The Milk Check

What happens to dairy markets when one of the world’s busiest shipping lanes suddenly gets disrupted? With the Strait of Hormuz under pressure and trade routes across the Persian Gulf in question, exporters are scrambling to figure out how to move product. What does all this mean for global dairy demand? In this episode of The Milk Check, host Ted Jacoby III sits down with the Jacoby trading team to talk through what happens when geopolitics collides with global dairy trade. We dig into: How exporters may reroute product through alternate ports like Jeddah Why trade flows could shift between the U.S., Europe, Oceania and Southeast Asia How energy prices and freight disruptions could ripple through dairy markets Whether this disruption boosts demand in the short term or destroys it if it drags on Find out how one shipping lane could reshape the global dairy trade. Listen to The Milk Check episode 95: The Strait of Hormuz: What the Iran Conflict Means for Dairy Trade. Click below to listen or find us on Spotify, YouTube,  Apple Podcasts, and Amazon Music. 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: [00:00:00] Coming up on The Milk Check. The Strait of Hormuz is closed. The port of Dammam is closed. Joe Maixner: There’s definitely product that’s stuck, can’t get to its destination. Ted Jacoby III: Welcome to the Milk Check from T.C. Jacoby and Company, your complete guide to dairy markets, from the milking parlor to the supermarket shelf. I’m Ted Jacoby. Let’s dive in. Today we’re gonna talk about what’s going on in the dairy market, specifically global trade. We’re recording this on March 6th, 2026, and seven days ago the U.S. bombed Iran.  As we [00:00:30] speak, the Strait of Hormuz is closed. The port of Dammam is closed, and trade flows are getting rearranged as we speak. Today with me, we have Joe Maixner, head of our butter trading book. We have Josh White, we have Diego Carvallo, and we have Mike Brown. And we thought it would be appropriate to discuss what’s going on in the Middle East, specifically how it’s affecting the dairy industry, and what its short-term and long-term effects will be on dairy demand. We’re gonna start with Joe. Joe, what are you hearing out there right [00:01:00] now? Joe Maixner: There’s definitely product that’s stuck, can’t get to its destination. Both going into Port of Dammam and other Middle Eastern ports for that matter. With butter’s moves over the past year, the Middle East market had been probably the largest growth opportunity for us in global exports for butter. Fortunately, this all happened after the rush for Ramadan to get everything in. So, I would say that it’s not as bad as it could be right now, but there is certainly product that’s stuck on the water looking for [00:01:30] alternative options to get to land. And there’s quite a bit of product that still is waiting to leave the U.S. that we’re not quite sure if and when it will actually leave. A lot of it’s still up in the air. Nobody really knows, what to do yet. I think it’s still too early to tell. Nothing’s been canceled per se, but the longer that this drags on, we’re certainly going to have some effects from it. Ted Jacoby III: There’s a lot of talk that maybe this war is gonna be a five to six week war. If the Strait of Hormuz is closed for five to six weeks, as is the [00:02:00] Port of Dammam, is that enough to cancel orders? Is that too long? Joe Maixner: I would say it should probably cancel some orders. I wouldn’t say it would cancel everything, but they’re gonna have to get product at some point from somewhere, They can’t completely stop. People are gonna have to eat. Production will still have to continue, and they’re gonna have to source product from somebody. And if we can’t get it there, they’ll find it from somewhere else. Ted Jacoby III: I’m hearing that one of the things that they’re exploring is shipping into Jeddah, which if you look at a map of the Middle East, Dammam is in the Persian Gulf on [00:02:30] one side of the peninsula. Jeddah is basically on the exact opposite side of Peninsula on the Red Sea. So they’re talking about shipping into Jeddah and then shipping it across the land to where it might need to go. The first thing that occurs to me is Dammam, I believe, is a bigger port than Jeddah. And so if you take all those container ships going into Dammam and send them to Jeddah instead, there’s not gonna be enough room to unload ’em all. And so, at the very least, the traffic’s gonna be pretty horrific. Are you guys hearing people working on that too? Joe Maixner: Yes, they’re looking at alternate ports of [00:03:00] entry and moving the product around. Jeddah is one. Casablanca is one. Going into Egypt is one. There are options. All of ’em are more expensive and it’s just gonna depend on how desperate the end user is to get the product. Josh White: We’ve got some experience dealing with trade disruptions over the past decade, and we tend to see the playbook similarly each time. And then when we talk about what’s specifically happened in our markets now, I think We can watch for some warning signs. Number one is in these type of situations, we start worrying about trade [00:03:30] flows, energy, freight, congestion, those type of things, all impacting markets and trade. Additionally, when we think about this conflict, there’s maybe three different scenarios to talk about. It’s very intense right now. Does that intensity continue for a very long time? What does that mean for our trade? It’s very intense right now for, but after, four to six weeks, maybe it continues on, but it’s more stable or consistent and the world learns how to trade around it. And then the third one is the one you [00:04:00] outlined earlier, which I think is a bit optimistic, usually these things don’t just go away that quickly, is that it’s over in a short amount of time. That’s the easiest one for us to project. That just creates a short-term concentration pent-up demand, pent-up shipments, and we just gotta work our way through that bubble. I think the middle one’s more likely. Not because I’m an expert on these things, but we’ve seen what happened in different conflicts in different situations. The middle one being it’s intense for a bit, then it becomes more consistent and normalized, and we just learn how to work [00:04:30] around it. What does that mean? And to me, that redirects trade flows. For instance, the U.S. has been very competitive in the Middle East for butter and cheese. It’s not the first time we’ve been competitive. We were competitive 15 years ago or so at a pretty good rate where we were an net exporter of butterfat, cheese I think we’ve been fairly consistent throughout, but it takes time to get there. Our biggest obstacle in doing business with that market versus Europe as a competitor, is the transit time. We inflate the freight rates, we increase transit [00:05:00] time, there’s concern of access to supply because of turbulence or stability, our price could be fine, and we could still miss some business because you have to buy now or you’ve gotta get product in now, or you just don’t have time to wait the, what, six weeks from order at minimum, probably more like a quarter, oftentimes, to get the product. That’s maybe our biggest obstacle right now is redirected trade lanes, not price. Joe Maixner: All of these trade disruptions create opportunity elsewhere. If our price comes off, [00:05:30] as it has, butter shot up earlier this week, it’s come back off here at the end of the week. It’s created opportunity for trade into other export markets. Where one door closes, another opens. Ted Jacoby III: How do you think those trade flows change? What comes, what goes, what are the changes that you think will happen? Let’s assume that the Persian Gulf is off limits for two or three months. What does that mean for dairy? Josh White: Lost demand, if it’s that long.  That’s lost demand. Now if we assume that we’re able to redirect product to [00:06:00] maintain the same demand, you’re gonna have trade lanes shift, right? What are the options? Ted Jacoby III: Let’s articulate this a little bit more for our listeners. When we’re talking about trade lanes shifting, right now there’s product on the water trying to head there that can’t. What’s gonna happen to those ships? That’s one. Two, there’s product that was sitting in the port about ready to ship. I think there were a lot of calls this week. I think we know of quite a few calls this week where they basically said, “Let’s sit on it. Let’s wait for this all to calm down before we actually ship it.” And three, [00:06:30] there’s product that maybe was scheduled to ship in a month or two. I think it’s fair to say, people probably have to figure out immediately what are they gonna do with the product that’s on the water right now. And I think the other two, they may be able to give it a little bit of time, decide whether or not they’re gonna cancel any orders and redirect it. Diego, the product that’s on the water right now, what do you expect happens to it? Diego Carvallo: Ted, I’ve been internally debating this for a while and even with the team. I think a few things are happening, but I don’t know which one has a bigger magnitude. Supply chains used to be very thin [00:07:00] for skim milk powder for the past year or two years. They are gonna have to build more inventory for those supply chains because product might take 60 days instead of 30 days to ship it. Product is gonna get stuck at the port of entry, port of shipment, in transit, et cetera. So, I think that bumps up demand artificially. Yeah. But there’s more product that’s gonna be stuck in the supply chain. That’s the first thing that comes to mind short-term, if this doesn’t continue to escalate. But if things continue to [00:07:30] escalate, and three weeks from now or a month from now, we’re sti

Flush season is here. Protein solids are up. Global milk production is up. So… Where’s all the skim milk powder? In this episode of The Milk Check, host Ted Jacoby III and the Jacoby team sits down with Martijn Goedhart and Henk-Jan Bouwman of Cefetra Dairy for a European perspective on the volatility rippling through global dairy markets. We talk through how traders got caught short and why the spring flush might not loosen up the skim milk powder/nonfat dry milk market. Plus, are we pricing U.S. out of the export market? We’ll get you up to speed on: Why skim solids are being pulled away from dryers and into protein streams How hand-to-mouth buying turned into a short squeeze What record-high butter stocks in Europe mean for upside potential Tune in to hear how Europe and the U.S. are navigating one of the most volatile stretches in recent memory. L If you’re making sourcing or coverage decisions right now, don’t miss The Milk Check episode 94: The Dryer’s Getting Robbed. Got questions? We’d love to hear them. Submit below, and we might answer it on the show. Ask The Milk Check TMC-Intro-final Ted Jacoby III: [00:00:00] Coming up on The Milk Check. Martijn Goedhart: You have supply growing, and then you think, “Oh, we’re gonna build stocks.” But then, demand caught up. And quite viciously. Ted Jacoby III: Welcome to the Milk Check from T.C. Jacoby and Company, your complete guide to dairy markets, from the milking parlor to the supermarket shelf. I’m Ted Jacoby. Let’s dive in. This week we are excited to have two special guests, Martijnjn Goedhart and Henk-Jan Bouwman from Cefetra Dairy in the Netherlands. We’ve been working closely with these guys for some time and we thought it would be a great idea given all the craziness and dairy markets going on in the United States, to ask them to give us a little bit of perspective on what’s going on in Europe so we can get a feel for how the global markets are affecting our U.S. dairy markets. Martijn, Henk, thanks for joining us today. Martijn Goedhart: Thanks for having us, Ted. Henk-Jan Bouwman: Thank you, Ted. Ted Jacoby III: I feel like what’s going on in nonfat right now more has an origin in the U.S., but I also noticed that you guys started to feel that maybe this market was gonna be a little bit shorter than we expected over in Europe before we realized it in the U.S. [00:01:00] Tell us about the skim milk powder market in Europe and what’s been going on the last month. Martijn Goedhart: In Europe, we’ve been overwhelmed by milk production growth since the second half of 2025, due to bluetongue, late calving, second peak, as some of us call it. And that has resulted in good outputs, and that output needs to go to the commodities. So, we’ve seen butter stocks build up significantly, and everyone assumed that that would mean that the skimmed stocks were also building up because that’s basically the other product you’re gonna produce when you do butter, right? A few things we, I think, overlooked is like the general protein trend in the world and the demand for protein, both on the whey side as well as on the milk side nowadays. So a lot of protein has ended up in other products than your typical skimmed nonfat production bucket. Adding to that, Europe has been the most competitive source in the world market for a long time. Demand wasn’t great because buyers were buying hand-to-mouth because they would basically wait for that carry to come toward them and buy at the lowest price at the last moment. But [00:02:00] now we see that the exports out of Europe have been great. And that’s been keeping the market clean. I think some traders speculated on lower prices and got caught short, basically needed to cover. And that’s where we are at now. And I think more than ever, if you look at NZX (New Zealand Exchange), this all started with a firmer GDT (Global Dairy Trade), with China stocking up a bit. So, if you look at NZX, CME (Chicago Mercantile Exchange) and EEX (European Energy Exchange), those markets are starting to correlate better than they did before because everyone’s looking at the developments of the other exchanges and then draw their conclusions for their own home base. And yeah, that cocktail, together with some U.S. developments that we’re gonna dive into, has caused record-high volatility over the last few weeks. Ted Jacoby III: So, Martijn, you’re telling a story that sounds very familiar ‘ cause that’s exactly what we’ve seen here in the U.S. We’re not making anywhere near as much nonfat dry milk as we expected because the protein demand is forcing those skim solids into other places. What are those other places in Europe? Where is that protein being used and what is it being made into in Europe right now? Martijn Goedhart: I think there’s two main [00:03:00] streams. Bear in mind that the milk pressure in Europe was so high that you need to burn milk, and the way to do that is to produce casein. So, I think casein production has increased by like double-digit numbers, that’s not because it was such a nice valorization, you can just dry more milk per hour. And considering the liquid markets over the last few months, during our low season, liquid milk was trading way below the commodity equivalent, proving that there’s a surplus of liquid milk that can’t be processed by drying it or churning it. So, that’s one part. The other part is, it’s the same in the U.S. We’ve been around here for a few days now, but in Europe, you see the same: everything is protein fortified, extra protein, in basically everything you can buy. So, a lot of protein that is processed in line before it even reaches the other class. So, like the dryers basically. Ted Jacoby III: Martijn and Henk, do you guys think that the skim milk powder market in Europe has tightened up primarily because everybody who was living hand-to-mouth saw the market started going up, and they decided they wanted to buy more now because they wanted to get the product at a lower price before the price [00:04:00] went higher, and then they just started chasing the market? Or do you think demand has shifted and there’s a true increase in the demand for the product? Henk-Jan Bouwman: There’s two things to touch upon here, Ted. One is, you’re absolutely right: people were buying hand-to-mouth, and they were actually rewarded for doing that because everybody believed that the price of tomorrow was better than the price of today. And for a fairly long period of time, they got rewarded for that. That also led to traders being short, as Martijn touched upon. From a demand perspective, yes, there’s actually quite some demand, and people also realize that they have to turn to Europe to find their cheapest skim. That also creates a bit of a demand pull towards European skim, which makes the price go up. And we’ve seen that, in particular, in low heat in comparison to medium heat. But in general, export markets for us are pretty strong, and, I would say, pretty much all the demand ends in European skim milk powder of origins. Josh White: Is anybody extending days in inventory? Do we think that there’s a short squeeze driving international clients to buy a couple extra weeks, a month, more than that of product? The nature of your question, Ted, [00:05:00] is what’s caused us to tighten up on that product? Is it truly demand for nonfat dry milk, or is it just reduced production overall? And I think maybe it’s both in a way. On the one hand, Martijn mentioned that the catalyst of this was actually a GDT event where China stepped in and bought more. And I think that we’ve been talking about the disappearance of China as a structural buyer of milk powder for quite some time. But their stocks to use ratio has been reported to be fairly low, and maybe they felt it was time to extend some days of inventory. At the same time, you evidenced what’s happening in the U.S., And Martijn alluded to it a little bit in Europe as well, that the pull for dairy protein in general is actually vacuuming some solids away from the dryer, and particularly the SMP or the nonfat dryer. So, is it both? Are we seeing people look to build a little bit more safety stock at the same time that our production is down a bit because protein demand overall is robbing our supply. Henk-Jan Bouwman: There’s a, there’s a couple of things to touch upon, Josh. One is in this whole upward movement, there were quite some international buyers [00:06:00] who still had demand open, for instance, for Q2 and Q3, and decided to step in and said, “Hey, this is a moment to buy, to cover that demand, because I am anticipating an upward movement.” So, in that sense, I’m completely with you. Producers did the same, as well. For them it was also attractive to lock some forward sales. And that has led to lesser availability of skim in EU. And that basically also caused the rally to continue. Martijn Goedhart: I think the difference with the U.S., as I understand it, is we have never not been able to buy product during this whole volatility. So, producers were always offering, customers would like step in, step out. If they really need it, they would book. They were also cautious. And we went up, then we went down, then we went up again. But in that down movement, customers were like, “Yeah, you see, so it’ll come off again.” So, that didn’t prompt them to build any length. I think producers did fairly well in putting a fundament below their sales book for the flush that’s upcoming. Traders are holding a fair bit of cash product right now for the next three, four months. It’s not tight as [00:07:00] such, but you see that certain buyers need certain origins that are scarce. So, it’s very much about the origin, the spec, and the product that you have, whether you can monetize on those higher prices. Ted Jacoby III: It seems to me, just listening to you guys talk about Europe, that the U.S. and Europe are both experiencing a very similar phenomenon in our supply chain

En este nuevo episodio de The Milk Check, Diego Carvallo conversa con Miguel Aragón y Yara Morales sobre un mercado lácteo marcado por una fuerte volatilidad y una demanda sólida de proteínas. A pesar de ser el mes del amor y la amistad, los mercados no han mostrado mucha “ternura”, con movimientos importantes en precios y disponibilidad. El equipo analiza el aumento en el consumo de MPC 70, MPC 80 y MPC 85, especialmente en México, donde cada vez más clientes están aceptando estas proteínas para aplicaciones nutricionales. También se comenta la escasez de renina/caseína renina, la fuerte presión alcista en los precios de proteínas lácteas y el comportamiento sorprendente de los WPC, cuyos valores han subido de forma significativa. Además, se revisa la volatilidad en quesos y mantequilla, la creciente aceptación de mantequilla estadounidense en México, Chile y Centroamérica, y por qué, aun con abundante leche en EE. UU., muchos mercados continúan bien soportados. Un episodio clave para entender hacia dónde se mueven los mercados de proteínas y lácteos, y qué esperar en las próximas semanas. ¿Tienes preguntas? Nos encantaría escucharlas. Envíalas aquí abajo y quizá las respondamos en el programa. Pregúntale a The Milk Check

Dairy futures have been anything but calm. In just three weeks, prices across Class III, Class IV, cheese, butter and nonfat have surged, then whipped back and forth enough to exhaust even full-time market watchers. In this episode of The Milk Check, Ted Jacoby and the T.C. Jacoby & Co. team break down why dairy futures can look irrational, even when the underlying fundamentals haven’t changed much. What’s driving the chaos (beyond fundamentals) Short squeezes 101: how a crowded short can turn into a domino effect Flow first, narrative second: why the buying often hits before the story shows up Realized vs. implied volatility: what the market did vs. what the options market is pricing in Why nonfat may be the center of the storm: the team debates whether this is a true regime change Why butter and cheese moved too: how spread relationships and algorithmic trading can drag correlated dairy contracts higher Spot market feedback loops: how NDPSR-linked spot markets can amplify futures moves (tail-wagging-the-dog dynamics). What usually happens next: why squeezes rarely park at the top Plus: stick around for a director’s cut featuring the unedited, behind-the-scenes debate the team usually leaves on the cutting room floor. 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: [00:00:00] It has been wild and crazy every day for the last three weeks. Welcome to the Milk Check from T.C. Jacoby and Company, your complete guide to dairy markets, from the milking parlor to the supermarket shelf. I’m Ted Jacoby. Let’s dive in. We’ve got a special treat for you this week. We’re gonna drop the director’s cut of this podcast where we include some of the conversations that usually get edited out: how we debate internally about some of these market dynamics. So, stay tuned after the end of the podcast and listen to the off-takes. My name is Ted Jacoby, CEO of T.C. Jacoby & Co., and joining me today is Jacob Menge, our Vice President of Risk Management and Trading Strategy, Josh White, our Vice President of Dairy Ingredients, and Joe Maixner, our Director of Sales. We are in week three of a very high level of volatility in the dairy markets. We’ve had a very interesting last few weeks. It’s February 9th, and since January 15th, our Class III March futures are up 18%. Our [00:01:00] March cheese futures are up over 15%. Butter futures are up over 26%. nonfat futures up 37% and Class IV milk futures up 36%. These markets have not gone up in a straight line. There’s been a massive amount of volatility, a lot of green, a lot of red, and then a lot of green, and then a lot of red again, enough to make all of us who talk these markets on a daily and an hourly basis to be flat out exhausted. The question becomes, what’s causing this level of volatility?  We are gonna talk a little bit about market psychology. Why can markets do what they’ve done in the last three weeks, and why our actual fundamental market analysis hasn’t really changed that much.  To quote the famous British economist, John Maynard Keynes, “Markets can remain irrational far longer than you and I can remain solvent.” And I’ll tell you that the last three weeks reminded me repeatedly of that phrase. It serves as a warning against over leveraging or trying to fight the tape, trading against trends, suggesting that just because you are right about a trend’s [00:02:00] long-term direction, it’s useless if you run out of capital. Ted Jacoby III: And I have a feeling that based on what we’ve been experiencing lately, there’s probably a few people out there that exactly that happened to. It has been wild and crazy every day for the last three weeks. Jake, why do markets do this? Jacob Menge: You threw out your little soundbite anecdotes. We will pull out some more of ’em during those podcasts, I’m sure, because those are all written by people that have been burned by short squeezes like we’re seeing, right? One that sticks out to me is: volatility is the tax you pay for liquidity and leverage, and that’s what futures markets are, right? They are a way for people to express their opinion on price action. Obviously, even a hedger is in some way expressing an opinion using futures or options. They’re highly liquid. You don’t even have to pay full price for ’em because you only gotta put up that margin upfront. And again, volatility is usually the tax that you pay for that. When you have this easy leverage, and everybody can get on one side of the boat you can’t have your cake and eat it, too. You can’t [00:03:00] have tight spreads, you can’t have the leverage and smooth prices all at the same time. And that can result in things like short squeezes. We were primed for one. You’re right, we had low volatility. We had a lot of people that were short the market because that was the prevailing narrative. As a result, all it took was one little spark to set some pretty dry kindling ablaze. That’s exactly what we saw, especially on the nonfat side. I’ll pull out my second anecdote. I’ve always heard: squeezes are flow events first, narrative events second. That’s exactly what was going on with nonfat. Meaning we get this massive bullish order flow coming in. The market goes up 30%+ in a few week period, and it’s only after that happens that all of a sudden we start having these conversations of, well, what was everybody missing in nonfat? I think the market probably was missing something on the nonfat side. But at the end of the day when you have volatility near lows, volume that was [00:04:00] fairly average, it makes sense that really the only way to go is gonna be up. If there’s any kind of news. And the news this time turns out there’s a whole lot less nonfat out there than people probably expected. And away we go. And it turns into this snowball where there’s the first people to see that and start wanting to buy, and the second they start wanting to buy, turns out there’s not a whole lot of sellers there, because everybody that wanted to sell already had sold. You get that first nice air pocket jump higher. That really is that first domino where if you’re a market maker, say, and you need to hedge your book, you’re trying to run a delta neutral trading book as a market maker, you might say, “Okay, well hey, I need to go get some long delta myself.” And you might go try to buy some options, to buy calls, to offset that. And then all of a sudden the market maker that is selling the calls want more for the calls than they wanted just a day ago. Ted Jacoby III: A day ago? Try an hour ago. Jacob Menge: Yeah, an hour ago. Truly. And so [00:05:00] that would be what we call implied volatility. Right. And I think that’s one important distinction here is we have volatility, what we call realized volatility, which is what the market actually did, like how crazy the market is, and then implied volatility, basically what the market is charging for options usually and implying what the market thinks the volatility will be in the future. And that’s where it gets really fun because even though we didn’t have a lot of realized volatility, if the market thinks it’s gonna become volatile and starts charging more for these options, it can almost be a self-fulfilling prophecy, right? Because now you have to pay more to buy that insurance policy, and you can see how that snowball really can grow fairly fast. We have one other really  fun part in dairy markets that I can’t help but mention, and that is that we also have spot markets. Those spot markets indirectly are linked to the futures prices because of our National Dairy Products Sales Report (NDPSR) system. And so we [00:06:00] can really wind up with the tail wagging the dog in our futures markets and in our spot markets where, say the spot markets were driving the ship on the way down. People had a lot of products, they’re selling them. Well, all of a sudden, if we start getting a little bit of a squeeze in our futures markets, now if you have product, you don’t wanna sell it on the exchange, you wanna just hold onto it and capture the carry in the futures curve. And so you’re not gonna sell. And so any bidder on the spot auction has to bid it higher. And guess what? Now the futures see the spot auction being bid up and they say, “Well, well, we are right to be panicking. We need to go higher.” And that’s just pouring gasoline on the fire. We’ve already got a raging inferno at this point, but that adds the final pour of gasoline. Ted Jacoby III: You remind me of one of my learning moments 20 some odd, almost 30 years ago, when I was watching these markets, as the futures markets were just becoming relevant to the dairy industry. And it was the realization that futures markets and spot markets are [00:07:00] two different markets with a different set of drivers of supply and demand. On the spot market, supply is, let’s talk about butter, is the supply of 80% bulk butter. Demand is the demand for that 80% bulk butter. The futures butter markets, it may settle to that NDPSR price of the bulk butter market, but the reality is the supply is the number of people who are willing to sell those futures, and the demand is the number of people that are willing to buy those futures. And so you can have people coming into the market that really don’t care at all about how much block butter are out there because they’re actually trying to hedge cream cheese or a chocolate shake or something completely different that has butter in it, but they need to own those futures, and that futures market can move quite a bit and has nothing to do with the actual supply and demand of the market it’s based on. Jacob Menge: Anecdote number three. I always have heard squeezes feel irrational because risk systems are mechanical. And I think that is true here, right? You have stops in place. A lot of [00:08:00] companies will have risk management policies that say, “Hey if VAR gets to a certain po

Nonfat prices have moved sharply higher in recent weeks. But the rally isn’t being driven by a sudden surge in demand. It’s being driven by a breakdown in where milk is actually flowing. In this episode of The Milk Check, Ted Jacoby III and the Jacoby team unpack insights coming out of the IDFA Dairy Forum in Palm Springs and explain why nonfat prices have surged nearly 25 cents in just weeks, even as milk production remains strong. The issue isn’t price resistance. It’s availability. Milk that the market expected to move into dryers is instead being diverted into cheese plants, ultra-filtration, whey proteins and other higher-value protein streams. As a result, powder supply is far tighter than headline production numbers suggest. Layer in heavy short positioning, processing disruptions, and new offtake agreements, and the market begins to resemble a classic short squeeze. In this conversation, the team breaks down what’s actually driving NDFM and why higher prices haven’t unlocked new supply. We cover: How protein economics are pulling milk away from powder Why rising milk production hasn’t translated into greater availability Key structural differences between the U.S., Europe, and New Zealand Where the market may find its next equilibrium, and what could disrupt it If you’re relying on historical assumptions about nonfat availability, this episode explains why those assumptions may no longer hold. Listen to The Milk Check to understand what the evolving nonfat landscape means for pricing risk, exports and coverage decisions ahead. Available below or on Spotify, Apple Podcasts, Amazon Podcasts or YouTube. Got questions? We’d love to hear them. Submit below, and we might answer it on the show. Ask The Milk Check Jacob Menge: [00:00:00] There are just so many of these long-held assumptions, things that people who have been in the industry a while probably have, like, “Well, my gut tells me this.” Question your gut. Ted Jacoby III: Welcome to the Milk Check from T.C. Jacoby and Company, your complete guide to dairy markets, from the milking parlor to the supermarket shelf. I’m Ted Jacoby. Let’s dive in. It is January 30th. We’ve all just got back from the Dairy Forum in Palm Springs, where it was a hell of a lot warmer than it is here in frigid St. Louis, Missouri. Joining me today is Diego Carvallo, the head of our international sales team and our head non -fat dry milk trader. We have Josh White, head of our dairy ingredients group, Jacob Menge, our VP of risk Management and Trading Strategy, and Mike Brown, VP of Jacoby Dairy Market Intelligence. Guys, welcome. What did we learn in Palm Springs? I think the biggest thing that came out of our visit and running into everybody at the Dairy Forum is that nonfat dry milk and skim milk powder really is tight. We have a short squeeze going on in the nonfat dry milk [00:01:00] market. The market is up. I think it’s 25 cents in the last three weeks. I’ll let Diego explain to everybody what’s really going on in the nonfat market right now. Diego? Diego Carvallo: Ted, that’s a very loaded question right now. Everybody’s scratching their heads. As of right now, today, Friday the 30th, the market just closed. The whole strip is limit up — 4 cents up. I think I hadn’t seen this in quite some time. IDFA was very interesting for a lot of people to discover why the spot market has been tight for this long and have good discussions on what the outlook looks like. Let’s start with the fundamentals. I think a few things are helping this market and supporting it and pushing it higher. The first one is what a lot of people are discussing, which is the amount of UF being produced in regions like the Midwest. We all know that many of the plants have installed new capacity to have UF sales, and those solids are in great demand [00:02:00] for cheese fortification right now. So that’s one of the reasons why the Midwest especially feeling this tight. Another reason is that the majority of the people who speculate with this market, and it goes from traders to manufacturers and even distributors, most of them have been short, expecting this market to move lower during the spring flush. I remember a few months ago, the speculation was that we were gonna break the $1. And, it seems like everybody got short, physical and in the screen, and that market, obviously, whenever we saw a bounce, everybody ran to cover their shorts, right? Another reason is that we saw a few interruptions in processing capacity, especially in California during the months of November. I think that also contributed to the tightness in the market without even getting into the conversation of new [00:03:00] offtake agreements that have taken up this year. So I think those are the main contributors to this market moving higher, and I think it’s something that is mainly affecting the U.S. The rest of the market is following through. I think this scenario is very different when you talk about European and New Zealand production. It’s even different when you see the U.S., the West Coast versus the rest of the country. Ted Jacoby III: Tell me about Europe. I know Europe started acting tight a little bit before the U.S., but what’s going on in Europe? Nonfat, dry milk and skim milk powder is probably our most global market when it comes to dairy. Diego Carvallo: So, Europe had a couple of large tenders that took place, I think that was beginning of January. So, the infamous O’Neill tender and a few similar tenders that usually move a lot of product. Those tenders took place, and I think it helped clear some of the excess product that was available in the market. But I think in Europe we had a similar situation where most of the traders, most [00:04:00] of the end users and manufacturers, everybody was expecting prices to move lower, right? Whenever we saw these tenders coming and the market slightly turned less bearish, I think everybody ran also to cover their shorts. But the situation in Europe has not been as bullish as it has in the U.S. The spread between the U.S. and Europe when it comes to skim has in fact widened as of right now. Europe is also feeling the support. Definitely. It’s in part driven by the U.S. rally. Ted Jacoby III: Well, that makes sense. I can tell you I had conversations with a few different manufacturers while I was at IDFA. And the best way I can sum up what the feeling was there’s a couple of dryers on the East Coast. Those dryers at this point are not expecting to ever run full this year, not even at the height of the flush, because there’s three new plants at various stages of development. There’s a new cheese plant in New York. There is a Fair Life milk plant in New York, and then ultimately a yogurt plant in New [00:05:00] York. All three of those plants are gonna need the milk. It’s gonna come at the expense of the powder plants in that area. You look at the Southwest in Texas again, you’ve got two new cheese plants that are still in the midst of ramping up. They are getting first dibs on the milk at the expense of the nonfat dry milk plants down there. So those plants are gonna get the milk that they expected. And there’s another nonfat plant that pretty much has turned a 100%, to Diego’s point that’s turned a 100% of their milk supply into skim UF that they’re supplying to various sources. And that plant is running the ultra filtration unit full. So, that plant isn’t drying anything. You got a couple of dryers in the Michigan area. They’re not running as full as usually, but it’s more of a domino effect there. I have a hunch as you get into the flush, those dryers may fill up. But you’ve got four other dryers, maybe five that aren’t. Now you go over to the west coast: California, those are drying. But California alone, as big as it is, is not enough to offset how much milk is not running into the dryers in the [00:06:00] rest of the country. And then you’ve got the Northwest, where there has been a lot of milk lost in the Northwest. And so that dryer isn’t running as full as probably previously expected. What happened was everybody just got together, finally started talking when they were all together in Palm Springs, and they realized when they did the math, even if we’re up 4.4% in milk production, we’re not drying more nonfat. Those skim solids are going elsewhere for various reasons. Diego Carvallo: The biggest question right now, Ted, is the lack of product in the Midwest and East Coast could balance out the lack of exports that we’re gonna have from this price rally. The numbers say that demand is approximately 60 million pounds. That number, it’s probably only 2% to 3% of U.S. nonfat production. So, it doesn’t seem like a huge number, but when you compare it to exports it is quite a volume. Ted Jacoby III: It really does add up. Yeah, no, I would agree with that. Jacob Menge: It sounds based on what Ted had just laid out and what you had said earlier, Diego, that this [00:07:00] isn’t necessarily a demand-driven rally. It’s really a lack-of-supply-driven rally. Ted Jacoby III: Yeah. A lack-of-supply-driven rally in an environment where everybody was expecting oversupply and kind of got caught surprised when they realized that even though there’s more milk, it didn’t fully translate to more powder. Jacob Menge: So, what changes it? Price? How long? What does end game here look like? Based on what I’m hearing, sounds to me like there’s almost not a price that is all of a sudden going to bring more supply out of the woodwork. So, is there a price that kills demand? People say, “Hey, we can’t make this number work anymore?” Ted Jacoby III: I think, actually, Diego just framed it a few minutes ago in the right way. This lost production that we were expecting, is it enough to make up for the fact that international demand for nonfat and skim milk powder isn’t actually that great? I think he’s hit the nail on the head. Let’s face it, skim milk powder, nonfat, dry milk is kind of th

Milk production is up 4.5% — but somehow, milk is clearing. Something doesn’t add up. In this episode of The Milk Check, the team uncovers the shifts reshaping dairy economics in 2026. Ted Jacoby III leads a classic market roundtable with the Jacoby team to unpack what they’re seeing as dairy transitions out of the holiday demand season and into early-year reality. Despite 4.5% year-over-year milk production growth, milk is clearing in many regions. Cheese and butter markets are under pressure, but inventories aren’t yet burdensome. Protein markets remain tight. And nonfat dry milk is showing surprising strength. So what’s going on? In this episode, we cover: Why added processing capacity may be masking where supply is really long How cheese and butter are absorbing milk that would normally back up at the farm Why protein demand is tightening skim solids and whey markets Whether nonfat’s recent rally is real or a phantom And which dairy market narratives the team thinks are wrong right now If you’re trying to make sense of conflicting signals across milk, fat, protein and powder, this episode delivers the context behind the numbers. Listen now to The Milk Check episode 90: The Market is Lying to Us. 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: [00:00:00] Am I just being a conspiracy theorist? Diego Carvallo: I would probably bet a little bit on that conspiracy theory. It could be. It could be possible, Ted. Who knows. Ted Jacoby III: Welcome to the Milk Check from TC Jacob and Company, your complete guide to dairy markets, from the milking parlor to the supermarket shelf. I’m Ted Jacoby. Let’s dive in. We’re on the new side of the New Year. It is January 12th. we’re gonna have a classic market discussion today. Things have started to settle down from the holidays and I thought it would be a great idea just to share with everybody what we’re seeing in the markets as we’re transitioning from the high-demand season into the low-demand season. We have our usual suspects today. We have my brother Gus who manages our fluid group. We’ve got Josh White, head of our dairy ingredients group. We have Joe Maixner, head of all of our butter sales. Mike Brown, our Vice President of Market Intelligence, and myself. So, we’ll start with milk, Gus. What’s it look like right now? Gus Jacoby: It certainly isn’t tight, but it isn’t really long either. I think the November milk production was up [00:01:00] 4.5% and that typically would be fairly significant in areas where there isn’t a lot of additional processing capacity. One would think it would be very, very long with that kind of growth, but we’re not seeing that. Areas like the upper Midwest, Mideast, those areas are not as long as we thought they would be. I don’t want to act as if it’s tight. That’s not the case. Through the holidays, there was still plenty of milk that was around. But I think here as we climbed out of the New Year holiday and into mid-January, things have gotten fairly what we would say in balance. And that’s a little bit alarming considering that type of milk production growth. Ted Jacoby III: Why do you think that is? Is it just all the new capacity from all the new plants that have been built, or what else is going on? Gus Jacoby: Well, certainly in that western, upper Midwest and Southwest region, upstate New York as well, there’s been a lot of processing capacity that’s been added. So, those areas have been able to soak up that extra milk. I think milks travling a bit but I also think folks have found a little bit more efficient avenues to place the milk after dealing with some length over the past year [00:02:00] or so. But there’s a little bit of a question mark I have in the back of my mind as to how efficient we’ve been able to do so. Typically, when we have this kind of large growth, anything north of 4% is large, and large enough to be concerned about. But nonetheless, the processing capacity is significant. We don’t wanna discount that. But one can certainly wonder why in areas like the Mideast, where you haven’t really added a lot of production capacity here recently, why we aren’t seeing a bit more milk floating around. Ted Jacoby III: You think it’s just domino effect type things? Where, as milk is tighter in New York, so none of that milk is going into the southeast or into Appalachia, therefore it’s gotta be pulled from the Mideast? Gus Jacoby: Ted, that might be a part of it. I think domino effect is certainly going on here. There’s some areas of the country that don’t have enough milk because of that additional capacity we discussed. But having said all that, I think there’s some question marks out there right now as to why it isn’t a bit longer in certain parts of the country. Ted Jacoby III: What about some, I’ll call it non-traditional demand growth, and what I mean by that is things [00:03:00] like ESL or some of the protein drinks? It looks like there have been new brands showing up on the supermarket shelf lately. Gus Jacoby: If you’re alluding to areas like UF milk or high-protein fluid products there is certainly a lot of demand in that Class I, Class II segment of our industry. Add in the fact that you have a lot of demand for fortification solids for cheese plants, skim can seem a little bit tight right now, and there’s some logic behind that, but I don’t think there’s enough ultra filtration capacity right now to satisfy demand. So, if milk is going in that direction, there isn’t enough UF units out there, I think, to fill that void. And I wouldn’t say that’s the reason why we’re tightening up milk supplies by no means. In some parts of the world, yes, that might be the case, but that’s pretty small in the grand scheme of things. Ted Jacoby III: On the fluid side, is skim solids slash dairy protein tighter than the butterfat side? Gus Jacoby: Absolutely it is. Yes. I don’t think there’s any question about that. You’ve got two things driving [00:04:00] that. Too much butterfat requires cheese plants to gather more fortification solids, and the demand for protein right now is through the roof. You’re gonna have it hit from both sides and they’re hitting pretty strong. Ted Jacoby III: Could that extra skim solid slash dairy protein demand be what’s tightening up the milk market? Are we seeing it, for example, in lower cream multiples? Gus Jacoby: There still is plenty of cream around, to answer that question directly. I just don’t think there’s enough UF processing capacity at this moment in time to say that it’s tightening milk by any means. Ted Jacoby III: Could it be cheese plants taking the milk directly off the farm but spinning off a lot more cream? Gus Jacoby: I would say some of that is gonna go on. Yeah. ’cause there’s not enough fortification solids to be had, or at least not at the price the cheese plants are gonna be happy with. Cheese plants, even though they might prefer UF at times, they’ll take different types of skim solids and that certainly will tighten up that skim side of the market. That, combined with the fact that the protein sector is short, certainly you’re gonna have that element in our [00:05:00] market right now. I just think there’s enough milk out there, Ted, and not enough protein, isolation capacity of any sort to be the main reason as to why you’re not as long on milk as you think you should be. Ted Jacoby III: You know, I’ve had a theory going for a little while that all this extra capacity we’ve added, a lot of it is cheese capacity, and I feel like this time around, we’ve just transferred where we’re feeling the length. We’re not necessarily feeling the length in milk like we usually do. Instead, there’s enough processing capacity to get all that milk and to make cheese out of it. And therefore, we’re seeing the length in cheese, and we’re seeing the length in butter. And that’s why those two markets have been under so much pressure lately, whereas the milk market seems to be in balance. We’ve just moved down the supply chain a little bit where the length is manifesting. Does that make sense? Gus Jacoby: A little bit? Yeah. Mike Brown: It Does Make sense. Where you have new plants, they wanna be full. They’re cheese plants. They’re gonna try to fill those plants with milk to the extent they can market product, which is becoming a [00:06:00] concern as we see the CME cheese price continuing to drop. We’re also reaching a point when fat is very high, you can’t afford to fortify cheese vats because your skim solids price is high relative to fat. Right now everything’s kind of low, but powder relative to cheese, is as high as it’s been in quite a while. If you have revenue from waste stream, fortifying with nonfat or skim solids makes a whole lot of sense. But if you’re paying that full price for the casein portion of that skim, it gets closer again now too. It’s a little different situation than it’s been in a while. I don’t think Gus could be any more right about the need for more ultra filtered capacity. I’m just curious where it’s gonna show. Because the demand certainly seems to be there. Ted Jacoby III: If there’s one place where I think maybe we’re underestimating demand, it’s in that ESL protein space. And I agree with Gus, there’s probably not enough capacity to really manifest all of that resting demand or untapped demand, but I bet we’re maximizing that supply chain everywhere we can, especially given what we’re seeing in the whey protein [00:07:00] market right now. And it doesn’t show up in the data really clearly. You’re up four and a half percent in milk. Some of that is, we’re still measuring against weakness and we’re measuring against the bird flu outbreak that was happening a year ago. I just think there’s also some demand there possibly in that space that isn’t really showing up in the data in a way that makes it clear to everybody we’ve got some good demand in a couple of places. Having sai

In this episode of The Milk Check, Ted Jacoby III welcomes Lloyd Metzger and TJ Jacoby of Valley Queen Cheese Company for a deep dive into the science, functionality and future of dairy proteins. The conversation starts at the molecular level – the difference between casein and whey – and builds toward the real-world implications for product developers, processors and nutrition brands. We cover: Why casein is built to carry calcium (and whey isn’t) How heat and pH change protein behavior Fast versus slow digestion and why both matter The role of whey protein in muscle maintenance, aging and GLP-1 nutrition What pro cream really is and why its value may be underestimated Why cellular agriculture is more niche than threat If you work in dairy, food formulation or nutrition, this is a protein conversation worth digesting. Got questions? We’d love to hear them. Submit below, and we might answer it on the show. Ask The Milk Check TMC-Intro-final[00:00:00]Ted Jacoby III: Hi everybody, and thank you for joining us today for this very special recording of the Milk Check Podcast. Today, our topic is: what is the future of dairy proteins? And we have two very special guests. The first is Lloyd Metzger, VP of Quality and Technical Services for Valley Queen Cheese Company, and formerly Professor of Dairy Science at South Dakota State University. And the second, particularly special to me, is my son TJ Jacoby, Whey Technologist for Valley Queen. A South Dakota State graduate. Someone who has been interested in dairy proteins since his first biology class in high school. Guys, thank you for joining us today and welcome to The Milk Check. Lloyd Metzger: Glad to be here. TJ Jacoby: Good to be on, Dad. Ted Jacoby III: It’s December 18th, 2025. Milk production in the US is up 4%. Milk production in Europe is up something similar. Milk production in New Zealand is up. Milk production in Argentina is up. We are definitely in an [00:01:00] environment today where the supply of milk and dairy is overwhelming demand, at least for the moment. Cheese prices are near historical lows. Butter prices are near historical lows. Nonfat milk, skim milk powder prices are on the low end of the range. This market is a market that feels heavy, and I think most people out there would say, it almost feels like even though we’re at lows, we may actually go lower before we go higher. And yet, on the other hand, there are whey proteins, Josh, if I’m not mistaken, whey proteins just hit historical highs. Josh White: Maybe the highest prices we’ve ever seen for whey protein isolate and WPC 80. Ted Jacoby III: So, we have an environment where the demand on the protein side is extremely strong, and the trends on protein consumption are extremely strong and really feel like they’re gonna be around for quite some time. We’ve got baby boomers retiring and whether it’s because of GLP-1s or it’s just a general knowledge and understanding of what human nutritional needs are as people age, they know that they need more protein in their [00:02:00] diet. So, it begs the question: what is going on with dairy proteins and whey proteins and how is this going to evolve in such a unique market where demand is so strong for protein right now? And so, I’m gonna ask the question first. What’s the difference at a molecular level between whey proteins and milk proteins? Because when we’re in an environment like we are now, where you’ve got the demand really, really high, you also have a market that’s gonna start looking for alternatives, simply because prices are so high. What is the difference between milk proteins in general and whey protein specifically? Lloyd Metzger: It’s important to talk about from a functional perspective how the proteins are different. I’m sure we’ll get into the nutritional differences between those proteins as well. It’s important to understand what’s driving those differences in functional characteristics. And it’s really all about calcium. The casein system is designed to carry calcium. The whey protein system is not designed to carry calcium. That differentiates the two groups of [00:03:00] proteins and makes their properties very different. TJ Jacoby: I’ll explain it like this. Milk proteins, there’s two classes of proteins, right? There’s casein and then there’s whey. The casein is used to make cheese, and then the whey protein is what comes off. So, the whey protein is everything that is not used to make cheese. So, the reason why casein proteins works so well for cheese because those proteins like to fall together in these spheres, they like to stick to one another. They like to stick to one another ’cause they have certain groups that latch onto the calcium and then they bridge with phosphate. When they do, they have multiple proteins, different types of casein proteins that bridge together with phosphate and then based on their repulsion forces, they stick together. Calcium and phosphates really help it stick when we make cheese. The outside of that casein, micelle, that ball, when we make cheese, that outside is stripped off, it becomes hydrophobic, and that causes those spheres to stick together. That’s a huge functional property of casein. Whey [00:04:00] protein is the opposite. Whey protein is really hydrophillic. It’s very polar. So, they like to float around in solution and stay floating around in solution. And they don’t like casein. It likes to stay separate from casein. And so, when you make cheese, it readily is released into the whey stream because it likes to stick with the water. In the same way, those kind of stick together with these sulfur groups. But when you heat it up, they unfold. And when they unfold, now there’s certain reactions that can take place. So, those are the two major differences between casein and whey. Lloyd, what did I miss? Lloyd Metzger: I would try to simplify it a little bit. The difference between casein and whey protein is casein is what’s trapped when we make cheese. And whey protein is the soluble protein that’s left over in the water phase of cheese. Cheese making is a dehydration process. We concentrate the fat and protein that’s in milk, the casein version of protein in milk. But you gotta look at the properties of those two [00:05:00] systems and the groups of protein. So, the casein protein is actually really stable to heat, but it is not stable to pH. So, casein will always coagulate at low pH. So, you lower the pH of milk, you get a yogurt-like product. That’s all the casein that’s coming out of the system. Whey proteins don’t mind a low pH, and they’ll stay soluble at a wide range of pH. But now, when you get to temperature, the complete opposite happens. Casein can handle super high temperatures and be very stable. Whey proteins can not handle high temperature at all, they start to gel. I think it’s important to look at the two different groups. Now you get into the functional differences between those two and the very different properties you have between those. Lloyd Metzger: That’s why you get all these products that are very different from each other. Why cheese is so much different than whey protein. And then you have these dairy products that are a combination that have the two together. So like when we make yogurt, we end up with the two products together and get this property that’s partway in between the two proteins. Ted Jacoby III: [00:06:00] Based on what you’re describing, when we’re talking about milk proteins, MPC 80, for example, there’s a higher level of calcium, I take it in milk proteins than compared to whey proteins. Is that true? Lloyd Metzger: Absolutely, but let’s remind everybody: milk protein is both casein and whey protein together at the normal ratio that’s in milk. So, of the protein, 80% is casein, 20% is whey protein. So, when you say milk protein, you’re actually meaning 80% casein and 20% whey protein. Now, when we talk about cheese or casein, we’re basically a hundred percent casein and 0% whey protein. Now, when we talk about whey protein, we’re essentially a 100% whey protein, no casein except for one fragment of casein that actually gets solubilized, as TJ described, and now actually becomes part of whey protein. Something that a lot of people don’t understand is that about 15% of what we call whey protein is actually a piece of casein that gets lost in the whey and now gets [00:07:00] captured and harvested in the whey protein manufacture process. But again, it’s important to remember milk protein is a 80 / 20 combination of casein and whey protein together. So, when you’re talking about milk protein, you’re actually talking about whey protein and casein together. Ted Jacoby III: It’s funny, I just learned something never really quite had my head around, and that’s that 80 / 20 ratio, that 80% of all the protein in milk is actually either alpha or beta casein. Correct? Lloyd Metzger: There’s actually four different casein fractions that are involved that make up that 80% of the total protein. Ted Jacoby III: Okay. The casein molecule isn’t really any bigger than most of the whey protein molecules, but they tend to clump together in those micelles. And so, they act as one big humongous mass compared to whey proteins. Correct? TJ Jacoby: Whey proteins may be collected like in pairs like two at a time, but casein proteins, there’s hundreds, right? Lloyd, that will just clump together. Thousands. TJ Jacoby: So, these spheres are absolutely massive protein complexes, but in fact there are a lot of little individual [00:08:00] proteins that make it up and they’re all bridged together with calcium and phosphate. Lloyd Metzger: It’s a packaging system that was designed to package up calcium and phosphorus. So, the whole casein system was designed by nature as a delivery vehicle for calcium and phosphorus, because calcium is not soluble by itself. Calcium phosphate is essentially rock. It’s the material that makes up eggshells. Think, think about a

There’s milk everywhere: more milk in the U.S., Europe and New Zealand than a year ago, soft Class IV, and Class III futures that could slip into the $13s once you plug in today’s spot cheese and whey. With a long milk wave crashing over the dairy industry, will farmers start culling cows and leaving stalls empty? Inside the episode, the team churns through: Why strong balance sheets, paid-down debt and high cow values could delay a production pullback How lower feed costs shift the breakeven – but can’t fully offset falling milk checks Why Western and cheese-focused regions like the Pacific Northwest, California and Idaho may struggle first How WPC 80, WPI and clear whey proteins have become the lone bulls – and why capacity constraints limit the industry’s response Why there are limits to what customers can pay for whey, and where substitution is already happening It’s a barn full of bears on butter, cheese and fluid milk, but the protein complex is still flexing. The question is how long that can last? Tune in to The Milk Check episode 88: One bull in a barn full of bears to hear how our traders are navigating a market that’s bearish on volume but still bullish on protein. 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, everybody, to The Milk Check. It is December 5th. We’re gonna talk about markets today. And rather than boring you and having the same conversation we had three weeks ago, everything is still bearish. There’s milk everywhere. There’s milk all over the U.S. There’s milk all over Europe. There’s milk all over New Zealand. There’s a whole bunch more milk this year than last year. Things are long. It’s very likely things are gonna get longer before they get shorter. Today we have some of our usual suspects. My brother Gus has joined us today. We’ve got Josh White, we’ve got Joe Maixner, we’ve got Diego Carvallo. And, of course, myself. Looking forward to a great conversation. So, rather than discussing how bearish we can be on these markets, my question, and I’m gonna start by throwing this question at my brother, Gus, is Gus, how long do you think it’s gonna take for dairy farmers to start culling cows and for this milk [00:01:00] production to slow down? Gus Jacoby: I feel like milk price and farm economics are completely contingent on that and how bad those farm economics get with respect to the milk price. Class III is still relatively high. Obviously, Class IV is pretty poor right now. The way I see it, dairymen, at this moment in time, still have fairly strong balance sheets. So, the recent low prices haven’t affected ’em all that much. So, I don’t expect their behavior with respect to culling and whatnot to change. But I think in five, six months from now, assuming that the milk price is at or lower, and quite frankly, I think Class III probably does need to get a bit lower, you’ll start to see some of that behavior change. If I had to guess, either as early as early summer, but as late as maybe mid-fall, if farm economics don’t change, we’ll start to see dairymen begin to leave stalls open. I mean, they’re gonna cull a cow, collect that beef revenue that they can grab, and not necessarily buy the expensive heifer. Ted Jacoby III: You’re thinking it’s gonna take about six months for dairy farmers [00:02:00] to get to the point where they feel like they need to increase the amount of cows they’re selling in order to meet their cashflow needs? Gus Jacoby: That’s my best guess. And again, that can be either expedited or slowed down depending on where the milk price goes. Ted Jacoby III: Corn prices have really come down this year. Do you think the lower feed prices have lowered where that break even point is, or how low we need to go in milk price in order to really send those signals in a strong way? Gus Jacoby: Certainly, feed prices being lower are gonna be helpful to the farm economic model. This becomes a milk price discussion. If the cheese price continues to have that downward pressure and gets low enough, those feed prices won’t be low enough. It’s always related to their inputs. And certainly, cheap feed helps their cause to extend growth in the milk production model. Ted Jacoby III: Right now, on December 5th, the Class III prices for the first quarter are right around, let’s call it $15.50, but if you use today’s cheese price on the spot market at the CME in today’s whey price, you’re probably looking at something closer to $14, 14 and a quarter. [00:03:00] Is that low enough or do we need to go lower? Gus Jacoby: It’s low enough. But not low to expedite anything. Maybe that takes us into the late summer, and remember, it depends on where we’re talking here in the country. Milk production costs are different depending on where you exist in the country. And also payouts are a lot different in a lot of places, depending on where you exist in the country. So, some regions might struggle sooner than later. Ted Jacoby III: Which regions do you think are gonna struggle first? Gus Jacoby: The West, Pacific Northwest, I think California, areas like Idaho that are strongly cheese based. If you’re paying on a Class III price and it stabilizes, which I don’t anticipate here, then perhaps some of those regions might hold on longer. My guess is predicated on the forecast of Class III going a bit lower. Ted Jacoby III: I guess I’d have to agree with that ’cause I don’t think $14 a hundredweight is enough. Because we’re still in front of Christmas, and I think the market’s probably gonna get worse before it gets better. My hunch is we’re gonna see $13 milk this year. We’re gonna see it in Class IV, and we may be already [00:04:00] seeing it in Class IV as soon as December. I think we’re gonna see a 13 handle in Class III, probably most of the first quarter. Gus Jacoby: If you’ve got a Class III at 13, and Class IV holds as low as it is, which I would expect certainly in the first half of the year, and then you have your standard freight and other deducts in those milk checks, dairymen are now getting to an area that is very adverse. Ted Jacoby III: Even though we’re talking about really low prices, I think there’s a lot of dairy farmers out there that are in a pretty healthy place. Gus Jacoby: I would agree. Ted Jacoby III: They’re healthy in two ways. One, I think that many of them have been able to take the last two years and really pay down their debt. And so, they’re in a really good spot financially, just on the balance sheet alone. But the second thing is those cows, they’re worth twice what they were worth three years ago. And so, not only have they paid down their debt, but if they need to borrow more, they’ve got more collateral to borrow against because those cows are usually the collateral for the banks when the banks lend dairy farmers money. It’s [00:05:00] usually the cows and the land. My hunch is that this may go on longer than we expect because of how healthy dairy farmers are financially today. Not saying they’ll be healthy in four or five months, but they’re healthy today. And because of how much bankers are probably willing to lend them based on those balance sheets. Gus Jacoby: I agree that the balance sheets are strong at the moment, even after a couple tough months. But I would also add, that that can change fairly quickly if the milk price gets low enough. And it’s certainly a ratio of farm economics over a certain period of time and milk price. If it gets low enough and makes those farm economics adverse enough, it can expedite the issue, which is a plausible scenario right now. Ted Jacoby III: Mm-hmm. I would agree with that. I think the hardest thing, especially when you have a falling market like we do right now, is to try and figure out exactly where the bottom is. About a month ago, the bottom was about a $1.40. Well, guess what? Cheese price is already below a $1.40 Now, we’re hearing it’s gonna be [00:06:00] somewhere in the $1.20s. What I’m scared is we’re gonna get to the $1.20s, and somebody’s gonna start talking about maybe we need to go into the teens. I don’t know if we’re gonna go that low, but we’re definitely in that scenario right now, where you have a market that’s falling and nobody has a really good feel for where that bottom is. Gus Jacoby: I agree. Cheese and butter right now, their outlook over the next six to eight months does not look good. Ted Jacoby III: Yeah. You mentioned butter. Joe, I’ll ask you: we’re below a $1.50 in butter. Butter feels like maybe it’s caught a temporary floor. Is this a temporary floor or could we stabilize here for the next six months? Joe Maixner: I think we’ve hit a temporary floor, but I don’t think it’s the lowest we’ll see over the next 90 days. I think that cream seems to be in balance, even after Thanksgiving, and I think it’s kept a nice spot in the market where people are willing to buy, those that hadn’t already put contracts on for next year are seeing the 2026 numbers and they’re looking at that against their budgets and blocking volume up for next year. A [00:07:00] lot of first half volume’s already been booked. We’re just seeing more activity. We’ve hit that level of support. Ted Jacoby III: Joe, you mentioned cream. Gus, I’m gonna go back to you. We had some really ugly cream multiples the first half of last year. Have we increased churn capacity, and do we expect those multiples to be just as bad this year or have we increased churn capacity enough so that maybe they won’t quite get so bad? Gus Jacoby: We have increased churn capacity, certainly. I don’t know if it’s enough. Some dairymen around the country are feeding their rations a bit different and getting a little bit less butterfat out of the milk. I don’t think that’s enough, yet, to make too much change. I will anticipate having some very low multiples through the holidays and the spring flush. Ted Jacoby III: Okay. Diego, I’m gonna switch gears and come

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