on the Eastern Atlantic, you have some pretty long milk. But an interesting dichotomy for the discussion is that there are areas of the country that aren’t so long. It’s mostly areas where a lot of milk-processing capacity has been added, like the I-29 corridor up in South Dakota or down the Southwest. Those areas aren’t quite as tight, but nonetheless, where it is long, for example, in the Mideast, there have been a number of plant shutdowns for periods that have made it really long for certain stretches. You add in some higher components, and you’re in for some interesting times right here in the middle of April. Ted Jacoby III: So we’re about a week away from Easter. Do we think things will get even longer over the Easter weekend before they maybe start to clean up a little bit? Gus Jacoby: Some plants that were down are coming back online, but not all of them, so I think you will have a little bit of both. It’s hard to figure out exactly how long we’ll be over Easter. But I think it’s safe to say that you’ll likely have enough plant shutdowns during that holiday weekend, and it’ll still be ugly. Ted Jacoby III: And what about cream? Cream has been the bane of many people’s existence this year, especially in the Midwest. Is it still ugly? Or is it starting to get better? Gus Jacoby: It’s not as ugly as it was. How about that? Ice cream demand has kicked in; perhaps some other Class II products have shown some demand for cream again. That, in addition to some longer skim-solids, probably provides those cheese plants with some fortification that can hold some fat back from there. Those two have firmed up the market a bit, so we’ve seen some higher multiples than we’ve seen maybe a month ago. Nonetheless, Ted, it’s still long. I don’t want to act like it’s gotten any significant tightness with what I just said. There’s more demand, and some cheese plants aren’t selling quite as much cream as they were before. Ted Jacoby III: How do you expect this cream situation and these low-cream multiples? How is this going to play out as we get into the heat of the middle of the summer? Gus Jacoby: That is a very good question. I’ve been trying to find some answers to that. I’ve engaged Joe a little bit to help me figure out this butter market a little bit. But there’s no doubt that the cream has been a butter maker’s dream, so to speak, and the fact that they can go out, endure these long markets, and call their price. At least, that was the case in the middle of Q1. Not so much now, but it doesn’t mean that it isn’t still long, and those numbers aren’t very profitable for them. They are. Nonetheless, as we know, most of your butter inventory is produced during this term, and the rest of the year is somewhat unknown. And I’m going to hand that off to Joe. Ted Jacoby III: Joe, is this butter market going to stay around where it is? If you were talking cream, we sure did feel like it should be going lower, even if it’s already down in the low twos. Well, where’s it going to go from here? Joe Maixner: As to where it’s going to go from here, I’m not going to give you any specifics because I don’t have that on my crystal ball. But I would say that we’re probably range-bound for a little while here. Alluding to what Gus was talking about on the cream, we’ve seen a lot of excess cream finding homes outside of churns recently. Churns are still getting plenty of creams, but they’re not getting all of the distressed spot creams as they had been earlier in the year. The big question is, and I hate to go into it already, but it will be the exports. How much product actually gets exported with all of this tariff situation? My personal opinion is that exports for butter really aren’t going to be affected. There are several different imports for re-export programs out there, as well as the fact that we’re just that much more competitive than the rest of the world, so a 10% tariff on most countries will not stop buyers from bringing in our products. Ted Jacoby III: Okay. And Gus, before we move on, what about liquid skim-solids? Skim condensed, skim UF milk, borrow, whatnot? Is that market getting better yet? Gus Jacoby: It’s loosened up a little bit, Ted, but I don’t want to act as if it’s crazy, right? I mean, you can get skim-solids right now. Some areas of the country have taken on the milk and sold skim-solids and cream. They take the milk at a discount and sell it. You’re just in the typical flush mode. But when we talk about that, you can’t help but talk about the fact that with skim solids now being readily available and probably some good deals out there in the marketplace to be had, that means that fortification solids are available for those cheese plants. Again, the higher butterfat component means you can keep that butterfat in the cheese plant. I’m not saying that that’s happening in any lengthy term. I think it’s happening on a spot basis. I don’t know what will unfold as we enter the summer and out of the flush. Ted Jacoby III: I’m going to ask this Gus, both for you and for Diego. I’m unsure if you guys will have the same or different answers. But you think one of the reasons we’ve had skim solids available is because of the non-fat price? That market has been difficult to trade in because the demand is so poor. Gus Jacoby: I think there’s certainly a lot of powder being made and whatnot. No doubt in this tariff climate, there’s probably some concerns about what will unfold in the future. But I also think we have really long milk right now, as we always do in the spring flush. And there’s certainly still plenty of powder being dried. So, Diego, do you want to take that from there? Diego Carvallo: Yeah, I do think it’s part of the reason. The thing is, you have powder where it’s not that needed; let’s put it that way. You have a little bit more powder now that the avian influenza has improved in California. And that product needs exports, while the product that cheese makers need for purification needs to be in the Midwest. But yeah, the answer is yes, and in part, that’s the reason. Yeah. Ted Jacoby III: All right. Since we’ve exhausted all of our liquid dairy options, we’re going to start talking about all those products we can store. And just about every single one of them is being affected in one way or another by this tariff market. So, Diego, I’ll stick with you. In this non-fat market, prices have been going down. I saw a statistic, it looks like our inventories of non-fat and skim milk powder are 57% higher than they were at this time last year. Is this a direct effect of the tariff war that’s going on, or is there more to it? Diego Carvallo: No, increasing inventories is not the result of the tariffs. It is the result of the U.S. being at a higher price than the rest of the world for close to, I would say, six months. So let’s say at the beginning of the year, end of last year, Europe was at a steep discount to U.S. in non-fat. And Europe was taking most of the little demand that there was around. So, as a consequence, the U.S. was dependent only on Mexico. Mexico hasn’t been buying as many had expected, and inventories grew. Now that we have the tariffs, depending on the price, it could continue to accelerate. I think the U.S. will need to go into a discount versus the rest of the world so that inventories stop growing. Ted Jacoby III: Okay. How hard is that going to be, with everything going on in the t

In this episode of The Milk Check, find out why some dairy producers may be eyeing the exit. Sarina Sharp, risk manager at Ag Business Solutions and the writer behind TC Jacoby’s Weekly Market Report joins the Jacoby team this week. Sarina brings invaluable insights as we dig into critical topics like: Milk prices and financial stability: How long can dairy farmers survive with Class III prices dipping below $17? Supply chain shifts: How whiplash tariffs, changing federal orders, and fluctuating demand are affecting the U.S. dairy market. Bird flu and milk production: How the bird flu has changed U.S. milk production, and where it may strike next. Tune in to The Milk Check episode 75: Exit stage left: Why some producers are selling out while they can. If you like milk (and we know you do), then pour yourself a mug and tune in for insights on how to navigate this uncertain landscape and stay ahead in the coming months. Special Guest: Sarina Sharp, risk manager, Ag Business Solutions, and market analyst for the Daily Dairy Report The Jacoby Team: Josh White, vice president, dairy ingredients Ted Jacoby III, CEO & president, cheese, butter & dry ingredients Mike Brown, vice president, dairy market intelligence Gus Jacoby, president, fluid dairy ingredients & dairy support Intro (with music): Welcome to The Milk Check, a podcast from T.C. Jacoby & Company, where we share market insights and analysis with dairy farmers in mind. Ted Jacoby III: Welcome everyone to the March 28th, 2025, edition of The Milk Check, a T.C. Jacoby & Company podcast. It is my pleasure to welcome a couple of special guests to the podcast this week, first, Sarina Sharp of Ag Business Solutions and the Daily Dairy report. Welcome to the podcast, Sarina. Most of you know that Sarina is also the writer of the T.C. Jacoby Weekly Market Report, which we publish every Friday. Sarina, we’re honored to have you join us today. More importantly, thank you for the partnership. I can’t tell you how often I get compliments on the weekly report that you write for us, so thank you very much. Sarina Sharp: Thanks for having me. Thrilled to hear it. Ted Jacoby III: In addition, we have a few of our usual suspects: my brother Gus, head of our fluid group; Josh White, head of our dairy ingredients team, and I am excited to announce that Mike Brown, formerly of IDFA and Kroger fame, is joining the Jacoby team as our new vice president of Dairy Market Intelligence. Mike, I am excited to have you on the team, and I look forward to having you on this podcast as a regular presence. Mike Brown: Well, thank you, Ted. I’m delighted to be here. It’s good to be back in markets and away from government regulation. I’m very excited about the opportunity. And Sarina, I am really looking forward to working with you. I’ve been a fan for decades now. Appreciate that opportunity to work with you as well. Sarina Sharp: Time flies. Ted Jacoby III: It sure does. So my first question is this. We’ve been talking for probably a couple of years now about the heifer replacements and the issue that’s been evolving because many dairy farmers are breeding to beef simply because it’s really hard to pass up $700 for a black cow rather than spending $3,000 to raise that calf into a heifer. But we’re getting to the point where right now, for example, our traders that sell into the retail space, they’re telling us demand’s not that great. Those who are selling into the food service space are saying demand’s not that great. Even our traders who export are telling us that Trump’s rhetoric about tariffs is having an effect and making it difficult for us to export. In other words, demand is not that great on the horizon. Milk prices have come down. Class III price is probably going to be in the low 17s, maybe even into the high 16s in April. Are we getting to the point that we’re starting to reach that line where dairy farmers are going to say, hey, beef prices are still high, we can sell our dairy cows, we can cull our herd, we can drop our cow numbers? And how does that play out given the heifer replacement issues that we’ve been talking about? Sarina, I’m going to ask you that question first. Sarina Sharp: Thought that one might be coming to me. I think there’s an assumption that cull rates go up when milk prices go down because dairy producers start to cull. So when dairy producers see low milk checks, the first thing that they do is actually try to increase milk production. So most dairy producers are not going to start culling in a way that shrinks their individual herd. However, there will be a group of dairy producers who decides, you know what? These are tough financial times. This is not for me anymore. I think especially right now after several years of very good prices and high beef prices, there is a group of dairy producers out there who’ve been looking for the right time to retire an exit ramp, and they were not going to make that exit when milk prices were high and revenues were good. But now that that’s here and beef prices are still high and heifer prices are very high, they have a really obvious out, sell my cows, cash it in, get a big check, either retire or move on to a different career. That allows other producers, the ones that want to keep their barn full but have been culling at a very low rate for the past 18 months, to buy some of those cows that they’ve not been able to find for a while and then boost their cull rates. It’s kind of a two-step process to where we see the herd actually shrinking, but I think that’s the route that we’re going to take. And then, of course, the longer that these low milk prices are around, the more we’ll get a second category of sellouts, which is people who financially can’t make it in this environment. We’re already seeing an uptick in the number of dispersal auctions on the docket, particularly in the Pacific Northwest where some producers are getting steep discounts. Those cows are going to move out of those older, kind of retired, and economically unsustainable areas, and they’re going to move into some of these other dairies. And then that’s going to allow cull rates to go up. Ted Jacoby III: Generally speaking, right now though, are the balance sheets for most dairy farmers in pretty good shape after a couple of really good years? Sarina Sharp: Yes, they should be. We’ve had relatively low feed costs. It varies a lot region to region and which Class of milk do you get and what’s your basis, but generally speaking, dairy producers are in good shape. And, of course, that beef income that we’re talking about, that has really helped pad the bottom line in the past couple of years here. Ted Jacoby III: With those healthy balance sheets, how much runway do we have before some of these factors really come into play? Because I’m assuming the savings accounts are in good shape, and so they can probably go three to four months at least in many cases without having to start panicking, and they’ll just ride it out for a while. But I have no real feel for how long that may happen relative to some of the past times when we get lower prices. Sarina Sharp: So aside from that group of producers I mentioned in Washington that is getting steep discounts, I think that’s generally the case, that producers have healthy balance sheets, they’re on good terms with their lender, no one’s in a panic here, they haven’t seen a small milk check yet. We’re talking about lower prices in April. That’s a mid-May milk check. So we haven’t really started the clock on the financial distress-type sellouts, and that’s a several month process, but I’ve been looking to retire now seems like a pretty good time. When you’ve got this much uncertainty and you’re starting to see milk prices slip, but cow prices are still very high, that’s an opportunity that you don’t want to evaporate. Ted Jacoby III: Would you say it’s safe to say then that it’s mostly the guys who want to retire or thinking about retire and don’t have children who want to go into the business, those dairy farmers who exit the business in 2025 are primarily going to be of that category, even if we have an extended period of prices, let’s say in the $16 range, just because the balance sheets are healthy and outside of the Pacific Northwest? The financially distressed dairy farmers, we’re probably a year away from reaching a point like that. Is that a fair way to put it? Sarina Sharp: I don’t know if we’re a year away, but I wouldn’t expect any in the next few months. It’s a second half of the year problem. Ted Jacoby III: Got it. Gus, I’m going to throw it at you. You got any questions for Sarina or Mike? Gus Jacoby: Yes. We’re looking at a summer with some depressed prices relative to what dairymen have been used to for a while. We also have some modifications to our federal order that are going to be implemented. Is that a little bit of a double whammy to producers? Or has that been factored into the futures that I’m looking at from a standpoint of what adversity dairymen might see here over the next few months? How bad is it? And how long will it last? And what’s our best guess with respect to that? Mike Brown: Well, I’ll provide a little observation on that. A couple of things I would observe as far as the federal order change, the futures I believe already have those factored in, so people that are making those hedges of course are recognizing those higher manufacturing allowances. I also know just empirically talking with folks that there’s going to be some adjustment in premiums to make up at least some of that difference, if not all of it in a lot of markets. And then of course, Class I, if you’re in a market with fluid milk, your prices are going to go up, so your blend change won’t be as great. I do think the market fundamentals are a whole different story though when we’re looking at $1.60 cheese, and even though costs are lower, we’re looking at much weaker margin than we were a couple of

Dairy markets have taken a hit, with prices dropping across the board. Global economic uncertainty, tariff concerns, and weak demand have sent prices for cheese, butter, nonfat dry milk, and whey tumbling. Our team tackles this and more, including: Pricing market predictions by dairy product category Tariffs and demand changes for U.S. products Global strategies to diversify supply chains and potential long-term impacts A potential shift on feed strategies and butterfat production Don’t miss Ted Jacoby III and his expert panel’s market discussion on what’s going on and what may be coming next. Listen now to The Milk Check. Intro (with music) Welcome to The Milk Check, a podcast from T.C. Jacoby & Co., where we share market insights and analysis with dairy farmers in mind. Ted Jacoby III: Welcome everybody to this month’s version of The Milk Check. We’re going to have an old-fashioned market discussion this month. Joining me today is Diego Carvallo, Director of Dry Ingredient Trading, especially on the international side, Greg Scheer, our Milk Marketing Manager, Jacob Menge, Vice President of Risk Management and Trade Strategy, Jared Miklasz, Sales Manager for the UFC Group, UF Milk and Cream, Joe Maixner, Director of Sales for Dairy Ingredients, and our Head Butter Trader, Josh White, our Vice President of Dairy Ingredients, and Miguel Aragon, Director of International Cheese Sales for Latin America. We’re recording March 7th. Before we get started, let me say this: stick around, and don’t go when we start to say goodbye. We’re going to have a Marvel version of this podcast. After we said goodbye, we ended up having another 15 minutes of conversation. That may have been the best part of the whole conversation. Thanks everybody. Pretty much every single one of our markets has been down 20 to 30 cents in the last month, whether it’s cheese, butter, non-fat, or whey. They all seem to be down 20 to 30 cents. Jake, is this a function of all of the tariff rhetoric coming out of the Trump administration, or is there something else going on? Jacob Menge: It’s tough to separate the components of what are really driving these markets. I think tariff talk is absolutely part of it. In our last podcast we mentioned that uncertainty just weighs on markets, and there’s more uncertainty today than I would say. There was the last podcast we did. The can has gotten kicked on the Mexico tariffs. I’m not sure how many times you can do that. This time when it happened, we saw it in equity markets, they didn’t really pop like they did last time. The can got kicked on tariffs and equities were like, “Oh, okay, good.” And when it happened yesterday, equities really just continued. They’re crying lower. I’m only bringing that up because this is obviously a macroeconomic-driven dairy and equities market. Tariffs are part of the problem, but demand is just poor, according to everything we’ve seen. I think we’ll hear from all of our product traders. That is certainly a factor, but it’s tough to blame anything. Ted Jacoby III: All right, well, let’s start with butterfat today. I’m going to ask Jared and Joe together. The butter market is down 20 to 30 cents, and the cream market has been ugly since Christmas. What’s going on on the demand side? Will this market stay this way all year, or is it a classic seasonal phenomenon? Because if there’s one market that’s probably the most insulated by the tariff talk, it would be the butter market, but butter, if anything, it almost feels like the heaviest of all of our markets right now. Jacob Menge: There are certainly quirks in each market. Dairy is not the only one seeing that, though, so if I had to lean one way or the other, yeah, there are macroeconomic influences in that demand piece. Jared Miklasz: Butterfat numbers are still hanging out somewhere in the 4.5% range compared to they’re about a year over year 2.5% jump in demand remains to be extremely long, and we’re seeing yogurt productions up, low fat cottage cheese as well. There’s just been a lot of fat added to the complex. As far as end in sight or pick up in demand, we’re sitting here on March 7th, six weeks before Easter, hoping to see a little uptick in demand as we get into the spring holidays. But what also gives me a little bit of a pause for concern, and seeing that hard ice cream sales surged up almost 21% year over year in January, those ice cream manufacturers are taking advantage of these cheap cream, which we know certainly continued into February. So I anticipate that they’re building up their stocks and there may not be as strong of a pool from ice cream as we get into the first part of summer year. This means we could be looking at a long pre-market into late summer. Maybe this lower demand will result in higher [inaudible 00:04:02] rates in Q2 and potentially impact the future of milk production, but we don’t see a real end in sight here. Ted Jacoby III: Joe, what about butter? Is the butter market long too? Joe Maixner: Yeah, butter’s long. It’s been reeling from the effects of this long cream market. Demand has been okay, but it has not been great. We’ve seen increased stock builds on the cold storage reports. We came in with 270 million on the January report, which is a pretty hefty number for that early in the year already. The production report that just came out showed that we were only up about half a percent year over year. Last year’s January production report was the second-highest on record for the month of January, so we bested that. We’re seeing strong builds on the butter side. We are the cheapest hat in the world. We’re trying to export what we can, but between the uncertainties with the tariff talk and the fact that our butter is only good in certain regions of the world, it’s tough to get things done. Ted Jacoby III: And I assume the reason it’s only good in certain regions of the world is ’cause we’re 80% fat versus the 82% fat coming out of Europe. Joe Maixner: Yeah, that and the fact that our butter color-wise doesn’t represent the same and the flavor profile is a little bit different because we’re not a primarily pasture fed dairy herd. So if it’s going into further processing, a lot of countries can use it. But if it’s table service or going into retail, a lot of people don’t want it because it doesn’t look or taste like the European or Oceania product. Ted Jacoby III: Those differences, what difference in price, how much lower does US butter prices need to be than European butter prices, for people to start considering buying butter from us instead as a result of those differences? Joe Maixner: I think we’re close. We’re about there. We’ve seen some business get done, but we’re coming up on some other global competitors as well that are marketing really cheap product coming out of China and India. We’ve seen product in the low fives being offered for that product 5,000 a metric ton. Ted Jacoby III: $5000 in metric ton. What’s that in dollars per pound? Joe Maixner: On an 82, that’s a 220. So we’re not there yet. Ted Jacoby III: Got it. So even though we’re a dollar lower than, let’s say, European prices, we don’t really compete against European butter, we compete against places like India and China and as a result, that’s where we need to be in order to really clear a lot of butter internationally? Joe Maixner: For those markets that are looking for a cheap fat option, yes. Ted Jacoby III: Got it. Joe Maixner: You have to keep in mind too, though, our two largest trade partners on butter export-wise are Canada and Mexico. And with all of the current political strife going on right now, there’s a lot of uncertainty there as well. Ted Jacoby III: Got it. Makes sense. Okay. Josh White: We continue to make more fat in our milk, and maybe this is the point at which we all of a sudden have saturated our market and that’s a real conversation, but I think one of the things Joe alluded to is even if we don’t have readily available trade between Europe and the US, for instance, just simply that the conversation’s happening and that we’re getting to use Joe’s words closer, that’s a signal. There’s no reason that the US and Europe should trade product back and forth. And some of those conversations with the European companies are, how can we use this cheap US butter fat price? Now, does that mean the US comes up or Europe comes down or both? I’m not going to predict that. It means the world market’s out of balance and we’ve got to start to figure out how to balance that. Ted Jacoby III: Well, let’s switch gears and let’s talk a little bit about non-fat. Diego, non-fat price’s come down 20 cents in the last couple of weeks. What’s going on? Diego Carvallo: A lot of things have influenced the price of non-fat, and the main ones are poor exports. I would say that’s the main driver. And poor exports is the result of several factors. So the first one is that we haven’t been competitive for several months already. Europe has been taking demand away from the US for at least three to four months already. They have been, at some periods, as much as 350, $400 below US prices. That obviously resulted in fewer exports from the US and more inventories in the US. The US had to export less product because of avian influenza, but I think that was maybe to an extreme, and as a result, we’re seeing that year-on-year inventories are way higher and at the same time the avian influenza is improving and production is slowly coming back, especially now during the flush. And we had to come down in terms of price, we had to become more competitive in order to gain that demand that usually buys from the US. And a good example is Mexico. Mexico hadn’t imported product from the US in several years and this year, they started importing product because the spread was very wide. Product from Europe was very competitive. Right now, that spread between the US and Europe has decreased significantly, and now we’re seeing way more deman

Could tariffs put U.S. dairy exports at risk? In this episode of The Milk Check, special guest Mike McCully, President of The McCully Group, joins us to slice through the uncertainty in today’s dairy market. With trade tensions rising, could tariffs spook global buyers and push them toward alternative markets? We tackle some of the biggest questions facing dairy exporters today, including: Will tariffs curdle U.S. dairy exports? How are Mexico and China adjusting their buying strategies? What happens if tariffs push global buyers to look elsewhere? Listen now to the latest episode of The Milk Check to learn what’s making waves in the dairy markets. Special Guest: Mike McCully, The McCully Group The Jacoby Panel: Diego Carvallo Jacob Menge Josh White Miguel Aragón Ted Jacoby, III Yara Morales Intro (with music) Welcome to The Milk Check, a podcast from T.C. Jacoby & Company where we share market insights and analysis with dairy farmers in mind. Ted Jacoby, III: Welcome everybody to The Milk Check. So, today, our topic is going to be tariffs and how that might affect the U.S. dairy industry. We are recording this at 2:00 PM on Friday, February 7th, and we’re going to talk about tariffs. Very likely, by the time you listen to this, it might all be irrelevant because who knows what the Trump administration is going to do next? Joining us today from our team is Miguel Aragon, our Director of Latin America’s Sales for Cheese; Yara Morales, our Director of International Sales for Dairy Ingredients; Diego Carvallo, our Head of International Trading for our Dairy Ingredients Team; and Josh White, the Head of our Dairy Ingredients Team. Also, Brianne Breed is joining us, Head of our Cheese Team, and Jacob Menge, Head of our Risk Management and Trading Strategy. In addition to that illustrious group, we’ve got Mike McCully today, the founder of the McCulley Group, who is probably well known to most everybody in the dairy industry, at least in North America. Mike, thanks for joining us today. Mike McCully: You’re very welcome. Happy to be here. Ted Jacoby, III: Mike, where do we stand right now on tariffs, what is the Trump administration doing, and what do we expect them to do next? Mike McCully: Had a very different conversation just a week ago when it looked like we were going to start on February 1st with tariffs on Mexico and Canada and retaliation from both countries and then China. But then, 48 to 72 hours, all of it got put on hold. The China retaliation was not on dairy; Canada and Mexico were on hold, so we’ve basically put all that tariff discussion over in a box, and we’re just going to sit and wait here for a while. It’s evolving each day. I read something yesterday or the day before: “The best tariffs are ones that are not used.” Hopefully, that’s where things go, but we’ll just have to wait and see. Between this and H5N1 are two very unpredictable elements that we have to deal with in the dairy market, not just this week and next week, but probably for quite some time. Ted Jacoby, III: I couldn’t agree with you more on that one. Jake, are we expecting anything to happen next in terms of tariffs? Jacob Menge: I think something is happening as we speak. Trump talked this morning about, in his own words, reciprocal tariffs on unnamed countries. That is new as of this Friday. Trump and tariffs seem to have a cadence of news on Friday, which Wall Street really loves. That’s certainly new. I heard him mention Japan, I think today. So that is just wreaking havoc on equity markets and our markets. It’s this unknown. Markets just hate the unknown, and much of it is hanging out there. Ted Jacoby, III: Where we stand regarding tariffs, we’ve postponed putting tariffs on Mexico and Canada or any, let’s call it additional tariffs, the 25% tariffs, we’ve delayed for about a month, the possible 25% tariffs on those countries. But we have put 10% tariffs on China, and then China recently came back with some retaliatory tariffs of their own on U.S. goods, but it did not include dairy at this point, correct? Mike McCully: For now. For now, yeah. Ted Jacoby, III: For now, yeah, for now. So if we’re lucky, things will go quiet for about a month, and they’ll work some things out, and we’ll never get tariffs. But officially, we can say that at least directly tariffs are not affecting the United States dairy industry’s ability to export. Having said that, Miguel, how are our customers in Mexico reacting today? Are they getting prepared to import dairy products from somewhere else? Miguel Aragón: The talk about the town last month was to prepare, but also to look somewhere else. They looked at Canada; they looked at Europe. Some purchases were made from Canada and some from Europe, but the volume comes from us. They are of the mind of Let’s just wait and see, but let’s have another avenue. Of course, in Mexico, you have the volume, but you also have the peso. So if the peso devaluates, then everything’s more expensive. It’s a wait-and-see approach right now. They trust that the market, that the peso didn’t go to 23 or it almost hit 22, but it didn’t. They don’t think it will be as bad because there is a lot of pressure from the U.S. dairy industry not to do anything to dairy. So we’ll see. Ted Jacoby, III: So right now, both the U.S. and Mexico dairy industries have their fingers crossed that nothing happens, but obviously, we just don’t know. Miguel Aragón: That’s correct. That’s correct. It’s a wait-and-see approach. Ted Jacoby, III: Yara, what about your customers? Yara Morales: Customers think that if that happened, they would obviously think that the pesos would go up to 23 and maybe more. Mexico does all the customers say. Mexico needs the United States products; they want to stay in the United States. They are trying to see other places like Belarus, Poland, Europe, or S&P because they want to stay with the United States. We’ll see, like Miguel said, it’s early. We don’t know what’s going to happen. The market for Mexico is the United States. Ted Jacoby, III: Are we seeing good demand in Mexico? Yara Morales: January was fantastic. Everybody wants product. There’s no inventory in Mexico and the final customer, and there’s not too much inventory in the border either. So the customer needs the products. Even with all this situation that is happening in Mexico with the new government and what happened in the United States, everybody is cautious about the demand, and the consumption demand is very low. So that’s why the customer doesn’t need too much product that used to be. It is also slow at the beginning of the year because everyone in Mexico must pay taxes. They named it [foreign language 00:05:41], so it’s hard, but even though it was hard, I was surprised by the demand; it was really good. Really, really good. We have good sales, and everybody asked for products, but like always, Mexico is looking for prices. Ted Jacoby, III: Do you think they’re building inventory right now, Yara? Yara Morales: No. No, they don’t build inventory. They buy only what they need. Building an inventory is hard because the interest rate is high. It’s doubled in the United States. I mean, it’s so high. So they are buying only the product they need at that moment. They don’t want to purchase inventory. No building inventory right now. Ted Jacoby, III: With the risk of tariffs making the product more expensive, they still want to live hand-to-mouth. Yara Morales: Yeah, and especially now that we see the market is going down, the purchase is going down, yeah, they’re paying less than in January. Right now, the market is 1.30, 1.20. They’re expecting it to be 1.28. So yeah, they’re also waiting to see what will happen with the market. And what happened with the tariffs. No, they’re not building inventory. Ted Jacoby, III: Diego, what about China? Let’s just speculate and say that China ends up putting tariffs on U.S. dairy products. How will that affect our exports to China? I assume New Zealand will still tend to win most of the bids, but we’re still exporting many whey products. Diego Carvallo: The U.S. has always been a big exporter of powders to China. So I think overall, if you see a significant tariff in place, you will see a reshuffling, reorganization of international powder flows or pipelines. More products from New Zealand will probably find homes in China, and more products from the U.S. will find homes in other markets where tariffs make the arbitrage more competitive. My first impression is right now, the U.S., we haven’t been very competitive to China when it comes to non-pad, but when it comes to WPCs, the whey, the MPCs and other products, higher value products, I think that’s where the main risk is right now with those tariffs. So I believe European WPC80 will find a competitive advantage in China, and we’ll see more imports flow that way. Ted Jacoby, III: That would make sense. Mike McCully: And Ted, I’d add on to that. This is one where I’ve reminded people in the last few months, some of which we’ve seen in the movie before. You can look at 2018 and what happened when China retaliated against the U.S. whey. There was also African swine fever, which was another part of it. But if you look at the data from 2017 to ’18 and ’19, there is a very significant drop off in exports of whey products from the U.S. to China. The African swine fever is a part of that, maybe a relatively large part, but there are directionally lower and probably significantly lower exports. If that goes through, Chinese buyers will look for other sources even though there aren’t tariffs. I can tell you that when I talked to folks selling to China on the Friday after the election, they said, “Find me other non-U.S. product sources.” Another one, just this last month, was, “Do not bring me a new supplier to qualify out of the U.S. for the next four years.” So those things are happening even without real tariffs; the impact is still there. Ted Jacoby, II

What will shape the dairy industry in 2025? Are you ready for it? In this episode of The Milk Check, we tackle the big question: what’s ahead for the dairy market in 2025? Spoiler alert: There’s no shortage of opinions—or uncertainty. 🐮 Heifer shortages vs. USDA projections: are we heading for a reality check? 🐄How will shifting cow populations reshape regional American production? 🧈 What is going on with butter? What’s ahead for 2025? 🌏 Will export demand stabilize or shake up the market? Our team debates critical factors impacting the year ahead, including herd dynamics, regional processing capacity, and export competition. From farmers to Futures buyers, this is your go-to episode for staying ahead of the dairy market’s evolution. 🎙️ Listen now to gain insights about cows, cream, and commerce on this episode of The Milk Check. Intro (with music): Welcome to The Milk Check, a podcast from T.C. Jacoby and Company, where we share market insights and analysis with dairy farmers in mind. Ted Jacoby, III (T3): Welcome everybody to our January 2025 version of the Milk Check podcast. Today, we will do a bit of a market outlook for 2025, and I’ve got most of our traders on with me to share their thoughts on what might be coming down the pike. That would include my brother Gus, who runs our fluid group; Greg Scheer, who’s head of our milk division; Joe Maixner, who handles our butter desk; Don Street, who does a lot of our analysis in terms of milk production, heifer supply numbers, cold storage, those kinds of things. Josh White, head of our dairy ingredients, runs our whey protein desk. Diego Carvallo, head of our international sales and runs our nonfat book; Jacob Menge, head of risk management; and Brianne Breed, head of our cheese group. Today, the group of us will get together and talk about the different segments of the industry and what we think is in store for us in 2025. So, thanks for listening. I think you’ll enjoy this podcast. We have been talking a lot internally about the heifer supply and the fact that there just may not be enough heifers to grow the milk supply, but I was talking to someone whose opinion I think pretty highly of the other day, and he told me that he knows of 60,000 cows that are going on new dairy farms in 2025, which makes me wonder if what we’ve been talking about with the heifer supply is true or if maybe the numbers we’re getting from the USDA are wrong. Do you think the cows are really going to be out there? Do you think we’ll be able to grow our milk supply in 2025, or do you think the shortage of heifers is real? Greg Scheer: Well, I think some areas may have a shortage of heifers. Obviously, some big farms have planned expansions that may not be counted in that number, but there are still tight supplies of heifers. Some of the bigger farms have their own replacements available. So, I do think it’ll limit how much milk production can grow. Gus Jacoby: Yeah, it’s hard to argue with what Greg just said. I mean, the economics are there for Garmin to continue to go to beef, and therefore, we don’t foresee the heifer supply growing, only shortening. Now, that doesn’t mean that some larger farms that have some affiliations with calf ranches can’t manage their heifer supplies as they need to grow into some new farms or current farms that require more production for new plant capacity coming on in their regions, but I don’t think there’s any doubt that we’re going to have a limiting factor on cows that puts a lid on it. To be clear, Teddy, we had a big influx of cows in the middle of the year when some new capacity came on in the southwest. We only ended the year with 20,000 cows up, including over 300,000 fewer cows culled. So, to keep the cow numbers relatively the same, we must continue culling fewer cows. We’re just going to find out whether that’s something we can get away with for the foreseeable future because the herd will certainly get older, and we’ll see how that affects milk production, yields, solids, components growth, and so on. Ted Jacoby, III: So, I’m hearing from some of our traditional dairy economists that they think we can add as many as 100,000 cows this year. Is that high? Gus Jacoby: I think that’s high, but let’s say you have 100,000 come on, and we continue to cull 300 to 350,000 less than we did in 2023. It’s a plausible scenario, although I don’t perceive that happening. What I perceive is maybe another 20 to 50,000 cows increase. It will increase more in the areas around the new plant capacity. It will decrease less in other regions and continue to cull at very low rates because farm economics will be good enough for dairymen to do so. We’ll lose cows in certain regions, but those regions are without plant capacity, so we’ll still increase yields and components. Ted Jacoby, III: So, we’ve got new plants coming online in the I-29 quarter up in South Dakota, Minnesota, that area, and we’ve got new capacity in Kansas and down in the southwest. So, I’m assuming that’s where we’ll probably add cows. Where do we lose cows? Gus Jacoby: I think you’ll continue to lose cows out West, California, Pacific Northwest, and Southeast. These are the regions where you continue to show that trend of cows exiting. Obviously, in those areas where new plant capacity comes on, you will see some increases because people are bracing for that and preparing for that. Ted Jacoby, III: So if we summarize kind of what we think about milk production, we’re probably going to increase milk production and increase cow numbers in the upper Midwest, specifically, the I-29 corridor and in the Southwest, lose cows in the West, California in that area, which also means increased milk into Class III, decrease milk in Class IV, and then also we haven’t touched on it, but if we’re going to increase cow numbers without increasing necessarily the heifer supply, that means we’ve got older cows, which will slow down the component increases we’ve been seeing the last few years at the same time. Gus Jacoby: It’s not like we’re getting that much older. It’s a small percentage that are older. Obviously, if a dairyman has the ability to get one more calf out of a cow, considering the beef price and the opportunity to gain some revenue there, there’s an incentive for them to do that. There are dairymen out there who have the wherewithal to bring on heifers, more so than others, and those tend to be the folks in those regions where plant capacity is being added. Right? There are bigger farms there. A bigger question is focused on the northeast as we add a little bit of capacity there. I don’t think those dairymen have access to the heifers like those in the southwest, in the western portion of the upper Midwest. I think that while there are some dairymen that will build new farms in that region that I’m aware of, to counter that argument, I also think that area hasn’t really been hit with the bird flu to the degree that other areas have yet, and that’s a concern for me as we try to fill capacity in that region. So, there are some unknowns on the eastern side of our country. I think there are some limiting factors on how those regions will be able to get more cows. Josh White: Guys, I want to jump in, too, because we’ve been talking about this new plant capacity, and we’ve talked about it a lot over the past year, but those facilities are just now coming online. Generally speaking, from the moment someone decides to move forward with it to the moment they’re commissioning milk through a new facility, it is two to three years, from the moment you’re signing up to the moment you’re actually making milk. The Same happens with a dairy’s decision to breed heifers that return to the dairy herd. Before that animal enters the milking herd, you breed it; then you have nine months of gestation, 22 to 24 months before that animal’s in the herd. So you’re making those decisions to invest in dairy for two to three years forward. They align with each other; they’re linear. The decision to build a plant and the decision to expand herds are about the same. So we’ve talked about the plants that are coming on right now. I mean, there are a few of them that just have started taking milk over the past six months and some that we’ll be taking in milk over the next six months, but it seems like we haven’t had any major announcements. How many more announcements do we have for 2026 and 2027, or do we have an air pocket? Ted Jacoby, III: In terms of plant expansions? Josh White: Yeah, and then will that also result in an air pocket in dairy heifer decisions, especially giving compelling alternatives to take those animals to beef? Ted Jacoby, III: Josh, I think you make a really good point. Any new capacity that I’m hearing about that isn’t going to be coming online in the next, let’s call it 10 months. I’m not really hearing much beyond that unless it’s plants that haven’t even broken ground yet, and so we’re probably talking 2028. Josh White: So, that might be the missing piece in this equation because we are outperforming milk expectations right now. Would all of us agree? I mean, from a component standpoint and an animal standpoint, we’ve been on this narrative that the heifers aren’t out there. The beef market is so attractive that, at some moment, it will be very difficult to grow this herd. Yet we’ve found a way to do it, and many are projecting, at least for the rest of 2025, that we’re going to continue to do so, and we’re skeptical, skeptical about how we are going to continue to grow. How long can we continue to retain animals in the herd? What’s going to happen as the herd gets older? All of this matters, and for sure as material, but is it also the result of structural decisions made in 2022 and 2023 to expand dairy capacity, both from a manufacturing or processing standpoint, but also from the dairy herd? And when we look at what 2023 and 2024 were like, were those decisions being made under the economic co

Where is the global dairy industry headed? In this episode of The Milk Check, we’re joined by Andy Powers, vice president of technical services at the American Dairy Products Institute (ADPI), alongside members of the Jacoby team, to explore the future of dairy. Together, we tackle emerging trends, market forces, and opportunities for dairy proteins, fats, and other dairy products in the next 5 to 10 years. Emerging trends: The role of GLP-1 drugs in driving future global demand Dairy vs. plant proteins: How the structure of dairy and plant proteins differ and what that means for nutrition and health The rise of butterfat: U.S. butterfat and the role of exports in future consumption Cheese’s global opportunity: How cheese production is ramping up to meet international demand Dairy co-products: Innovations in whey protein, lactose, and milk protein isolates to address shifting market needs From health-conscious consumers to industrial applications, we examine how dairy is evolving to stay competitive. Plus, check out The ADPI 2023 ADPI Dairy Products Utilization & Production Trends report here and the ADPI Ingredient Resource Center here. Don’t miss this comprehensive look at the future of dairy with insights from Andy and the Jacoby team, including Ted Jacoby, III, CEO & President, cheese, butter & dry ingredients; Josh White, vice president, dairy ingredients; Diego Carvallo, director of dry dairy ingredient trading, and Tristan Suellentrop, sales associate, Into (with music): Welcome to the Milk Check, a podcast from TC Jacob and Company, where we share market insights and analysis with dairy farmers in mind. Ted Jacoby, III (T3): Hello, everyone, and welcome to this month’s episode of the Milk Check. Today, we are excited to have Andy Powers, vice president of technical services for the American Dairy Products Institute, joining us. Joining us as well, we have some of our usual suspects. Josh White, vice president of Dairy Ingredients, Diego Carvallo, our Director of International Sales for Dairy Ingredients, and Tristan Suellentrop, our sales associate and resident 20-something on our sales team. Guys, thank you, and Andy, excited to have you with us. Thanks for joining us. Our topic today is: what’s the future of dairy? Where do we think demand is going to grow globally in the dairy industry? What are the components that this industry is going to see the greatest demand and opportunity for as we look out over the next 5 to 10 years? Andy, I’ll start by saying we just recently had a five 10 year vision conversation within our organization, and one of the things that we spent a lot of time talking about was how dairy proteins, specifically as you look at the way the developing countries and the way their diets are changing and growing and developing when you look at the aging populations of many parts of the world when you look at the addition of medicines like Ozempic and Wegovy, protein is just going to become a bigger and a bigger part of the nutritional profile of what human beings eat. I’ve got two boys in their twenties, and they are much healthier eaters than I ever was when I was in my twenties. That means they’re consuming a lot more dairy protein. Andy Powers: Right. T3: What are your thoughts, and where do you think dairy proteins fit in that space? Andy Powers: First and foremost, because I’ve worked for the American Dairy Products Institute, you’re going to hear me talk about dairy. I drank the Kool-Aid a number of years ago. I believe in dairy’s value proposition, and I believe in its strengths in terms of nutrient density and complete nutrition. You talked about some of the driving forces that are going to influence demand for dairy in the future. We’ve got population growth as the baseline talked about an aging population. I think that’s significant. The ongoing current modernization or GDP growth meaning that people can transition from the most commodity-oriented and cheapest foods up the value chain and start to consume according to their preferences instead of their absolute needs and availabilities. All those things, I think, are supportive of dairy, and then you add some icing on that cake. You mentioned GLP-1. Everybody’s talking about this class of drugs, the GLP-1 agonists. Ozempic is the one that’s maybe most consumer-forward. It’s off-label use for designer weight loss. I guess I would say it needs to be accompanied by the consumption of high-quality protein or loss of muscle mass as a problem. And so all those things, I think, speak to a higher protein diet in the future. I think if you follow the money, there’s been a lot of US investment in plants to process milk and turn that milk into, among other things, high-protein foods and ingredients. So all of those signs, I think, are positive. It’s just a matter for dairy to flex its muscles, showing its adaptability, and overcome some of the challenges to have a pretty bright future. That’s my view in a nutshell. Josh: You spoke of the GLP-1 drugs. Obviously, that’s topical, but the average person doesn’t really understand why that drives additional protein consumption, maybe in a short way. Can you go into a bit more depth? Is this medical advice by people who are put on this drug that they need to really, really increase their protein consumption? Are they steering people to dairy, or is that just the popular solution? Andy Powers: Yeah, great question, Josh. To be honest, I’m not sure that I could tease out the difference between people who are accidentally going in the direction of dairy and people who are being instructed to do so. And I’m certainly not a dietician. I’m not a physician. So whether or not the science says that dairy is the best, the one and only answer for the particular consequences associated with the GLP-1 drugs, I couldn’t say for sure. But what I can say is that on the label, it was originally developed to help people manage diabetes, right? A follow-on consequence of appetite suppression is reduced caloric intake. And without balancing that reduction in taking in calories with some sort of improvement in the quality of the calories that you take in or a deliberate choice to go after a high protein density diet, much like a sports nutrition sort of a diet, the consequence is loss of muscle mass. That’s definitely undesirable whether you are on-label or off-label for the drugs. And the good news is whether or not medicine is pointing people to dairy, dairy’s nutritional value proposition is very much aligned with those needs. If you’re going to try to build muscle or retard the loss of muscle, then dairy is far and away the best choice at this time. T3: Andy, why dairy instead of plant proteins? What makes dairy the better choice of protein relative to some of the other protein options out in the marketplace these days? Andy Powers: Yeah, it’s a couple of things. I’m going to start by just saying complete nutrition and what that means for us as animals consuming protein, in particular, is that we have to take in those essential amino acids or those indispensable amino acids to support our own protein synthesis. And that’s not just about muscle, it’s about hair, it’s about bone, it’s about connective tissue, so virtually all of the structural things that make us have a substantial amount of protein associated with them. We build those things through synthesis pathways, and that means that, in part, we can make some of those building blocks to create muscle, to create connective tissue with our own biomechanical machinery, but we have to take in some of those, and those are those essential amino acids or those indispensable amino acids. So when you start to look at foodstuff, what makes dairy special is that it has the densest concentration of, let’s say, especially muscle synthesis supporting amino acids of any foodstuff out there. And so far and away, it is the best choice when it comes to taking in quality calories that your body can readily transform into its substance, especially muscle. So, among those essential amino acids, and there are nine of them, you hear a lot about BCAAs. So, if you’re going to buy a protein powder at the store, maybe it’s saying on-label contains five grams per serving of BCAA. So those are branch-chain amino acids. We are mammals; cows are mammals. So, what cows are producing is very much aligned with what we need to take in. Dairy is very high in those branch-chain amino acids. It’s the densest of the essential amino acids and contains high levels of those branch chain amino acids. So we’re talking about valine, leucine, and isoleucine, and nothing better than that cocktail for us to take in and then turn into healthy tissue. T3: And so when comparing dairy proteins to many plant proteins, it’s the lack of those BCAAs and plant proteins that makes it harder for the human body to synthesize a lot of those plant proteins successfully at the same level of intake at the same efficiency. Andy Powers: That’s right. So you can still get it done with a plant-based diet, but sometimes you have to take in substantial multiples of alternatives that are plant-derived to hit those same minimum requirements that dairy can deliver more readily because it is a denser source of those same nutrients. And then you get into some factors on top of plant composition not being as well aligned with human dietary needs as animal protein sources are. Some, like soy, for example, contain anti-nutritional factors. This isn’t a made-up thing. I can’t pretend to understand all the science of it, but the reality is that as you take in soy, some of its composition will inhibit your ability to digest and take up those amino acids and peptides, and that means less efficient utilization of the nutrient, to begin with. So it’s one thing to analyze it chemically and say, Hey, the makeup is the same. But when you get into this digestibility piece, not only can plant proteins be less digestible innately, but

Today’s dairy market is global. In our latest episode of The Milk Check, we dive into the New Zealand and Oceania markets to understand how they may impact the U.S. dairy market. Join Jacoby and our two special guests Jo Bills, ag market analyst and director of global Insights at Ever.Ag, and Steve Spencer, managing Director at Ever.Ag as we dive into dairy. Tight global supplies of skim milk powder and strong demand will likely keep prices high through 2025 New cheese plants in the U.S. market increase Class III supply and may drive cheese prices down and limit powder output, tightening global powder supply New Zealand enjoys tariff-free access to the Chinese market, but China’s economic woes have reduced dairy demand Lower Chinese demand pushed New Zealand to focus on skim milk powder, butterfat, and cheese And lots more information on the global dairy market and our predictions 2025. We have a positive outlook for dairy in 2025, but cheese may be our wild card. Get the market scoop from the Jacoby team, including Ted Jacoby, III, CEO & President, Cheese, Butter & Dry Ingredients; Josh White, Vice President, Dairy Ingredients; and Diego Carvallo, Director of Dry Dairy Ingredient Trading. Intro (with music): Welcome to The Milk Check, a T.C. Jacoby & Company podcast where we share market insights and analysis with dairy farmers in mind. Ted Jacoby, III (T3) Hello, everybody, and welcome to The Milk Check. This month, we are excited to welcome special guests Joanne Bills and Steve Spencer from Freshagenda to share their thoughts on milk production and dairy demand in Asia, Oceania, and internationally for 2025. Joining us from the Jacoby team are Josh White and Diego Carvallo from our dairy ingredients team. Welcome, everybody, and thank you for joining us today. Steve Spencer: Thank you, Ted. It’s great to be here. We enjoy these. We’ve done a few of these, so it’s always good fun. T3: We’re about to enter year two of China’s tariff changes regarding New Zealand dairy products and how they are imported into China. For our audience, many of whom are dairy farmers here in the U.S., why don’t you give us a quick overview of those changes? Then, we can discuss what that has meant for dairy markets in that region and how it affects dairy prices. Steve: In basic terms, New Zealand has tariff-free access to the Chinese market. That was preset for an extended period. They were on a slow rundown of tariffs over a long haul. A few years before that was due, they had a review, and it seemed to be that that was just a little period to push it out a bit longer, and that’s in the rearview now. So, we’re in a very tariff-free environment for New Zealand exports, which you’d think has freed them up to go wild. The only trouble is China’s not a market that is allowing many people to go wild right now because that’s come at the same time as China hitting a phase of the second wave after Covid; the second wave lockdowns were much harsher, much longer, much more damaging to the economy and so that’s crippled demand for dairy in many parts of the market because spending, consumer spending has been depressed and many things are contributing to that right now and that’s still a happening thing. So, that has freed New Zealand up to grow its share of the market in skim milk, powder, cheese, and butterfat and they’ve certainly done that at a time when the import volumes are a lot lower. So, we’ve got to sit back and look at the overall trends in China. We think they’re just off the bottom regarding those import trends, but New Zealand has certainly picked up share, and their exports to China are falling. You could take the story of product by product because the products that China isn’t producing or doesn’t produce, skim milk, powder, butterfat, cheese, a small production of those, really the trade is probably following the pattern of demand we’re seeing in that market. There have been some false starts, and some volumes pick up and go in slow again, so they’re seeing lots of volatility in the trade over time and whole milk powder; it’s about how much of a balance China’s got, how much they’re producing internally, what’s happening to their milk use across all categories, and then what role do imports play in that. That’s still a sad story. We have seen the whole milk powder trade over the last six months, but it is still 28% down year-on-year. New Zealand is exporting, and New Zealand has the dominant share of that. T3: Do you expect what’s happening in China with their import volume? Is this a new normal? Do you think we will stay down here or end up closer to where we were four or five years ago or somewhere in the middle? What should our expectations be going forward for China? Joanne Bills: Yeah, I think, Ted, it will depend a lot on what happens with their internal production. We have seen good growth in milk production over several years, but more recently, that growth has stalled. Raw milk prices are well down, and there have been rumors talk of the government starting to take action to reduce cow numbers. They certainly did that in the pig herd. We haven’t seen any follow-through in the dairy industry, but they’re very focused on getting that internal Chinese dairy supply chain rebalanced and aligned with demand. You would have to think that they’ll still have some demand for, particularly as Steve said, the things that they don’t produce internally. Butter demand has been surprisingly good, given what prices have done, and there’s also been fairly steady growth in cheese. It’s really hard with China I think, Ted, to know what normal is because we’ve had all these levels of normal over the years that there’ve been such a dominant force in dairy, but we probably won’t get back to where we were in terms of whole milk powder demand and that’s probably why Fonterra is very much about diversifying into other markets and products. T3: And that was where I was going when I was asking that question. We’re dealing with a new normal when it comes to China and we’re going to be exporting less to China globally, which means New Zealand may be increasing their market share, but they’re increasing market share of a shrinking or at least a smaller market. Joanne: That’s spot on. T3: New Zealand’s dealing with this smaller import market in China for their products, even though they’re increasing market share, they’ve got to find new places for their product. Steve: I think they’re doing it with a brave face, Ted. I think they’ve done a good job. They’ve had some help. So, when the whole milk powder demand plummeted and charts and that are spectacular, I think they had to pivot towards skim and butter and hopefully build their cheese trade. That didn’t happen in cheese, but so they’ve had to put that milk in a different uses. Around the same time, we had a few problems in South America, so their whole milk powder trade was helped. They were able to push things into markets, push product into markets where the South Americans couldn’t supply, but now I think we’re seeing a adjustment to say, “Yep, that’s a market that isn’t going to grow much from where it is in terms of our whole milk powder requirements.” And now the focus for them is very much on protein, milk protein, high functional evaluating in that respect to use up skim solids. Josh White: Is that fair to say that during peak production there’s a certain amount of whole milk powder that always has to be made? It’s a shrinking amount it seems like every year, and we should expect it to continue to as we go into 2025, giving them more versatility as to where they can allocate the raw milk to in New Zealand. That being said, if China demands whole milk powder, they’ll be quick and the obvious ones to respond. Steve: Yeah, they can flex, Josh. I think they can divert tankers literally. It’s just which plant do they send certain tankers to when it really matters. I think the flex is still there. The hint about how they’re going in terms of their total book and what they’ve got in front of them is the annual GDT forecasts they put out of their total almond powder trade on GDT is usually a good sign for where their overall production and demand is in their book, and that hasn’t shifted much in this year. It shifted down a little. We think it’s probably a little bit up on last year even, but the peak is much stronger this year and we’ll come to that I’m sure, but that’s a different dimension they happened to manage. Josh: So, before we shift to talk about supply across the board, maybe touch on a couple other interesting data points on the demand situation. How would you describe the rest of Southeast Asia and then you mentioned a bit more about South America. Are we forecasting or expecting South American situation to change from a demand standpoint much or is that really all supply driven? Steve: Yeah, let’s start there first. So, the issues is how the America were about supply out of Argentina and Uruguay where their milk production really tanked down 10 or so percent for a period of time. The economies down there aren’t great either, so their domestic consumption has been impaired. Looked okay for a while, but that’s now coming back. So, they are putting more into whole milk powder now, but the whole economy is trashed. Input costs are very high for farmers, they were having to struggle through on very thin margins and difficult cash flow, different currency situation. I think it’s improving now. Production is back on par, year-on-year, so that is starting to ride itself. We talked about the China demand thing first. We talked about the supply side, supply chain balance, but the demand side and China’s still got, we think, a long way to go, Josh, in getting back to some sense of growth. We’re certainly seeing it in a few little sectors, but consumer spending has been knocked around by the impact on housing. Household incomes or household wealth has been damaged by the property mar

As summer fades, we're moving into peak demand season for the U.S. dairy market. Keep on top of shifting trends with The Milk Check. Guest host Josh White and a panel of industry experts discuss the latest trends and projections for U.S. dairy as we approach this critical period. 💸 Blue tongue’s impact on European milk production.🧈 Butterfat is bucking the trend with a strong inventory.🍦 Cream prices have softened after a brief surge in the last few weeks.🧀 Cheese markets set record-high prices this year, but is the tide turning?🐄 Milk powder prices are on the rise as we head into peak demand season. Plus, we’ll look ahead to 2025: What impact will the expanded cheese production capacity have on milk prices in the second half of the year? Get the market scoop from Josh White and his team, including Diego Carvallo, director of dry dairy ingredient trading; Greg Scheer, manager of milk marketing; Jacob Menge, vice president of risk management & trade strategy; and Joe Maixner, national sales manager of dairy ingredients. Intro (with music): Welcome to The Milk Check, a TC Jacoby and Company podcast where we share market insights and analysis with dairy farmers in mind. Josh White: Hey, everyone. Welcome to The Milk Check. Today is Friday, September 20th. I am Josh White, filling in for Ted this week. We've entered that time of year when producers or processors, customers alike, we all put that summer fun behind us here in the Northern Hemisphere and focus a lot more attention on what's happening in the market today, closing out the year and thinking about what could influence the next calendar year. As a result, we think it's a great time to have what TC would call a good old classic market discussion. Today, I'm joined by most of our traders here at TC Jacoby and Company, and I'll lead that discussion in Ted's absence. So I'll do my best Ted impression and say, "Hey guys, where do we start?" Does anybody have a thought as to what we should cover at the beginning? I personally think it all starts with milk. Greg, I would love your opinion as to what's happening today and the market as it relates to milk moving across the country and what your thoughts are looking ahead. Greg Scheer: Thanks, Josh. Yes, we've seen tighter spot markets this summer and this spring compared to previous years. We have tighter milk supplies. We have a lack of replacement heifers. We have very expensive replacement cows. Producers have been holding back from culling as heavily as they usually do. We just don't have the replacements to increase milk supply. So we have firm spot markets. We've seen that this summer. We expect to see that this fall, but we are setting up for 2025 to be a tighter year for milk supplies because of those reasons. Now, that could be mitigated some. I've heard of very good harvests being put up, good quality, cheap feed, and producers will be able to feed those cows maybe a little better, but the fact of the matter is it's going to be hard to get cow numbers up. They'll probably decline, and the cost of any kind of replacement will be high. Josh: So Greg, you're talking through those dynamics and that doesn't take into account what the industry has discussed a lot about all these new plants coming on a new capacity. We've got another plant firing up any day now, another large one in the southwest that will likely start early in 2025, and a few plant expansions in the upper Midwest. How do you think that that influences this tightening milk dynamic as we go into next year? Greg: It will make the milk competition just that much stronger. For the producer, it should help get higher premiums for milk in those competition areas. Plants will have to plan ahead, and even in some regions where milk's traditionally been very long and can get all the milk they want, it will be harder next year. It's just more competition. It will maybe pull some milk from other plants, and some older,

In today’s episode of The Milk Check, we’re joined by Tim the Dairy Farmer, a farmer, speaker and ag comedian. If you think dairy farming is no laughing matter, then you haven’t met Tim. Tune in for a special episode of the podcast, where Tim and the Jacoby team discuss: Strong harvest likely leading to lower feed prices Could dairy heifer prices rival Black Angus prices in the near(ish) future? Could the milk price reach $30? Things you should never plan near the cow pasture Plus, learn how Tim got into the comedy biz and how he silences the hecklers. Don’t miss this episode of The Milk Check with Tim the Dairy Farmer. Intro audio (with music): Welcome to the Milk Check, a TC Jacoby & Co podcast where we share market insights and analysis with dairy farmers in mind. Ted Jacoby II (T3): Welcome, everybody, to the Milk Check. This month we've got a very special episode, we have a special guest, Tim the Dairy Farmer is with us today. Tim is going to ask us what we think is going on with these dairy markets, and we're going to do our best to give him an answer, and we'll see where the conversation goes from there. Tim, why don't you tell us a little bit about yourself? Tim the Dairy Farmer: I've been in the dairy business for 30-something years, taken my licks, started doing standup comedy as Tim the Dairy Farmer about 22 years ago, and I speak at agriculture events. I'm a standup comedian, I'm not a motivational speaker. I'm horrible at marketing myself there, Ted. So basically I'm a dairy farmer that does standup comedy, and they hire me to come to meetings, to wake up after guys like you talk. And here's another thing, this podcast is called the Milk Check, correct? T3: Yes. Tim: All right. This is how you know I'm a dairy farmer, y'all call it the Milk Check, I'm just happy my last milk check had a comma. T3: Well, that's why we call it the Milk Check, because we want to talk a little bit about markets and what's affected dairy farmers' milk checks. Hopefully most dairy farmers do have a comma right now because prices are halfway decent. But before we go to markets, Tim, I've got to ask, tell me about one of the most interesting agricultural events that you participated in. I'd love to hear a good story. Tim: Oh, man. I've got so many. It's not the good ones that you remember, it's the horrible ones. There's three shows, there's the one you planned to do, the one you do, and the one you wish on the drive home that you would have done. I've had all kinds of stuff go wrong. No, for the most part they're always fun. T3: All right. Josh White: So Tim, how often are you on the farm versus having to hit the road for comedy? Tim: I probably go off and do 30, 35 shows a year. Normally I fly out the night before and I'm back the day after. My brother's always been my biggest supporter, he covers while I'm gone. I couldn't have made it this far doing comedy without my brother's support, because we're partners in the dairy and he's always covered for me when I'm gone. T3: Where is the dairy located, Tim? Tim: Central Florida. We're actually over between Fort Myers and Tampa, where all the elderly people go to pass away, you take a right and that's where we're at. T3: When that hurricane came through Fort Myers last year, that affect you guys at all? Tim: No, it affected a few of my buddies. Nobody lost any cows, but barns were just crinkled up like aluminum foil and tossed around. I think over the years I've lost three barns to hurricanes. T3: Oh, really? Tim: Yeah. They tell you how it's rated for 80 mile an hour or whatever, and then when the tornado or the hurricane comes through it wads it up like a piece of paper and chucks it 100 yards. You're like, "Well, that wasn't rated right." Anyway. Go ahead, this is your podcast. T3: Tim, if you have a question to get the market discussion started, why don't you go ahead and shoot?