The Milk Check

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:

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?

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 li...

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.

In this episode of The Milk Check, find out why some dairy producers may be eyeing the exit. Sarina Sharp, risk manager at Ag Business Solutions and the writer behind TC Jacoby's Weekly Market Report joins the Jacoby team this week. Sarina brings invaluable insights as we dig into critical topics like: Milk prices and financial stability: How long can dairy farmers survive with Class III prices dipping below $17? Supply chain shifts: How whiplash tariffs, changing federal orders, and fluctuating demand are affecting the U.S. dairy market. Bird flu and milk production: How the bird flu has changed U.S. milk production, and where it may strike next. Tune in to The Milk Check episode 75: Exit stage left: Why some producers are selling out while they can. If you like milk (and we know you do), then pour yourself a mug and tune in for insights on how to navigate this uncertain landscape and stay ahead in the coming months. Special Guest: Sarina Sharp, risk manager, Ag Business Solutions, and market analyst for the Daily Dairy Report The Jacoby Team: Josh White, vice president, dairy ingredients Ted Jacoby III, CEO & president, cheese, butter & dry ingredients Mike Brown, vice president, dairy market intelligence Gus Jacoby, president, fluid dairy ingredients & dairy support Intro (with music): Welcome to The Milk Check, a podcast from T.C. Jacoby & Company, where we share market insights and analysis with dairy farmers in mind. Ted Jacoby III: Welcome everyone to the March 28th, 2025, edition of The Milk Check, a T.C. Jacoby & Company podcast. It is my pleasure to welcome a couple of special guests to the podcast this week, first, Sarina Sharp of Ag Business Solutions and the Daily Dairy report. Welcome to the podcast, Sarina. Most of you know that Sarina is also the writer of the T.C. Jacoby Weekly Market Report, which we publish every Friday. Sarina, we're honored to have you join us today. More importantly, thank you for the partnership. I can't tell you how often I get compliments on the weekly report that you write for us, so thank you very much. Sarina Sharp: Thanks for having me. Thrilled to hear it. Ted Jacoby III: In addition, we have a few of our usual suspects: my brother Gus, head of our fluid group; Josh White, head of our dairy ingredients team, and I am excited to announce that Mike Brown, formerly of IDFA and Kroger fame, is joining the Jacoby team as our new vice president of Dairy Market Intelligence. Mike, I am excited to have you on the team, and I look forward to having you on this podcast as a regular presence. Mike Brown: Well, thank you, Ted. I'm delighted to be here. It's good to be back in markets and away from government regulation. I'm very excited about the opportunity. And Sarina, I am really looking forward to working with you. I've been a fan for decades now. Appreciate that opportunity to work with you as well. Sarina Sharp: Time flies. Ted Jacoby III: It sure does. So my first question is this. We've been talking for probably a couple of years now about the heifer replacements and the issue that's been evolving because many dairy farmers are breeding to beef simply because it's really hard to pass up $700 for a black cow rather than spending $3,000 to raise that calf into a heifer. But we're getting to the point where right now, for example, our traders that sell into the retail space, they're telling us demand's not that great. Those who are selling into the food service space are saying demand's not that great. Even our traders who export are telling us that Trump's rhetoric about tariffs is having an effect and making it difficult for us to export. In other words, demand is not that great on the horizon. Milk prices have come down. Class III price is probably going to be in the low 17s, maybe even into the high 16s in April. Are we getting to the point that we're starting to reach that line where dairy fa...

Dairy markets have taken a hit, with prices dropping across the board. Global economic uncertainty, tariff concerns, and weak demand have sent prices for cheese, butter, nonfat dry milk, and whey tumbling. Our team tackles this and more, including: Pricing market predictions by dairy product category Tariffs and demand changes for U.S. products Global strategies to diversify supply chains and potential long-term impacts A potential shift on feed strategies and butterfat production Don't miss Ted Jacoby III and his expert panel's market discussion on what's going on and what may be coming next. Listen now to The Milk Check. Intro (with music) Welcome to The Milk Check, a podcast from T.C. Jacoby & Co., where we share market insights and analysis with dairy farmers in mind. Ted Jacoby III: Welcome everybody to this month's version of The Milk Check. We're going to have an old-fashioned market discussion this month. Joining me today is Diego Carvallo, Director of Dry Ingredient Trading, especially on the international side, Greg Scheer, our Milk Marketing Manager, Jacob Menge, Vice President of Risk Management and Trade Strategy, Jared Miklasz, Sales Manager for the UFC Group, UF Milk and Cream, Joe Maixner, Director of Sales for Dairy Ingredients, and our Head Butter Trader, Josh White, our Vice President of Dairy Ingredients, and Miguel Aragon, Director of International Cheese Sales for Latin America. We're recording March 7th. Before we get started, let me say this: stick around, and don't go when we start to say goodbye. We're going to have a Marvel version of this podcast. After we said goodbye, we ended up having another 15 minutes of conversation. That may have been the best part of the whole conversation. Thanks everybody. Pretty much every single one of our markets has been down 20 to 30 cents in the last month, whether it's cheese, butter, non-fat, or whey. They all seem to be down 20 to 30 cents. Jake, is this a function of all of the tariff rhetoric coming out of the Trump administration, or is there something else going on? Jacob Menge: It's tough to separate the components of what are really driving these markets. I think tariff talk is absolutely part of it. In our last podcast we mentioned that uncertainty just weighs on markets, and there's more uncertainty today than I would say. There was the last podcast we did. The can has gotten kicked on the Mexico tariffs. I'm not sure how many times you can do that. This time when it happened, we saw it in equity markets, they didn't really pop like they did last time. The can got kicked on tariffs and equities were like, "Oh, okay, good." And when it happened yesterday, equities really just continued. They're crying lower. I'm only bringing that up because this is obviously a macroeconomic-driven dairy and equities market. Tariffs are part of the problem, but demand is just poor, according to everything we've seen. I think we'll hear from all of our product traders. That is certainly a factor, but it's tough to blame anything. Ted Jacoby III: All right, well, let's start with butterfat today. I'm going to ask Jared and Joe together. The butter market is down 20 to 30 cents, and the cream market has been ugly since Christmas. What's going on on the demand side? Will this market stay this way all year, or is it a classic seasonal phenomenon? Because if there's one market that's probably the most insulated by the tariff talk, it would be the butter market, but butter, if anything, it almost feels like the heaviest of all of our markets right now. Jacob Menge: There are certainly quirks in each market. Dairy is not the only one seeing that, though, so if I had to lean one way or the other, yeah, there are macroeconomic influences in that demand piece. Jared Miklasz: Butterfat numbers are still hanging out somewhere in the 4.5% range compared to they're about a year over year 2.

Could tariffs put U.S. dairy exports at risk? In this episode of The Milk Check, special guest Mike McCully, President of The McCully Group, joins us to slice through the uncertainty in today's dairy market. With trade tensions rising, could tariffs spook global buyers and push them toward alternative markets? We tackle some of the biggest questions facing dairy exporters today, including: Will tariffs curdle U.S. dairy exports? How are Mexico and China adjusting their buying strategies? What happens if tariffs push global buyers to look elsewhere? Listen now to the latest episode of The Milk Check to learn what's making waves in the dairy markets. Special Guest: Mike McCully, The McCully Group The Jacoby Panel: Diego Carvallo Jacob Menge Josh White Miguel Aragón Ted Jacoby, III Yara Morales Intro (with music) Welcome to The Milk Check, a podcast from T.C. Jacoby & Company where we share market insights and analysis with dairy farmers in mind. Ted Jacoby, III: Welcome everybody to The Milk Check. So, today, our topic is going to be tariffs and how that might affect the U.S. dairy industry. We are recording this at 2:00 PM on Friday, February 7th, and we're going to talk about tariffs. Very likely, by the time you listen to this, it might all be irrelevant because who knows what the Trump administration is going to do next? Joining us today from our team is Miguel Aragon, our Director of Latin America's Sales for Cheese; Yara Morales, our Director of International Sales for Dairy Ingredients; Diego Carvallo, our Head of International Trading for our Dairy Ingredients Team; and Josh White, the Head of our Dairy Ingredients Team. Also, Brianne Breed is joining us, Head of our Cheese Team, and Jacob Menge, Head of our Risk Management and Trading Strategy. In addition to that illustrious group, we've got Mike McCully today, the founder of the McCulley Group, who is probably well known to most everybody in the dairy industry, at least in North America. Mike, thanks for joining us today. Mike McCully: You're very welcome. Happy to be here. Ted Jacoby, III: Mike, where do we stand right now on tariffs, what is the Trump administration doing, and what do we expect them to do next? Mike McCully: Had a very different conversation just a week ago when it looked like we were going to start on February 1st with tariffs on Mexico and Canada and retaliation from both countries and then China. But then, 48 to 72 hours, all of it got put on hold. The China retaliation was not on dairy; Canada and Mexico were on hold, so we've basically put all that tariff discussion over in a box, and we're just going to sit and wait here for a while. It's evolving each day. I read something yesterday or the day before: "The best tariffs are ones that are not used." Hopefully, that's where things go, but we'll just have to wait and see. Between this and H5N1 are two very unpredictable elements that we have to deal with in the dairy market, not just this week and next week, but probably for quite some time. Ted Jacoby, III: I couldn't agree with you more on that one. Jake, are we expecting anything to happen next in terms of tariffs? Jacob Menge: I think something is happening as we speak. Trump talked this morning about, in his own words, reciprocal tariffs on unnamed countries. That is new as of this Friday. Trump and tariffs seem to have a cadence of news on Friday, which Wall Street really loves. That's certainly new. I heard him mention Japan, I think today. So that is just wreaking havoc on equity markets and our markets. It's this unknown. Markets just hate the unknown, and much of it is hanging out there. Ted Jacoby, III: Where we stand regarding tariffs, we've postponed putting tariffs on Mexico and Canada or any, let's call it additional tariffs, the 25% tariffs, we've delayed for about a month, the possible 25% tariffs on those countries.

What will shape the dairy industry in 2025? Are you ready for it? In this episode of The Milk Check, we tackle the big question: what's ahead for the dairy market in 2025? Spoiler alert: There's no shortage of opinions—or uncertainty.

Where is the global dairy industry headed? In this episode of The Milk Check, we're joined by Andy Powers, vice president of technical services at the American Dairy Products Institute (ADPI), alongside members of the Jacoby team, to explore the future of dairy. Together, we tackle emerging trends, market forces, and opportunities for dairy proteins, fats, and other dairy products in the next 5 to 10 years. Emerging trends: The role of GLP-1 drugs in driving future global demand Dairy vs. plant proteins: How the structure of dairy and plant proteins differ and what that means for nutrition and health The rise of butterfat: U.S. butterfat and the role of exports in future consumption Cheese's global opportunity: How cheese production is ramping up to meet international demand Dairy co-products: Innovations in whey protein, lactose, and milk protein isolates to address shifting market needs From health-conscious consumers to industrial applications, we examine how dairy is evolving to stay competitive. Plus, check out The ADPI 2023 ADPI Dairy Products Utilization & Production Trends report here and the ADPI Ingredient Resource Center here. Don't miss this comprehensive look at the future of dairy with insights from Andy and the Jacoby team, including Ted Jacoby, III, CEO & President, cheese, butter & dry ingredients; Josh White, vice president, dairy ingredients; Diego Carvallo, director of dry dairy ingredient trading, and Tristan Suellentrop, sales associate, Into (with music): Welcome to the Milk Check, a podcast from TC Jacob and Company, where we share market insights and analysis with dairy farmers in mind. Ted Jacoby, III (T3): Hello, everyone, and welcome to this month's episode of the Milk Check. Today, we are excited to have Andy Powers, vice president of technical services for the American Dairy Products Institute, joining us. Joining us as well, we have some of our usual suspects. Josh White, vice president of Dairy Ingredients, Diego Carvallo, our Director of International Sales for Dairy Ingredients, and Tristan Suellentrop, our sales associate and resident 20-something on our sales team. Guys, thank you, and Andy, excited to have you with us. Thanks for joining us. Our topic today is: what's the future of dairy? Where do we think demand is going to grow globally in the dairy industry? What are the components that this industry is going to see the greatest demand and opportunity for as we look out over the next 5 to 10 years? Andy, I'll start by saying we just recently had a five 10 year vision conversation within our organization, and one of the things that we spent a lot of time talking about was how dairy proteins, specifically as you look at the way the developing countries and the way their diets are changing and growing and developing when you look at the aging populations of many parts of the world when you look at the addition of medicines like Ozempic and Wegovy, protein is just going to become a bigger and a bigger part of the nutritional profile of what human beings eat. I've got two boys in their twenties, and they are much healthier eaters than I ever was when I was in my twenties. That means they're consuming a lot more dairy protein. Andy Powers: Right. T3: What are your thoughts, and where do you think dairy proteins fit in that space? Andy Powers: First and foremost, because I've worked for the American Dairy Products Institute, you're going to hear me talk about dairy. I drank the Kool-Aid a number of years ago. I believe in dairy's value proposition, and I believe in its strengths in terms of nutrient density and complete nutrition. You talked about some of the driving forces that are going to influence demand for dairy in the future. We've got population growth as the baseline talked about an aging population. I think that's significant. The ongoing current modernization or GDP growth meaning that people can transition from the mos...

Where is the global dairy industry headed? In this episode of The Milk Check, we're joined by Andy Powers, vice president of technical services at the American Dairy Products Institute (ADPI), alongside members of the Jacoby team, to explore the future of dairy. Together, we tackle emerging trends, market forces, and opportunities for dairy proteins, fats, and other dairy products in the next 5 to 10 years. Emerging trends: The role of GLP-1 drugs in driving future global demand Dairy vs. plant proteins: How the structure of dairy and plant proteins differ and what that means for nutrition and health The rise of butterfat: U.S. butterfat and the role of exports in future consumption Cheese's global opportunity: How cheese production is ramping up to meet international demand Dairy co-products: Innovations in whey protein, lactose, and milk protein isolates to address shifting market needs From health-conscious consumers to industrial applications, we examine how dairy is evolving to stay competitive. Plus, check out The ADPI 2023 ADPI Dairy Products Utilization & Production Trends report here and the ADPI Ingredient Resource Center here. Don't miss this comprehensive look at the future of dairy with insights from Andy and the Jacoby team, including Ted Jacoby, III, CEO & President, cheese, butter & dry ingredients; Josh White, vice president, dairy ingredients; Diego Carvallo, director of dry dairy ingredient trading, and Tristan Suellentrop, sales associate, Into (with music): Welcome to the Milk Check, a podcast from TC Jacob and Company, where we share market insights and analysis with dairy farmers in mind. Ted Jacoby, III (T3): Hello, everyone, and welcome to this month's episode of the Milk Check. Today, we are excited to have Andy Powers, vice president of technical services for the American Dairy Products Institute, joining us. Joining us as well, we have some of our usual suspects. Josh White, vice president of Dairy Ingredients, Diego Carvallo, our Director of International Sales for Dairy Ingredients, and Tristan Suellentrop, our sales associate and resident 20-something on our sales team. Guys, thank you, and Andy, excited to have you with us. Thanks for joining us. Our topic today is: what's the future of dairy? Where do we think demand is going to grow globally in the dairy industry? What are the components that this industry is going to see the greatest demand and opportunity for as we look out over the next 5 to 10 years? Andy, I'll start by saying we just recently had a five 10 year vision conversation within our organization, and one of the things that we spent a lot of time talking about was how dairy proteins, specifically as you look at the way the developing countries and the way their diets are changing and growing and developing when you look at the aging populations of many parts of the world when you look at the addition of medicines like Ozempic and Wegovy, protein is just going to become a bigger and a bigger part of the nutritional profile of what human beings eat. I've got two boys in their twenties, and they are much healthier eaters than I ever was when I was in my twenties. That means they're consuming a lot more dairy protein. Andy Powers: Right. T3: What are your thoughts, and where do you think dairy proteins fit in that space? Andy Powers: First and foremost, because I've worked for the American Dairy Products Institute, you're going to hear me talk about dairy. I drank the Kool-Aid a number of years ago. I believe in dairy's value proposition, and I believe in its strengths in terms of nutrient density and complete nutrition. You talked about some of the driving forces that are going to influence demand for dairy in the future. We've got population growth as the baseline talked about an aging population. I think that's significant. The ongoing current modernization or GDP growth meaning that people can transition from the most...

Today's dairy market is global. In our latest episode of The Milk Check, we dive into the New Zealand and Oceania markets to understand how they may impact the U.S. dairy market. Join Jacoby and our two special guests Jo Bills, ag market analyst and director of global Insights at Ever.Ag, and Steve Spencer, managing Director at Ever.Ag as we dive into dairy. Tight global supplies of skim milk powder and strong demand will likely keep prices high through 2025 New cheese plants in the U.S. market increase Class III supply and may drive cheese prices down and limit powder output, tightening global powder supply New Zealand enjoys tariff-free access to the Chinese market, but China's economic woes have reduced dairy demand Lower Chinese demand pushed New Zealand to focus on skim milk powder, butterfat, and cheese And lots more information on the global dairy market and our predictions 2025. We have a positive outlook for dairy in 2025, but cheese may be our wild card. Get the market scoop from the Jacoby team, including Ted Jacoby, III, CEO & President, Cheese, Butter & Dry Ingredients; Josh White, Vice President, Dairy Ingredients; and Diego Carvallo, Director of Dry Dairy Ingredient Trading. Intro (with music): Welcome to The Milk Check, a T.C. Jacoby & Company podcast where we share market insights and analysis with dairy farmers in mind. Ted Jacoby, III (T3) Hello, everybody, and welcome to The Milk Check. This month, we are excited to welcome special guests Joanne Bills and Steve Spencer from Freshagenda to share their thoughts on milk production and dairy demand in Asia, Oceania, and internationally for 2025. Joining us from the Jacoby team are Josh White and Diego Carvallo from our dairy ingredients team. Welcome, everybody, and thank you for joining us today. Steve Spencer: Thank you, Ted. It's great to be here. We enjoy these. We've done a few of these, so it's always good fun. T3: We're about to enter year two of China's tariff changes regarding New Zealand dairy products and how they are imported into China. For our audience, many of whom are dairy farmers here in the U.S., why don't you give us a quick overview of those changes? Then, we can discuss what that has meant for dairy markets in that region and how it affects dairy prices. Steve: In basic terms, New Zealand has tariff-free access to the Chinese market. That was preset for an extended period. They were on a slow rundown of tariffs over a long haul. A few years before that was due, they had a review, and it seemed to be that that was just a little period to push it out a bit longer, and that's in the rearview now. So, we're in a very tariff-free environment for New Zealand exports, which you'd think has freed them up to go wild. The only trouble is China's not a market that is allowing many people to go wild right now because that's come at the same time as China hitting a phase of the second wave after Covid; the second wave lockdowns were much harsher, much longer, much more damaging to the economy and so that's crippled demand for dairy in many parts of the market because spending, consumer spending has been depressed and many things are contributing to that right now and that's still a happening thing. So, that has freed New Zealand up to grow its share of the market in skim milk, powder, cheese, and butterfat and they've certainly done that at a time when the import volumes are a lot lower. So, we've got to sit back and look at the overall trends in China. We think they're just off the bottom regarding those import trends, but New Zealand has certainly picked up share, and their exports to China are falling. You could take the story of product by product because the products that China isn't producing or doesn't produce, skim milk, powder, butterfat, cheese, a small production of those, really the trade is probably following the pattern of demand we're seeing in that market.

Today's dairy market is global. In our latest episode of The Milk Check, we dive into the New Zealand and Oceania markets to understand how they may impact the U.S. dairy market. Join Jacoby and our two special guests Jo Bills, ag market analyst and director of global Insights at Ever.Ag, and Steve Spencer, managing Director at Ever.Ag as we dive into dairy. Tight global supplies of skim milk powder and strong demand will likely keep prices high through 2025 New cheese plants in the U.S. market increase Class III supply and may drive cheese prices down and limit powder output, tightening global powder supply New Zealand enjoys tariff-free access to the Chinese market, but China's economic woes have reduced dairy demand Lower Chinese demand pushed New Zealand to focus on skim milk powder, butterfat, and cheese And lots more information on the global dairy market and our predictions 2025. We have a positive outlook for dairy in 2025, but cheese may be our wild card. Get the market scoop from the Jacoby team, including Ted Jacoby, III, CEO & President, Cheese, Butter & Dry Ingredients; Josh White, Vice President, Dairy Ingredients; and Diego Carvallo, Director of Dry Dairy Ingredient Trading. Intro (with music): Welcome to The Milk Check, a T.C. Jacoby & Company podcast where we share market insights and analysis with dairy farmers in mind. Ted Jacoby, III (T3) Hello, everybody, and welcome to The Milk Check. This month, we are excited to welcome special guests Joanne Bills and Steve Spencer from Freshagenda to share their thoughts on milk production and dairy demand in Asia, Oceania, and internationally for 2025. Joining us from the Jacoby team are Josh White and Diego Carvallo from our dairy ingredients team. Welcome, everybody, and thank you for joining us today. Steve Spencer: Thank you, Ted. It's great to be here. We enjoy these. We've done a few of these, so it's always good fun. T3: We're about to enter year two of China's tariff changes regarding New Zealand dairy products and how they are imported into China. For our audience, many of whom are dairy farmers here in the U.S., why don't you give us a quick overview of those changes? Then, we can discuss what that has meant for dairy markets in that region and how it affects dairy prices. Steve: In basic terms, New Zealand has tariff-free access to the Chinese market. That was preset for an extended period. They were on a slow rundown of tariffs over a long haul. A few years before that was due, they had a review, and it seemed to be that that was just a little period to push it out a bit longer, and that's in the rearview now. So, we're in a very tariff-free environment for New Zealand exports, which you'd think has freed them up to go wild. The only trouble is China's not a market that is allowing many people to go wild right now because that's come at the same time as China hitting a phase of the second wave after Covid; the second wave lockdowns were much harsher, much longer, much more damaging to the economy and so that's crippled demand for dairy in many parts of the market because spending, consumer spending has been depressed and many things are contributing to that right now and that's still a happening thing. So, that has freed New Zealand up to grow its share of the market in skim milk, powder, cheese, and butterfat and they've certainly done that at a time when the import volumes are a lot lower. So, we've got to sit back and look at the overall trends in China. We think they're just off the bottom regarding those import trends, but New Zealand has certainly picked up share, and their exports to China are falling. You could take the story of product by product because the products that China isn't producing or doesn't produce, skim milk, powder, butterfat, cheese, a small production of those, really the trade is probably following the pattern of demand we're seeing in that market.

As summer fades, we're moving into peak demand season for the U.S. dairy market. Keep on top of shifting trends with The Milk Check. Guest host Josh White and a panel of industry experts discuss the latest trends and projections for U.S. dairy as we approach this critical period.

As summer fades, we're moving into peak demand season for the U.S. dairy market. Keep on top of shifting trends with The Milk Check. Guest host Josh White and a panel of industry experts discuss the latest trends and projections for U.S. dairy as we approach this critical period.

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

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

Today, we share Part 2 of a special two-part episode celebrating TC Jacoby & Co's 75th anniversary. We'll talk about the milk industry from the '90s to the dairy world of the future. Join Ted Jacoby II, Gus Jacoby, and Ted Jacoby III for the conclusion of our special 2-part episode as we discuss: The first TC Jacoby & Co. cheese desk Our projection for future growth in U.S. cheese exports Our forecast for the future of the global dairy industry We love the dairy industry and look forward to what the future will bring. So, raise your glass of milk, and let's celebrate TC Jacoby's 75 wonderful years in the U.S. dairy industry. Intro audio (with music): Welcome to the Milk Check, a TC Jacoby & Co podcast where we share market insights and analysis with dairy farmers in mind. Ted Jacoby III (T3): Hello, everyone, and welcome to The Milk Check. Today, we have a special edition of our monthly podcast because this year, 2024, TC Jacoby & Co celebrates 75 years of serving the dairy industry. In honor of this special anniversary, we are publishing a two-episode edition where, in the first part, my father, my brother Gus, and I discuss and – in my father's case – tell tales of the first 50 years of our history. In part two, we share the more recent 25 years as well as our thoughts on what the future of the industry may hold. Welcome to part two. There are a lot of other things that were going on in the 90s. I mean, that all started in the 90s. We started our office in Mexico in the 90s. When I came to work for TC Jacoby & Co. in 1996, I spent about four or five months in St. Louis, and then I moved down to Mexico to help us start that office. That was quite the experience, living for a year in Mexico. Ironically, trying to move cheese to Mexico led me back to the States, and starting to sell it in the States. Eventually, I worked with risk management. At the time, we were moving nonfat dry milk into Mexico. We had a company in Mexico then, so we were TC Jacoby & Co in the U.S. selling to TC Jacoby & Co in Mexico. We were warehousing the product in a warehouse in Mexico, selling whey powder, nonfat dry milk, and various other powders to multiple distributors in the area, but then also moving a little bit of cheese. I had one of my suppliers, the cheddar cheese, cancel on me, and so I was calling around looking for cheddar cheese, and another supplier said, “Not only do I have a load of cheddar for you to ship to Mexico, but I also have about 50 other loads of cheese. You should call the guy who canceled on you and see if he needs any extra.” Next thing I know, I'm moving more cheese back and forth in the U.S. than I'm moving to Mexico. And that was when I called you and said, “Dad, I think I'm going to move back to the States, and I'm going to start up a cheese desk.” That was in 1997, and that's how we started trading cheese. We went through the 50s, 60s, 70s, and 80s, and just about everything you, Uncle Bill, and Uncle Tom moved was mainly fluid. Then, in the 90s, we started moving powder. Bill, I think in the 80s, had begun moving powder and butter in the U.S. Ted Jacoby II (T2): Billy used to move a lot of cream from California to the Midwest. Gus Jacoby: Well, remember that was a big time for us because his development of California and the cost to move fluid product at that time was economically feasible in making cream and condensed products supplied by the California Central Valley and delivered on an annualized contractual basis to places as far as the upper Midwest and even into the Mideastern U.S. at time. Understanding the CDFA and the arbitrage between that and the Federal Orders was another thing we took advantage of for a few decades. So that was a big and successful time for us from a trading standpoint of fluid products. T3: And then he was moving non-fat to many of the mozzarella guys in the Midwest when the mozzarella industry was in its infancy; that was when ...

Today, we share Part 2 of a special two-part episode celebrating TC Jacoby & Co's 75th anniversary. We'll talk about the milk industry from the '90s to the dairy world of the future. Join Ted Jacoby II, Gus Jacoby, and Ted Jacoby III for the conclusion of our special 2-part episode as we discuss: The first TC Jacoby & Co. cheese desk Our projection for future growth in U.S. cheese exports Our forecast for the future of the global dairy industry We love the dairy industry and look forward to what the future will bring. So, raise your glass of milk, and let's celebrate TC Jacoby's 75 wonderful years in the U.S. dairy industry. Intro audio (with music): Welcome to the Milk Check, a TC Jacoby & Co podcast where we share market insights and analysis with dairy farmers in mind. Ted Jacoby III (T3): Hello, everyone, and welcome to The Milk Check. Today, we have a special edition of our monthly podcast because this year, 2024, TC Jacoby & Co celebrates 75 years of serving the dairy industry. In honor of this special anniversary, we are publishing a two-episode edition where, in the first part, my father, my brother Gus, and I discuss and – in my father's case – tell tales of the first 50 years of our history. In part two, we share the more recent 25 years as well as our thoughts on what the future of the industry may hold. Welcome to part two. There are a lot of other things that were going on in the 90s. I mean, that all started in the 90s. We started our office in Mexico in the 90s. When I came to work for TC Jacoby & Co. in 1996, I spent about four or five months in St. Louis, and then I moved down to Mexico to help us start that office. That was quite the experience, living for a year in Mexico. Ironically, trying to move cheese to Mexico led me back to the States, and starting to sell it in the States. Eventually, I worked with risk management. At the time, we were moving nonfat dry milk into Mexico. We had a company in Mexico then, so we were TC Jacoby & Co in the U.S. selling to TC Jacoby & Co in Mexico. We were warehousing the product in a warehouse in Mexico, selling whey powder, nonfat dry milk, and various other powders to multiple distributors in the area, but then also moving a little bit of cheese. I had one of my suppliers, the cheddar cheese, cancel on me, and so I was calling around looking for cheddar cheese, and another supplier said, “Not only do I have a load of cheddar for you to ship to Mexico, but I also have about 50 other loads of cheese. You should call the guy who canceled on you and see if he needs any extra.” Next thing I know, I'm moving more cheese back and forth in the U.S. than I'm moving to Mexico. And that was when I called you and said, “Dad, I think I'm going to move back to the States, and I'm going to start up a cheese desk.” That was in 1997, and that's how we started trading cheese. We went through the 50s, 60s, 70s, and 80s, and just about everything you, Uncle Bill, and Uncle Tom moved was mainly fluid. Then, in the 90s, we started moving powder. Bill, I think in the 80s, had begun moving powder and butter in the U.S. Ted Jacoby II (T2): Billy used to move a lot of cream from California to the Midwest. Gus Jacoby: Well, remember that was a big time for us because his development of California and the cost to move fluid product at that time was economically feasible in making cream and condensed products supplied by the California Central Valley and delivered on an annualized contractual basis to places as far as the upper Midwest and even into the Mideastern U.S. at time. Understanding the CDFA and the arbitrage between that and the Federal Orders was another thing we took advantage of for a few decades. So that was a big and successful time for us from a trading standpoint of fluid products. T3: And then he was moving non-fat to many of the mozzarella guys in the Midwest when the mozzarella industry was in its infancy; that was when ...

A lot has changed in the dairy industry in the 75 years since Ted Jacoby, Sr. founded TC Jacoby & Company in 1949. Today, we share Part 1 of a special two-part episode celebrating TC Jacoby & Co's 75 wonderful years in the U.S. dairy industry. From picking up 10-gallon milk cans on the farm in the 40s to shipping internationally, we've come a long way. Join Ted Jacoby II, Gus Jacoby, and Ted Jacoby III for part 1 of a special 2-part episode as we discuss: How tank trucks fundamentally changed the U.S. milk supply Consolidation in the dairy industry When computers came for milk Plus, Ted Jacoby II shares his eyewitness account of the introduction of ultrafiltration (UF) milk. It all began with a coffee break. Join us for a walk down the milk memory lane in our 75th-anniversary episode, Part 1: Dive into our history. Ted Jacoby III (T3): Welcome and enjoy the show. Episode Intro: Welcome to the Milk Check, a podcast from TC Jacob and Company, where we share market insights and analysis with dairy farmers in mind. T3: Hello, everybody, and welcome to the Mouth Check. Today, we have a special edition of our monthly podcast because this year, 2024, TC Jacob and Company celebrates 75 years of servicing the dairy industry. In honor of this special anniversary, we are publishing a two-episode edition where, in the first part, my father, my brother Gus, and I discuss and, in my father's case, share tales of the first 50 years of our history. In part two, we share the more recent 25 years of our history and our thoughts on the future of this great industry we work in. Dad, I'll ask you: when Grandpa started the company in 1949, we still picked up milk in 10-gallon milk cans on the farm. So what was it like those first 10, 15 years of the company Ted Jacoby II (T2): When my dad, your grandfather, got out of the Navy in 1945, I think he and two other fellas bought a dairy in Highland, Illinois, and you're right, they had milk coming into that dairy in cans. He and his partners operated that dairy for a couple of years. They sold the dairy to Midwest dairies. Midwest Dairies was then taken over by a company called City Corp. And City Corp, and Midwest Dairies had consolidated almost all the dairies in southern Illinois. All these dairies were consolidated, then spun off to Prairie Farms, and Fletcher Gorley took over Prairie Farms and turned them into one of the premier co-ops in the United States. After they sold the dairy, he booked office space in St. Louis on the ninth floor of what was the commerce building. So he would act as a broker of barrels of this and drums of that and set up shop as a middleman for mostly dairy ingredients. There was a relationship that developed between us and Prairie Farms that has extended over all these years. We know each other quite well. The relationship has been strong for a long, long time. In the 40 years between the sixties and the nineties, pardon me, 30 years, you had several things occur. First of all, the consolidation people were picking up milk and bringing it to receiving stations, and then you could go from the receiving station to your regular market, or you could go somewhere else. There were receiving stations, called bump overs, which would consolidate the milk from many small farms and put it in a position to take it somewhere. You didn't have any dairies that shipped truckload quantities in the nineties in the Midwest. And then gradually, over that period of 30 years, you had large dairies that shipped truckload quantities, and that all occurred in the nineties and two thousand. T3: Once those bulk tank trucks became common, when we started seeing milk move to the southeast in the fall when milk got tight, T2: When tank trucks came in, it was about 1953 to 55, somewhere in that area, and the tank trucks were relatively small. 3,500 gallons was a big truck in those days, and when it became practical to move milk,

A lot has changed in the dairy industry in the 75 years since Ted Jacoby, Sr. founded TC Jacoby & Company in 1949. Today, we share Part 1 of a special two-part episode celebrating TC Jacoby & Co's 75 wonderful years in the U.S. dairy industry. From picking up 10-gallon milk cans on the farm in the 40s to shipping internationally, we've come a long way. Join Ted Jacoby II, Gus Jacoby, and Ted Jacoby III for part 1 of a special 2-part episode as we discuss: How tank trucks fundamentally changed the U.S. milk supply Consolidation in the dairy industry When computers came for milk Plus, Ted Jacoby II shares his eyewitness account of the introduction of ultrafiltration (UF) milk. It all began with a coffee break. Join us for a walk down the milk memory lane in our 75th-anniversary episode, Part 1: Dive into our history. Ted Jacoby III (T3): Welcome and enjoy the show. Episode Intro: Welcome to the Milk Check, a podcast from TC Jacob and Company, where we share market insights and analysis with dairy farmers in mind. T3: Hello, everybody, and welcome to the Mouth Check. Today, we have a special edition of our monthly podcast because this year, 2024, TC Jacob and Company celebrates 75 years of servicing the dairy industry. In honor of this special anniversary, we are publishing a two-episode edition where, in the first part, my father, my brother Gus, and I discuss and, in my father's case, share tales of the first 50 years of our history. In part two, we share the more recent 25 years of our history and our thoughts on the future of this great industry we work in. Dad, I'll ask you: when Grandpa started the company in 1949, we still picked up milk in 10-gallon milk cans on the farm. So what was it like those first 10, 15 years of the company Ted Jacoby II (T2): When my dad, your grandfather, got out of the Navy in 1945, I think he and two other fellas bought a dairy in Highland, Illinois, and you're right, they had milk coming into that dairy in cans. He and his partners operated that dairy for a couple of years. They sold the dairy to Midwest dairies. Midwest Dairies was then taken over by a company called City Corp. And City Corp, and Midwest Dairies had consolidated almost all the dairies in southern Illinois. All these dairies were consolidated, then spun off to Prairie Farms, and Fletcher Gorley took over Prairie Farms and turned them into one of the premier co-ops in the United States. After they sold the dairy, he booked office space in St. Louis on the ninth floor of what was the commerce building. So he would act as a broker of barrels of this and drums of that and set up shop as a middleman for mostly dairy ingredients. There was a relationship that developed between us and Prairie Farms that has extended over all these years. We know each other quite well. The relationship has been strong for a long, long time. In the 40 years between the sixties and the nineties, pardon me, 30 years, you had several things occur. First of all, the consolidation people were picking up milk and bringing it to receiving stations, and then you could go from the receiving station to your regular market, or you could go somewhere else. There were receiving stations, called bump overs, which would consolidate the milk from many small farms and put it in a position to take it somewhere. You didn't have any dairies that shipped truckload quantities in the nineties in the Midwest. And then gradually, over that period of 30 years, you had large dairies that shipped truckload quantities, and that all occurred in the nineties and two thousand. T3: Once those bulk tank trucks became common, when we started seeing milk move to the southeast in the fall when milk got tight, T2: When tank trucks came in, it was about 1953 to 55, somewhere in that area, and the tank trucks were relatively small. 3,500 gallons was a big truck in those days, and when it became practical to move milk,

The 2024 ADPI/ABI Annual Conference starts next week and will likely move the dairy markets. What does Jacoby predict for dairy production and demand for 2024? Join Ted Jacoby III and our guests Jacob Menge, Vice President of Risk Management and Trade Strategy; Joshua White, Vice President of Dairy Ingredients; Diego Carvallo, Director of Dry Dairy Ingredient Trading; Gus Jacoby, President of Fluid Dairy Ingredients and Dairy Support; Joe Maixner, National Sales Manager of Dairy Ingredients; and Ted Jacoby Jr. We discuss: Jacoby's predictions vs. results for 2024 YTD Factors impacting prices for Q3 and Q4 Continued downward pressure on milk production and lackluster fluid milk demand The impact of the Avian Flu on dairy production Plus, is whey the new canary in the coal mine? Find out more on today's episode of The Milk Check. Ted Jacoby III (T3): Hello, everybody, and welcome to the Milk Check. It's April 22nd, a week before the ADPI meeting in Chicago. And I thought this timing would be right for us to have a market discussion going into an annual conference that does have a tendency to be a bit of a market mover. Today with me, I have Jacob Menge, our head of trading strategy and risk management, Joshua White, head of our dairy ingredients group, Diego Carvallo, our head trader for non-fat, dry milk and other dairy powders, Gus Jacoby, head of our... President of our fluid division, milk cream, UF milk. Joe Maixner, head of our butter trading, and my dad, of course, joining us to give his thoughts on these markets. Welcome, everybody, and let's get to it. I was looking at our markets this morning, getting ready for this podcast and I kept asking myself the question, where did we think we'd be this week when we started the first week in January. And I don't think in any of our markets we really were thinking that we'd be dealing with what we're dealing with right now. So, I think, maybe, what we'll do is we'll start with cheese. Jake, when we were entering the year, if I remember correctly, we were pretty bearish the cheese market, and if we were talking about what we thought the second quarter was going to bring in cheese, I didn't think it was a market that was going to be up 8 cents today and in the seventies, and probably, going higher over the rest of the week. So, what do you think is going on in cheese, and compare and contrast what we thought would happen at the beginning of the year and what we're seeing right now? Jacob Menge: I would say cheese has probably been the most in line with our expectations of all our commodities from where we started the year. We were bearish, and I would argue we saw that bearishness, right? I mean, we were in the 140s for a while in both blocks and barrels, and so, I think, yeah, we've seen a pretty good push the past week or two. But otherwise, I think cheese, more or less, went in line with what we expected. Demand's been off a little bit. We've seen exports numbers are starting to look pretty good, but in general, sluggish has been what it's felt like for most of the year up until the past few weeks. I'd say cheese kind of went along with what we expected, and it's been this cycle that we've seen for about a year now, right? We get a good push higher. Last year in July, we saw a pretty good push up into, I think, the upper 180s, and then, we seemed to kind of kill demand [inaudible 00:02:57] we've been getting to those levels. And then, we've fallen into the 130s, 140s, low 150s, that generates some more demand, and we yo-yo from there. So, yeah, I wouldn't say anything too crazy from expectations on the cheese side. Joshua White: You asked at the beginning of the year, would we have expected prices in our market conditions to be where they're at now on April 22nd? And I just did a quick look back right when you asked that, just to see what our commercial meeting notes and what our dialog and discussion are.

The 2024 ADPI/ABI Annual Conference starts next week and will likely move the dairy markets. What does Jacoby predict for dairy production and demand for 2024? Join Ted Jacoby III and our guests Jacob Menge, Vice President of Risk Management and Trade Strategy; Joshua White, Vice President of Dairy Ingredients; Diego Carvallo, Director of Dry Dairy Ingredient Trading; Gus Jacoby, President of Fluid Dairy Ingredients and Dairy Support; Joe Maixner, National Sales Manager of Dairy Ingredients; and Ted Jacoby Jr. We discuss: Jacoby's predictions vs. results for 2024 YTD Factors impacting prices for Q3 and Q4 Continued downward pressure on milk production and lackluster fluid milk demand The impact of the Avian Flu on dairy production Plus, is whey the new canary in the coal mine? Find out more on today's episode of The Milk Check. Ted Jacoby III (T3): Hello, everybody, and welcome to the Milk Check. It's April 22nd, a week before the ADPI meeting in Chicago. And I thought this timing would be right for us to have a market discussion going into an annual conference that does have a tendency to be a bit of a market mover. Today with me, I have Jacob Menge, our head of trading strategy and risk management, Joshua White, head of our dairy ingredients group, Diego Carvallo, our head trader for non-fat, dry milk and other dairy powders, Gus Jacoby, head of our... President of our fluid division, milk cream, UF milk. Joe Maixner, head of our butter trading, and my dad, of course, joining us to give his thoughts on these markets. Welcome, everybody, and let's get to it. I was looking at our markets this morning, getting ready for this podcast and I kept asking myself the question, where did we think we'd be this week when we started the first week in January. And I don't think in any of our markets we really were thinking that we'd be dealing with what we're dealing with right now. So, I think, maybe, what we'll do is we'll start with cheese. Jake, when we were entering the year, if I remember correctly, we were pretty bearish the cheese market, and if we were talking about what we thought the second quarter was going to bring in cheese, I didn't think it was a market that was going to be up 8 cents today and in the seventies, and probably, going higher over the rest of the week. So, what do you think is going on in cheese, and compare and contrast what we thought would happen at the beginning of the year and what we're seeing right now? Jacob Menge: I would say cheese has probably been the most in line with our expectations of all our commodities from where we started the year. We were bearish, and I would argue we saw that bearishness, right? I mean, we were in the 140s for a while in both blocks and barrels, and so, I think, yeah, we've seen a pretty good push the past week or two. But otherwise, I think cheese, more or less, went in line with what we expected. Demand's been off a little bit. We've seen exports numbers are starting to look pretty good, but in general, sluggish has been what it's felt like for most of the year up until the past few weeks. I'd say cheese kind of went along with what we expected, and it's been this cycle that we've seen for about a year now, right? We get a good push higher. Last year in July, we saw a pretty good push up into, I think, the upper 180s, and then, we seemed to kind of kill demand [inaudible 00:02:57] we've been getting to those levels. And then, we've fallen into the 130s, 140s, low 150s, that generates some more demand, and we yo-yo from there. So, yeah, I wouldn't say anything too crazy from expectations on the cheese side. Joshua White: You asked at the beginning of the year, would we have expected prices in our market conditions to be where they're at now on April 22nd? And I just did a quick look back right when you asked that, just to see what our commercial meeting notes and what our dialog and discussion are.

This is the first podcast episode in our quarterly Understanding Export series. Today's special guest is Fernando Anaya, Director General at DILAC. DILAC offers powdered dairy products and has a 27-year track record within the Mexican dairy industry. Our Jacoby team includes Ted Jacoby, President; Yara Morales, Director of Sales for Mexico and Latin America; and Diego Carvallo, Director of Dry Dairy Ingredient Trading at T.C. Jacoby and Company, Inc. Today's episode discusses the Mexican consumer market for dairy products. Fernando shares his take on how drought, exchange rates, and political waves will affect Mexico's milk importers in 2024. How has the extreme drought in Mexico impacted domestic milk and cheese production and consumer demand? Inflation has increased dairy prices, but could a strong peso offset this challenge for Mexican importers? The Mexican government, one of the largest Mexican milk powder importers, announced that it will not import any milk powder this year. How will this big player impact the Mexican milk import market? Mexican presidential elections take place this summer. Is this likely to affect milk imports? This plus what importers should know about changes in milk import procedures and Fernando's opinion on the most important factor for milk imports in Mexico—dive in with us on today's Milk Check. T3: Welcome to this month's episode of The Milk Check. I'm Ted Jacoby, president of T.C. Jacoby & Company. Today, we are joined by Yara Morales, sales director for Mexico and Latin America; Diego Carvallo, dairy ingredient trading director; and special guest Fernando Anaya, director general for DLAC. DLAC is a very good customer of ours in Mexico, and we're excited to have him. Fernando, welcome, and thank you for joining us today. Fernando Anaya: Ted, thanks for the invitation. I'm really glad to be with you and your team. T3: This episode will be released in Spanish and English, the first in our Understanding Export series, which we will publish quarterly. Today, my first question, Fernando, to you, is when we think about the Mexican dairy market and how much dairy Mexico imports, what is the number one thing exporters to Mexico must understand about the Mexican consumer? Obviously, one of them is price, but beyond price, what's important to the consumer in Mexico? Fernando: Okay. Well, Ted, I think that's a really good question. Well, just to have a rough number of the imports into Mexico, I will say that 15% of our needs have to be imported every year, and that really is not changing a lot. I think that's the same number from maybe ten years into now. So, what do the exporters have to be aware of to be in the Mexican market? The number one for sure will be price, the second will be price, and the third will be price. So that's something that I guess you can agree on that. Of course, Mexican customers will always look to have a better price, but again, it's not the only thing they are looking for. There are some things that the exporter has to be aware of, and one of them will be regulations. For the past two or three years, Mexico has been entering into new regulations. For example, for non-fat, there's this new regulation, the NOM-222, and I know there have been a lot of challenges for the exporters because they must be sure they will be ready to fulfill this regulation. It's not that hard, but again, that's something that the exporters, mainly in the US, had to make some changes in their COAs, registering some labs to fulfill these regulations. So again, that's something that the exporters into Mexico must be aware of. The other thing is logistics. The way that Mexican customers purchase mainly non-fat food is changing. Right now, the Mexicans are looking for the product to be available in the customs agent warehouses. Why? Because it's very quick to get the product into Mexico. Let's think maybe ten years ago,

This is the first podcast episode in our quarterly Understanding Export series. Today's special guest is Fernando Anaya, Director General at DILAC. DILAC offers powdered dairy products and has a 27-year track record within the Mexican dairy industry. Our Jacoby team includes Ted Jacoby, President; Yara Morales, Director of Sales for Mexico and Latin America; and Diego Carvallo, Director of Dry Dairy Ingredient Trading at T.C. Jacoby and Company, Inc. Today's episode discusses the Mexican consumer market for dairy products. Fernando shares his take on how drought, exchange rates, and political waves will affect Mexico's milk importers in 2024. How has the extreme drought in Mexico impacted domestic milk and cheese production and consumer demand? Inflation has increased dairy prices, but could a strong peso offset this challenge for Mexican importers? The Mexican government, one of the largest Mexican milk powder importers, announced that it will not import any milk powder this year. How will this big player impact the Mexican milk import market? Mexican presidential elections take place this summer. Is this likely to affect milk imports? This plus what importers should know about changes in milk import procedures and Fernando's opinion on the most important factor for milk imports in Mexico—dive in with us on today's Milk Check. T3: Welcome to this month's episode of The Milk Check. I'm Ted Jacoby, president of T.C. Jacoby & Company. Today, we are joined by Yara Morales, sales director for Mexico and Latin America; Diego Carvallo, dairy ingredient trading director; and special guest Fernando Anaya, director general for DLAC. DLAC is a very good customer of ours in Mexico, and we're excited to have him. Fernando, welcome, and thank you for joining us today. Fernando Anaya: Ted, thanks for the invitation. I'm really glad to be with you and your team. T3: This episode will be released in Spanish and English, the first in our Understanding Export series, which we will publish quarterly. Today, my first question, Fernando, to you, is when we think about the Mexican dairy market and how much dairy Mexico imports, what is the number one thing exporters to Mexico must understand about the Mexican consumer? Obviously, one of them is price, but beyond price, what's important to the consumer in Mexico? Fernando: Okay. Well, Ted, I think that's a really good question. Well, just to have a rough number of the imports into Mexico, I will say that 15% of our needs have to be imported every year, and that really is not changing a lot. I think that's the same number from maybe ten years into now. So, what do the exporters have to be aware of to be in the Mexican market? The number one for sure will be price, the second will be price, and the third will be price. So that's something that I guess you can agree on that. Of course, Mexican customers will always look to have a better price, but again, it's not the only thing they are looking for. There are some things that the exporter has to be aware of, and one of them will be regulations. For the past two or three years, Mexico has been entering into new regulations. For example, for non-fat, there's this new regulation, the NOM-222, and I know there have been a lot of challenges for the exporters because they must be sure they will be ready to fulfill this regulation. It's not that hard, but again, that's something that the exporters, mainly in the US, had to make some changes in their COAs, registering some labs to fulfill these regulations. So again, that's something that the exporters into Mexico must be aware of. The other thing is logistics. The way that Mexican customers purchase mainly non-fat food is changing. Right now, the Mexicans are looking for the product to be available in the customs agent warehouses. Why? Because it's very quick to get the product into Mexico. Let's think maybe ten years ago,

Este es el primer episodio de nuestro serie trimestral Entendiendo Exportaciones. El invitado especial de hoy es Fernando Anaya, Director General en DILAC. DILAC ofrece productos lácteos en polvo y tiene un historial de 27 años dentro de la industria láctea mexicana. Nuestro equipo de Jacoby incluye a Ted Jacoby, Presidente; Yara Morales, Directora de Ventas para México y América Latina; y Diego Carvallo, Director de Comercio de Ingredientes Lácteos en T.C. Jacoby and Company, Inc. En el episodio de hoy se discute el mercado consumidor mexicano de productos lácteos. Fernando comparte su perspectiva sobre cómo la sequía, los tipos de cambio y las corrientes políticas afectarán a los importadores de leche en México en 2024. ¿Cómo ha impactado la sequía extrema en México la producción nacional de leche y queso y la demanda del consumidor? La inflación ha aumentado los precios lácteos, ¿pero podría un peso fuerte compensar este desafío para los importadores mexicanos? El gobierno mexicano, uno de los mayores importadores de leche en polvo de México, anunció que no importará leche en polvo este año. ¿Cómo afectará este gran jugador al mercado de importación de leche mexicana? Las elecciones presidenciales mexicanas se llevarán a cabo este verano. ¿Es probable que esto afecte las importaciones de leche? Además de lo anterior, lo que los importadores deben saber sobre los cambios en los procedimientos de importación de leche y la opinión de Fernando sobre el factor más importante para las importaciones de leche en México; sumérgete con nosotros en el Milk Check de hoy.

Este es el primer episodio de nuestro serie trimestral Entendiendo Exportaciones. El invitado especial de hoy es Fernando Anaya, Director General en DILAC. DILAC ofrece productos lácteos en polvo y tiene un historial de 27 años dentro de la industria láctea mexicana. Nuestro equipo de Jacoby incluye a Ted Jacoby, Presidente; Yara Morales, Directora de Ventas para México y América Latina; y Diego Carvallo, Director de Comercio de Ingredientes Lácteos en T.C. Jacoby and Company, Inc. En el episodio de hoy se discute el mercado consumidor mexicano de productos lácteos. Fernando comparte su perspectiva sobre cómo la sequía, los tipos de cambio y las corrientes políticas afectarán a los importadores de leche en México en 2024. ¿Cómo ha impactado la sequía extrema en México la producción nacional de leche y queso y la demanda del consumidor? La inflación ha aumentado los precios lácteos, ¿pero podría un peso fuerte compensar este desafío para los importadores mexicanos? El gobierno mexicano, uno de los mayores importadores de leche en polvo de México, anunció que no importará leche en polvo este año. ¿Cómo afectará este gran jugador al mercado de importación de leche mexicana? Las elecciones presidenciales mexicanas se llevarán a cabo este verano. ¿Es probable que esto afecte las importaciones de leche? Además de lo anterior, lo que los importadores deben saber sobre los cambios en los procedimientos de importación de leche y la opinión de Fernando sobre el factor más importante para las importaciones de leche en México; sumérgete con nosotros en el Milk Check de hoy.

The T.C. Jacoby team got together to talk about a two-part phenomenon that we're expecting to wrinkle the dairy markets over the course of the next year or two. 2023 through '25, plant capacity expansions total 9% of all milk production. But heifers are short, milk production was flat in 2023 and we expect it to be flat (or close to it) in 2024. So who will be left out, short on milk? Or will dairies pull off a production miracle? Director of Milk Marketing Greg Scheer, “Semi-retired member of the board” Don Street, Dairy Ingredients Vice President Josh White and Dairy Ingredients Sales Associate Tristan Suellentrop join Ted and his dad to speculate on how these issues will resolve over 2024 and 2025. From high level discussions of price and premiums to granular conversation about regional dynamics and potential changes to the direction of milk flow in the U.S., the team covered a lot of ground in 20-ish minutes. Give it a listen, and let us know what you think. T3: Welcome everybody to this month's edition of The Milk Check. Today, I am joined by Greg Scheer, our director of milk marketing, Don Street, longtime dairy trader and industry veteran, Josh White, head of our whey and dairy ingredients group, my dad, another industry veteran, and then Tristan Suellentrop, who is part of Josh White's team and also part of our marketing. So today we are going to try to answer a very interesting question, which is is the dairy industry about to embark on a very expensive game of musical chairs? Let me tell you what I'm thinking. Two seemingly unrelated issues are starting to feed through the dairy industry. The first one is the fact that we've got a heifer supply shortage because since the pandemic, beef prices have been so strong that people have been breeding dairy cows to beef cows because the value of a beef calf has been a lot higher than the value of a dairy calf. This has created a heifer shortage where we just don't have enough heifers entering the milk supply right now, and it's going to be very, very difficult for the US dairy industry to expand milk production because we don't have the heifers to do so. And think of it this way, if you make the decision today to breed to have a beef calf, you've got nine months of pregnancy, then you've got over two years of growth before that heifer can enter the milk supply, which means you have almost three years before you can change the dynamic that has already started. And everybody we're talking to today says dairy farmers, most of them, many of them are still breeding for beef calves and so this heifer supply shortage is not going away anytime soon. So that's one side of the coin. On the other side of the coin, there is a lot of plant expansion going on right now. In fact so much that since the beginning of 2023 through 2025, that three year period, we are building enough additional plant capacity to equal about 9% of the total milk production in the United States. And given the fact that we're already done with 2023 and milk production was basically flat in 2023, it's hard for me to imagine, given the heifer shortage, that we're going to be able to increase milk production by 4.5% a year over the next two years. In fact, our experts, and we'll let them talk about it, are saying that we think '24 is going to be flat as well. So what's going to happen? All these new plants, how are we going to fill them? Where's the milk going to come from when we aren't going to have the additional cows to fill these plants? I'll tell you what, Don, I'll start with you. What do you think is going to happen? How are we going to deal with this issue? Don: First of all, one can always count on delays in plant construction so that the time arising gets pushed back a bit. It never fails, right? So maybe that takes a bit off of the leading edge, but it doesn't really answer the question. I think if profitability is there for the dairy producers that you could ...

The T.C. Jacoby team got together to talk about a two-part phenomenon that we're expecting to wrinkle the dairy markets over the course of the next year or two. 2023 through '25, plant capacity expansions total 9% of all milk production. But heifers are short, milk production was flat in 2023 and we expect it to be flat (or close to it) in 2024. So who will be left out, short on milk? Or will dairies pull off a production miracle? Director of Milk Marketing Greg Scheer, “Semi-retired member of the board” Don Street, Dairy Ingredients Vice President Josh White and Dairy Ingredients Sales Associate Tristan Suellentrop join Ted and his dad to speculate on how these issues will resolve over 2024 and 2025. From high level discussions of price and premiums to granular conversation about regional dynamics and potential changes to the direction of milk flow in the U.S., the team covered a lot of ground in 20-ish minutes. Give it a listen, and let us know what you think. T3: Welcome everybody to this month's edition of The Milk Check. Today, I am joined by Greg Scheer, our director of milk marketing, Don Street, longtime dairy trader and industry veteran, Josh White, head of our whey and dairy ingredients group, my dad, another industry veteran, and then Tristan Suellentrop, who is part of Josh White's team and also part of our marketing. So today we are going to try to answer a very interesting question, which is is the dairy industry about to embark on a very expensive game of musical chairs? Let me tell you what I'm thinking. Two seemingly unrelated issues are starting to feed through the dairy industry. The first one is the fact that we've got a heifer supply shortage because since the pandemic, beef prices have been so strong that people have been breeding dairy cows to beef cows because the value of a beef calf has been a lot higher than the value of a dairy calf. This has created a heifer shortage where we just don't have enough heifers entering the milk supply right now, and it's going to be very, very difficult for the US dairy industry to expand milk production because we don't have the heifers to do so. And think of it this way, if you make the decision today to breed to have a beef calf, you've got nine months of pregnancy, then you've got over two years of growth before that heifer can enter the milk supply, which means you have almost three years before you can change the dynamic that has already started. And everybody we're talking to today says dairy farmers, most of them, many of them are still breeding for beef calves and so this heifer supply shortage is not going away anytime soon. So that's one side of the coin. On the other side of the coin, there is a lot of plant expansion going on right now. In fact so much that since the beginning of 2023 through 2025, that three year period, we are building enough additional plant capacity to equal about 9% of the total milk production in the United States. And given the fact that we're already done with 2023 and milk production was basically flat in 2023, it's hard for me to imagine, given the heifer shortage, that we're going to be able to increase milk production by 4.5% a year over the next two years. In fact, our experts, and we'll let them talk about it, are saying that we think '24 is going to be flat as well. So what's going to happen? All these new plants, how are we going to fill them? Where's the milk going to come from when we aren't going to have the additional cows to fill these plants? I'll tell you what, Don, I'll start with you. What do you think is going to happen? How are we going to deal with this issue? Don: First of all, one can always count on delays in plant construction so that the time arising gets pushed back a bit. It never fails, right? So maybe that takes a bit off of the leading edge, but it doesn't really answer the question. I think if profitability is there for the dairy producers that you could ...

T3, Josh and Tristan sat down with Jeroen Lemmens, who joined Cefetra Dairy in Singapore after spending multiple years trading dairy in China. We'd spent months looking for the right person to talk to about China's dairy buying habits past, present and future. The conversation gave some color to the disappearance of Chinese demand for American milk and some backbone to the hope that some of that demand will return in 2024. Discussion ranged from trade agreements with New Zealand and the state of the hog market to domestic macroeconomic factors like China's property market and industrial challenges. Give it a listen, and let us know what you think. Ted: Our special guest today is Jeroen Lemmens from Cefetra. Jeroen lives in Singapore and handles the Asian operations for Cefetra. Jeroen, why don't we start by telling us a little bit about yourself? Jeroen: I'm glad to be here. Thank you for the invitation. My name is Jeroen Lemmens. I have now been in dairy for, I think, close to 24 years. I worked in various trading firms in Holland, dealing mostly in Middle East, Eastern Europe, and Russia. Then, about seven years ago, I went to China. I was active in the China operation, importer-distributor dealing in dairy commodities, dealing with the biggest dairy companies in China, both in food and feed. I think that was a very valuable experience. China has a dynamic all of its own. I think that's also showing in the market at this moment. Also, during the dark times, the last few years during COVID, that was actually a very trying time. Then, early this year, I decided to leave the company I was working for and join Cefetra. For Cefetra now, setting up the operation in Singapore for Asia with, again, also a focus on China again. Ted: Wonderful. China for the United States is a key dairy trade partner. Really, so much of what happens in China, all of Southeast Asia tends to follow that lead. A lot of times the dynamics tend to be very similar. It's especially an important trade partner for the US when it comes to nonfat dry milk, and whey powder and whey derivatives. There's been a lot of talk lately about ... The import volumes in China are dropping, and, of course, in the US, our questions are always, "What does that mean for dairy prices in the US?" I want to start with a very simple question, which is, from a dairy perspective, what is going on in China? What is driving the decrease in imports of dairy products? Is it across the whole spectrum of dairy products, or is it just certain dairy products? What are your expectations, going forward? Jeroen: I think at the moment there's a lot of different things happening at the same time, all affecting the markets. I think a lot of buyers actually have been expecting that, with the reopening of China after COVID, there would be a boom in consumption. People were trying to take positions to be ready for this. Actually the import values this year so far have been bigger than last year, year to date, whereas the consumption dropped away by a variety of reasons. One is local consumption took a hit, especially the consumption of, let's say, higher grade, fresh products. That consumption reduced a lot, so that's less consumption, more imports. That's one reason early in the year. Second one is that the local production of milk powder in China actually continues to be strong. It has been very, very strong last few years, but it's still growing. You have growing local raw milk availability coupled with reasonable stocks and lowered amount, and I think that's dragging the market down now to a certain extent. Then, looking at nonfat for US, you have the other situation that's starting this year. There will be no duty for New Zealand milk farmers, full year. Normally, there would only be a period in early Jan that the first 100,000 tons of product would be low duty. Now it's no duty, full year. That means that the incentive for buyers to go to ...

T3, Josh and Tristan sat down with Jeroen Lemmens, who joined Cefetra Dairy in Singapore after spending multiple years trading dairy in China. We'd spent months looking for the right person to talk to about China's dairy buying habits past, present and future. The conversation gave some color to the disappearance of Chinese demand for American milk and some backbone to the hope that some of that demand will return in 2024. Discussion ranged from trade agreements with New Zealand and the state of the hog market to domestic macroeconomic factors like China's property market and industrial challenges. Give it a listen, and let us know what you think. Ted: Our special guest today is Jeroen Lemmens from Cefetra. Jeroen lives in Singapore and handles the Asian operations for Cefetra. Jeroen, why don't we start by telling us a little bit about yourself? Jeroen: I'm glad to be here. Thank you for the invitation. My name is Jeroen Lemmens. I have now been in dairy for, I think, close to 24 years. I worked in various trading firms in Holland, dealing mostly in Middle East, Eastern Europe, and Russia. Then, about seven years ago, I went to China. I was active in the China operation, importer-distributor dealing in dairy commodities, dealing with the biggest dairy companies in China, both in food and feed. I think that was a very valuable experience. China has a dynamic all of its own. I think that's also showing in the market at this moment. Also, during the dark times, the last few years during COVID, that was actually a very trying time. Then, early this year, I decided to leave the company I was working for and join Cefetra. For Cefetra now, setting up the operation in Singapore for Asia with, again, also a focus on China again. Ted: Wonderful. China for the United States is a key dairy trade partner. Really, so much of what happens in China, all of Southeast Asia tends to follow that lead. A lot of times the dynamics tend to be very similar. It's especially an important trade partner for the US when it comes to nonfat dry milk, and whey powder and whey derivatives. There's been a lot of talk lately about ... The import volumes in China are dropping, and, of course, in the US, our questions are always, "What does that mean for dairy prices in the US?" I want to start with a very simple question, which is, from a dairy perspective, what is going on in China? What is driving the decrease in imports of dairy products? Is it across the whole spectrum of dairy products, or is it just certain dairy products? What are your expectations, going forward? Jeroen: I think at the moment there's a lot of different things happening at the same time, all affecting the markets. I think a lot of buyers actually have been expecting that, with the reopening of China after COVID, there would be a boom in consumption. People were trying to take positions to be ready for this. Actually the import values this year so far have been bigger than last year, year to date, whereas the consumption dropped away by a variety of reasons. One is local consumption took a hit, especially the consumption of, let's say, higher grade, fresh products. That consumption reduced a lot, so that's less consumption, more imports. That's one reason early in the year. Second one is that the local production of milk powder in China actually continues to be strong. It has been very, very strong last few years, but it's still growing. You have growing local raw milk availability coupled with reasonable stocks and lowered amount, and I think that's dragging the market down now to a certain extent. Then, looking at nonfat for US, you have the other situation that's starting this year. There will be no duty for New Zealand milk farmers, full year. Normally, there would only be a period in early Jan that the first 100,000 tons of product would be low duty. Now it's no duty, full year. That means that the incentive for buyers to go to ...

Industry discussion surrounds a docket's worth of changes to the Federal Milk Marketing Orders (FMMO), and we feel like it's high time that we weighed in. The USDA hearing on pricing formulas reconvened November 27, and the Jacoby team can't help but feel that much of the hearings will amount to wasted or misplaced effort. On this episode of The Milk Check, recorded in mid-November, a group from throughout the company discusses the potential changes that might help dairies with ongoing profitability problems. Then, they share their thoughts on the contents of the hearing so far. T3: Hello everybody, and welcome to The Milk Check podcast. Today, we are going to tackle the famous, or maybe rather infamous, subject of federal order reform. I think you'll find listening to our discussion, that you'll find us a little bit more ambivalent about the process than maybe you'd expect from a group that is experts in marketing milk and the federal order system. But I'll let the conversation speak for itself, as we talk about the different things that the federal order hearing is trying to tackle and what we think should be done. And hopefully, it'll be helpful to everybody. I look forward to discussing it further, when they finally come out with their recommendations for how the federal order needs to be changed. Dad, obviously, the federal order hearing is going on. And my suggestion is the reality is the path we're going down really isn't going to change a lot, and maybe that's what we should discuss is how some of these changes aren't going to have a big effect because the market is going to change to that. Things like, okay, they're going to change the make allowances. How much of an effect are changing the make allowances really going to have on the farmer's milk price? Ted Jr: Zero. T3: That's my point. Ted Jr: The real issue is qualification and not the classified pricing system. Instead of having bottling plant A, for example, responsible for balancing, you now kick milk back to somebody else, usually a co-op who has a butter powder plant and you give them the responsibilities for balancing and then of course you pay for that with an overrated premium. And the alternative would be, in my view at least, to weaken the minimum price requirements and do it in such a way, and I'm not sure you're going to get out of the box with something like this, but do it in such a way that you can transfer some of the balancing requirements back to the bottling plant so that they can run sales on milk so we can get some of our customers back. Something that promotes marketing and allows at least a portion of the balancing to be transferred to the plant, I think would be beneficial. Is that going to happen? No, they're not going to touch that With a 10-foot pole, the minimum price requirements are the key to qualification, and so that's where the thing meets the wall. In the meantime, our Class I sales continue to decline. Anna: I think the biggest issue for me is that Class I is completely hamstrung by how everything is based off of their sales, their qualification, their everything else. It means that we've talked about them not being able to be innovative before, just how much it really sticks them in a certain spot where they can't do anything new. I don't really have a major problem with qualification. I think when you change those provisions, you end up devaluing the whole pool, which is kind of against the point, right? But my biggest issue is that we're basing all of this on Class I and quite frankly, they're not the most difficult customer anymore. Class III is in many cases way more difficult. Gus: How is Class III more difficult? And I look at this knowingly from the standpoint that cheese plants tend to take a more consistent volume of milk and therefore they're an easier customer to serve. But why do you say that? Anna: I don't think they're as easy as they used to be.

Industry discussion surrounds a docket's worth of changes to the Federal Milk Marketing Orders (FMMO), and we feel like it's high time that we weighed in. The USDA hearing on pricing formulas reconvened November 27, and the Jacoby team can't help but feel that much of the hearings will amount to wasted or misplaced effort. On this episode of The Milk Check, recorded in mid-November, a group from throughout the company discusses the potential changes that might help dairies with ongoing profitability problems. Then, they share their thoughts on the contents of the hearing so far. T3: Hello everybody, and welcome to The Milk Check podcast. Today, we are going to tackle the famous, or maybe rather infamous, subject of federal order reform. I think you'll find listening to our discussion, that you'll find us a little bit more ambivalent about the process than maybe you'd expect from a group that is experts in marketing milk and the federal order system. But I'll let the conversation speak for itself, as we talk about the different things that the federal order hearing is trying to tackle and what we think should be done. And hopefully, it'll be helpful to everybody. I look forward to discussing it further, when they finally come out with their recommendations for how the federal order needs to be changed. Dad, obviously, the federal order hearing is going on. And my suggestion is the reality is the path we're going down really isn't going to change a lot, and maybe that's what we should discuss is how some of these changes aren't going to have a big effect because the market is going to change to that. Things like, okay, they're going to change the make allowances. How much of an effect are changing the make allowances really going to have on the farmer's milk price? Ted Jr: Zero. T3: That's my point. Ted Jr: The real issue is qualification and not the classified pricing system. Instead of having bottling plant A, for example, responsible for balancing, you now kick milk back to somebody else, usually a co-op who has a butter powder plant and you give them the responsibilities for balancing and then of course you pay for that with an overrated premium. And the alternative would be, in my view at least, to weaken the minimum price requirements and do it in such a way, and I'm not sure you're going to get out of the box with something like this, but do it in such a way that you can transfer some of the balancing requirements back to the bottling plant so that they can run sales on milk so we can get some of our customers back. Something that promotes marketing and allows at least a portion of the balancing to be transferred to the plant, I think would be beneficial. Is that going to happen? No, they're not going to touch that With a 10-foot pole, the minimum price requirements are the key to qualification, and so that's where the thing meets the wall. In the meantime, our Class I sales continue to decline. Anna: I think the biggest issue for me is that Class I is completely hamstrung by how everything is based off of their sales, their qualification, their everything else. It means that we've talked about them not being able to be innovative before, just how much it really sticks them in a certain spot where they can't do anything new. I don't really have a major problem with qualification. I think when you change those provisions, you end up devaluing the whole pool, which is kind of against the point, right? But my biggest issue is that we're basing all of this on Class I and quite frankly, they're not the most difficult customer anymore. Class III is in many cases way more difficult. Gus: How is Class III more difficult? And I look at this knowingly from the standpoint that cheese plants tend to take a more consistent volume of milk and therefore they're an easier customer to serve. But why do you say that? Anna: I don't think they're as easy as they used to be.

Our team is (mostly) bearish right now. We're seeing signs that recent Class III price rises aren't supported by demand, and the lack of Asian demand for powders continues. In the August episode of The Milk Check, we discuss a recent LinkedIn post Ted made and whether there's any strong case against bearishness when looking at dairy prices. Butter continues to feel like an exception, and Joe Maixner wants to go “on the record” with a bullish outlook for the rest of the year but also into 2024. The international outlook, according to Diego Carvallo, couldn't get much more bearish. Ted: Welcome everybody to the August version of the Milk Check. Today we're going to have an old fashioned market discussion. We have with us, Josh White, Diego Carvallo, Joe Maxster, Jacob Menge, and I. So guys, I thought I'd start this conversation simply by mentioning the post that I just put on LinkedIn and you guys can tell me what you think of the post and if you think you agree with me or maybe where I'm wrong. So it's the middle of August, it's hot outside, you're seeing 100 degree temperatures all over the country. The milk supply is tightening as a result, schools will start up soon. So demand has picked up a little bit. The cheese market has popped, improving class three prices. And most of our other markets are starting to look like the bottoms are in. Does that mean the remainder of the year will be positive for dairy farmers? My hunch is that domestic demand will not be good enough to sustain decent milk prices. I see subtle signs everywhere. Very few of our domestic customers are giving us glowing sales reports. Most are using descriptions like average at best or slightly under budget. And while Mexico continues to be optimistic, our Asian customers are using words like depressing and even horrific to describe their sales. So even though milk production may turn negative year over year in the coming months, I just don't see enough positive demand to be bullish milk prices between now and the first half of 2024. Guys, am I being too bearish? Josh, what do you think? Josh: Just talking to different people I would echo what you mentioned. I had a few calls where people have said to date their overall demand has been lackluster. Their coverage going forward is taking into consideration some of that uncertainty about their demand, but we're starting to notice a few more transactional type, a little bit more transactional type business happening in the recent weeks that leads me to believe that the forward coverage isn't as strong as everyone thought from these type of companies. Ted: So what you mean by that is maybe the spot purchasing needs of some of the big buyers out there domestically between now and the end of the year may actually be a little bit stronger than it has been so far? Josh: I don't know that I'm predicting it, but I think there's a real opportunity for that. Jacob: The thing that I think is a bit of a black box still to this conversation is US demand, and I think you mentioned it in your LinkedIn post, Ted, but I think that's really the key here is that US demand piece. Because if you look at equity markets, for example, the US seems to be the favored child in the world right now where our markets are humming along, we're having the soft landing. Meanwhile, Europe specifically the UK, seemed to be on the brink or in a recession. And so again, will this kind of fiscal strength we've seen on the equity sides carry over into our household purchasing and as such mean we have good demand in the US. I think it remains to be seen. We've seen a number of arguments be made that the decent demand we've had so far this year is going to kind of falter in Q4. I think I might be in that camp. But if it doesn't, you pair decent demand along with a contracting supply, and especially if what Josh alluded to comes true, you have multi nets come in and do some buying on products here or there,

Our team is (mostly) bearish right now. We're seeing signs that recent Class III price rises aren't supported by demand, and the lack of Asian demand for powders continues. In the August episode of The Milk Check, we discuss a recent LinkedIn post Ted made and whether there's any strong case against bearishness when looking at dairy prices. Butter continues to feel like an exception, and Joe Maixner wants to go “on the record” with a bullish outlook for the rest of the year but also into 2024. The international outlook, according to Diego Carvallo, couldn't get much more bearish. Ted: Welcome everybody to the August version of the Milk Check. Today we're going to have an old fashioned market discussion. We have with us, Josh White, Diego Carvallo, Joe Maxster, Jacob Menge, and I. So guys, I thought I'd start this conversation simply by mentioning the post that I just put on LinkedIn and you guys can tell me what you think of the post and if you think you agree with me or maybe where I'm wrong. So it's the middle of August, it's hot outside, you're seeing 100 degree temperatures all over the country. The milk supply is tightening as a result, schools will start up soon. So demand has picked up a little bit. The cheese market has popped, improving class three prices. And most of our other markets are starting to look like the bottoms are in. Does that mean the remainder of the year will be positive for dairy farmers? My hunch is that domestic demand will not be good enough to sustain decent milk prices. I see subtle signs everywhere. Very few of our domestic customers are giving us glowing sales reports. Most are using descriptions like average at best or slightly under budget. And while Mexico continues to be optimistic, our Asian customers are using words like depressing and even horrific to describe their sales. So even though milk production may turn negative year over year in the coming months, I just don't see enough positive demand to be bullish milk prices between now and the first half of 2024. Guys, am I being too bearish? Josh, what do you think? Josh: Just talking to different people I would echo what you mentioned. I had a few calls where people have said to date their overall demand has been lackluster. Their coverage going forward is taking into consideration some of that uncertainty about their demand, but we're starting to notice a few more transactional type, a little bit more transactional type business happening in the recent weeks that leads me to believe that the forward coverage isn't as strong as everyone thought from these type of companies. Ted: So what you mean by that is maybe the spot purchasing needs of some of the big buyers out there domestically between now and the end of the year may actually be a little bit stronger than it has been so far? Josh: I don't know that I'm predicting it, but I think there's a real opportunity for that. Jacob: The thing that I think is a bit of a black box still to this conversation is US demand, and I think you mentioned it in your LinkedIn post, Ted, but I think that's really the key here is that US demand piece. Because if you look at equity markets, for example, the US seems to be the favored child in the world right now where our markets are humming along, we're having the soft landing. Meanwhile, Europe specifically the UK, seemed to be on the brink or in a recession. And so again, will this kind of fiscal strength we've seen on the equity sides carry over into our household purchasing and as such mean we have good demand in the US. I think it remains to be seen. We've seen a number of arguments be made that the decent demand we've had so far this year is going to kind of falter in Q4. I think I might be in that camp. But if it doesn't, you pair decent demand along with a contracting supply, and especially if what Josh alluded to comes true, you have multi nets come in and do some buying on products here or there,

On June 12, we brought a group together to share perspectives on the dairy markets, along with thoughts on what we might expect moving forward. And there wasn't a strong consensus. Josh thinks supply-side factors point to a relatively quick supply-side response playing out over months that produces some price upticks to offer some cover in the short term. Ted Jr. thinks price recovery will be slow and has his own counterarguments against the expectation of further production slowdowns. Jake feels bullish about spot prices on every product right now, but bearish in relation to current futures prices. Gus thinks dairy prices would need to climb above current futures prices to $19 or $20 milk before dairy farmers started feeling good again. And T3 worries that any recovery in the second half of 2023 will act as a “head fake” leading into fallout from macroeconomic weakness in 2024. T3: Welcome everybody to The Milk Check. Today we're recording this Milk Check on June 12th. The reason I'm giving you the date is because we're going to have an old-fashioned market discussion today. I've asked Jacob Menge, our director of trading strategy and risk management, to join us. My brother Gus, president of our fluid milk group, my dad, and Josh White, our vice president of dairy ingredients, to join us. In all of those markets, prices are low. I think probably the number one question dairy farmers are asking right now is, okay, these prices are really low. Are these prices going to stay down here for a long time? What are we dealing with? Jake, I'm going to ask you the first question. Where did demand go? Are these prices low because we're having a demand problem? If so, how'd we get here? Jake: I think pretty indisputably it is a demand problem, or at least that's a significant contributing factor. There's lots of little data points that support that, some anecdotal, some not. I know internally I've tossed a few of these out before. But exports out of China, way down. You look at foot traffic in stores like Target, that is significantly off. Those are things that are hinting at poor demand. I mean you can go as far as to look at the amount of cardboard boxes produced in the US, and it's a number that is significantly down year on year. Demand is notoriously hard to measure, but it's kind of like a black hole. You can't measure a black hole by looking at it directly, but you can measure it by looking at what it's doing to things around it. So looking at the things surrounding demand, they're not good. They're trending in the wrong direction, I'll say that. T3: How long do you think these demand issues have been happening? Has it just been 2023? Has it been the last couple of months? Jake: It's interesting. I think it's probably actually started in 2022, and it's something that just takes a long time to feel on the supply side here. When you have a push on one side of the market, it takes a while to feel that on the other side of the market. So my feeling is it probably actually started last year. We saw the stock market have a really negative year last year, and, so far, especially over the last two months in 2023, we've seen the stock market go gangbusters a little bit, and we haven't necessarily felt that bullish on the commodity side yet. So it's just got a long tail. T3: So even though we have a demand problem, unemployment's still pretty good. It's still quite low. Sounds like the Fed is still talking a more ... That it's more likely going to raise interest rates next than lower interest rates next. That seems to be a disconnect to me. How can demand be bad, yet the economy ... At least the Fed seems to think it's good? Does it mean demand is going to continue to be bad until something does break and the Fed has to start reacting to it? How do we get to a point where demand comes back? Jake: Awesome question. Wish I had an equally awesome answer for you.

On June 12, we brought a group together to share perspectives on the dairy markets, along with thoughts on what we might expect moving forward. And there wasn't a strong consensus. Josh thinks supply-side factors point to a relatively quick supply-side response playing out over months that produces some price upticks to offer some cover in the short term. Ted Jr. thinks price recovery will be slow and has his own counterarguments against the expectation of further production slowdowns. Jake feels bullish about spot prices on every product right now, but bearish in relation to current futures prices. Gus thinks dairy prices would need to climb above current futures prices to $19 or $20 milk before dairy farmers started feeling good again. And T3 worries that any recovery in the second half of 2023 will act as a “head fake” leading into fallout from macroeconomic weakness in 2024. T3: Welcome everybody to The Milk Check. Today we're recording this Milk Check on June 12th. The reason I'm giving you the date is because we're going to have an old-fashioned market discussion today. I've asked Jacob Menge, our director of trading strategy and risk management, to join us. My brother Gus, president of our fluid milk group, my dad, and Josh White, our vice president of dairy ingredients, to join us. In all of those markets, prices are low. I think probably the number one question dairy farmers are asking right now is, okay, these prices are really low. Are these prices going to stay down here for a long time? What are we dealing with? Jake, I'm going to ask you the first question. Where did demand go? Are these prices low because we're having a demand problem? If so, how'd we get here? Jake: I think pretty indisputably it is a demand problem, or at least that's a significant contributing factor. There's lots of little data points that support that, some anecdotal, some not. I know internally I've tossed a few of these out before. But exports out of China, way down. You look at foot traffic in stores like Target, that is significantly off. Those are things that are hinting at poor demand. I mean you can go as far as to look at the amount of cardboard boxes produced in the US, and it's a number that is significantly down year on year. Demand is notoriously hard to measure, but it's kind of like a black hole. You can't measure a black hole by looking at it directly, but you can measure it by looking at what it's doing to things around it. So looking at the things surrounding demand, they're not good. They're trending in the wrong direction, I'll say that. T3: How long do you think these demand issues have been happening? Has it just been 2023? Has it been the last couple of months? Jake: It's interesting. I think it's probably actually started in 2022, and it's something that just takes a long time to feel on the supply side here. When you have a push on one side of the market, it takes a while to feel that on the other side of the market. So my feeling is it probably actually started last year. We saw the stock market have a really negative year last year, and, so far, especially over the last two months in 2023, we've seen the stock market go gangbusters a little bit, and we haven't necessarily felt that bullish on the commodity side yet. So it's just got a long tail. T3: So even though we have a demand problem, unemployment's still pretty good. It's still quite low. Sounds like the Fed is still talking a more ... That it's more likely going to raise interest rates next than lower interest rates next. That seems to be a disconnect to me. How can demand be bad, yet the economy ... At least the Fed seems to think it's good? Does it mean demand is going to continue to be bad until something does break and the Fed has to start reacting to it? How do we get to a point where demand comes back? Jake: Awesome question. Wish I had an equally awesome answer for you.

On Episode 57 of The Milk Check, Tara Vander Dussen joins us to talk about sustainable agriculture. She is an environmental scientist and fifth-generation dairy farmer known online as the New Mexico Milkmaid. We celebrate some of the regenerative agricultural practices that people often take for granted, and Tara walks us through some of progress she's seeing in New Mexico dairies today. We discuss dairy's image problem and the steps folks can take to help consumers see dairy in a greener light. Our favorite quote from Tara: “Agriculture sees a waste in their stream, they're going to find a way to make it a value.” T3: Welcome, everybody, to The Milk Check, where we talk about things that are relevant to dairy farmers. I'm really excited about the podcast that we're putting together today. We have a special guest. Her name is Tara Vander Dussen. But before I introduce Tara, I want to tell you who else is on the podcast with us today. Joining my father and I, we have Tristan Suellentrop. Tristan is in our sales and marketing department. And we have Josh White. Josh heads up our dairy ingredients division. Tara, better known online as the New Mexico Milkmaid, she is a fifth generation dairy farmer, a farm wife, environmental scientist, mom to two girls, and a New Mexico native. She is a dairy advocate, a whiskey drinker, I like that, a fast talker, a lover of all things Southwest, and an avid boho braid enthusiast. Tara, I want to start off the podcast by asking what in the world is an avid boho braid enthusiast? Tara Vander Dussen: I know. I'm kind of surprised I don't have a braid in this morning. I almost put one in. No, I love braiding hair. Actually, when I first started sharing online, it was one of the things I shared about, and it was a great way to connect with people actually outside of agriculture and kind of bring them into the dairy fold. T3: Awesome. Thank you. So what we want to talk about today is sustainability and how sustainability is relevant to the dairy farmer. From my perspective, we work with a lot of dairy farmers in this industry, and the idea that dairy farming as an industry is not considered sustainable, it just strikes me as something so counter to all of the dairy farmers that I know. Dairy farmers work outside with nature. They care deeply about nature, they care deeply about animals. So when some of the things that I hear in the press about sustainability, about carbon emissions, and about dairy farming, more than anything else, what strikes me is if there's one thing I fully expect dairy farmers to do is to resolve this, is to attack this issue and say it's not just an economic issue, it's deeply personal to the dairy farmers that I know. The last thing that the dairy farmers I know ever want to be considered is somehow anti-environment, anti-sustainable. So my question to start this conversation off is what are the dairy farmers that you know, what are they doing, what is the industry doing to become more sustainable? You're an environmental scientist. I'm sure you know the background there. And then once we become a sustainable industry, how do we go back to the media and the general public and convince them and send the message that it's no longer relevant to consider the dairy industry unsustainable? Tara: Yeah, so many good questions in there. I'll start by saying I completely agree with you. That's kind of how I started sharing online as I was working as an environmental consultant on dairies throughout New Mexico. And then at the same time, I was seeing so much misinformation online, and it was like if people could just see what I see every day, they would see how much dairy farmers are doing to be more sustainable. That's really what led me to start sharing online. And as far as how we're like a piece of the land, one of the things I always tell people is the water that goes to my cows' water troughs is the same water that goes in my house.

On Episode 57 of The Milk Check, Tara Vander Dussen joins us to talk about sustainable agriculture. She is an environmental scientist and fifth-generation dairy farmer known online as the New Mexico Milkmaid. We celebrate some of the regenerative agricultural practices that people often take for granted, and Tara walks us through some of progress she's seeing in New Mexico dairies today. We discuss dairy's image problem and the steps folks can take to help consumers see dairy in a greener light. Our favorite quote from Tara: “Agriculture sees a waste in their stream, they're going to find a way to make it a value.” T3: Welcome, everybody, to The Milk Check, where we talk about things that are relevant to dairy farmers. I'm really excited about the podcast that we're putting together today. We have a special guest. Her name is Tara Vander Dussen. But before I introduce Tara, I want to tell you who else is on the podcast with us today. Joining my father and I, we have Tristan Suellentrop. Tristan is in our sales and marketing department. And we have Josh White. Josh heads up our dairy ingredients division. Tara, better known online as the New Mexico Milkmaid, she is a fifth generation dairy farmer, a farm wife, environmental scientist, mom to two girls, and a New Mexico native. She is a dairy advocate, a whiskey drinker, I like that, a fast talker, a lover of all things Southwest, and an avid boho braid enthusiast. Tara, I want to start off the podcast by asking what in the world is an avid boho braid enthusiast? Tara Vander Dussen: I know. I'm kind of surprised I don't have a braid in this morning. I almost put one in. No, I love braiding hair. Actually, when I first started sharing online, it was one of the things I shared about, and it was a great way to connect with people actually outside of agriculture and kind of bring them into the dairy fold. T3: Awesome. Thank you. So what we want to talk about today is sustainability and how sustainability is relevant to the dairy farmer. From my perspective, we work with a lot of dairy farmers in this industry, and the idea that dairy farming as an industry is not considered sustainable, it just strikes me as something so counter to all of the dairy farmers that I know. Dairy farmers work outside with nature. They care deeply about nature, they care deeply about animals. So when some of the things that I hear in the press about sustainability, about carbon emissions, and about dairy farming, more than anything else, what strikes me is if there's one thing I fully expect dairy farmers to do is to resolve this, is to attack this issue and say it's not just an economic issue, it's deeply personal to the dairy farmers that I know. The last thing that the dairy farmers I know ever want to be considered is somehow anti-environment, anti-sustainable. So my question to start this conversation off is what are the dairy farmers that you know, what are they doing, what is the industry doing to become more sustainable? You're an environmental scientist. I'm sure you know the background there. And then once we become a sustainable industry, how do we go back to the media and the general public and convince them and send the message that it's no longer relevant to consider the dairy industry unsustainable? Tara: Yeah, so many good questions in there. I'll start by saying I completely agree with you. That's kind of how I started sharing online as I was working as an environmental consultant on dairies throughout New Mexico. And then at the same time, I was seeing so much misinformation online, and it was like if people could just see what I see every day, they would see how much dairy farmers are doing to be more sustainable. That's really what led me to start sharing online. And as far as how we're like a piece of the land, one of the things I always tell people is the water that goes to my cows' water troughs is the same water that goes in my house.

You don't need technical analysis to tell you that dairy prices are low right now. But stocks are still high, which suggests demand is weak. The questions are: What gives? And when? In this episode of The Milk Check, we talk through the feeling that our current bearishness points to a strong price rebound later in 2022 or early 2023. But not before Trading Strategy Director Jacob Menge takes us through technical charts on dairy products and macroeconomic indicators like copper and the dollar index. In the end, Jake suggests that a “max pain” moment would be necessary to kick off a violent upward price swing, and the team talks through what “max pain” might look like for different products. Jake: I'm going to start just with one thing. For those of you that were on the call last Friday with Alan, that ITR economics presentation, we actually had talked about this exact graph, the consumer loans and how it's a pretty eye popping number. He basically said it's nothing. It's really irrelevant. It's more or less on trend, and I agree completely. That's what we had been saying for months now, that this is showing up in a lot of newspapers, ignore it. The one thing I do have to add that I've actually learned in the past couple months, just talking around, that there is something to pay attention to on the consumer loan side, that is just not in this graph at all, and I had no idea about, frankly. It is buy now, pay later. Buy now, pay later was a 2 billion market in 2019. Anybody want to guess what it was last year? Any brave soul going to stick a number out? Joe: 5 billion. Don: 50. T3: 30. 30 billion, isn't it...? Jake: Ted's closest. Ted's closest. It's like 25. Okay, so we went about 10 x on the buy now pay later market, and it's still going up. And here's the rub. Of all buy now pay later users, about 10% have a credit card, the other 90% don't. And that tells you they probably have such poor credit, they can't even access the formal credit lending market with protections on it. And so, this is the exact kind of thing that preceded 08, where they basically had not enough checks and balances on a certain credit lending market, and eventually, it got overworked. And you know the rest of the story. So that's the kind of thing to pay attention to. There are things in the background that are kind of sketchy. There's a million apps that you can do buy now pay later on literally anything now. So it's kind of interesting. Now, it's 25 billion. You look at total revolving credit here, which is 900 to a trillion. We're not talking a huge percent, just call it two to 3%. Okay? Not huge, but still, it could be a domino, that starts some ugliness. Because the valuation of these buy now pay later companies is massive. The regulations around it are basically nothing. It does not show up on credit reports. So literally, you could have $2,000 a month in buy now pay later and go apply for a home loan or go apply for a credit card, and everyone pulling your credit report has no idea that you have these other bills outstanding. So that's the kind of thing that, even though officially credit cards don't look risky right now, how much else is tied up here? This is not the big one or anything to me, but it's just something that I thought was kind of interesting and kind of indicative of the economy as a whole, that people are starting to really ramp up use of products like that. Over to the fun stuff here. Going to start with cheese. We talked about this. We haven't done one of these charting meetings in a while, but we talked about this buck 93 level, which I think, in Class III, was... What was it? Like 1980? We were right on that line, and that has been a sticky, sticky support or resistance line for a long time. And we cruised right through it. There's a little bit of hesitation, but we are firmly below that now, and there's just not a ton of support anywhere up until like a buck 80, I would say.

You don't need technical analysis to tell you that dairy prices are low right now. But stocks are still high, which suggests demand is weak. The questions are: What gives? And when? In this episode of The Milk Check, we talk through the feeling that our current bearishness points to a strong price rebound later in 2022 or early 2023. But not before Trading Strategy Director Jacob Menge takes us through technical charts on dairy products and macroeconomic indicators like copper and the dollar index. In the end, Jake suggests that a “max pain” moment would be necessary to kick off a violent upward price swing, and the team talks through what “max pain” might look like for different products. Jake: I'm going to start just with one thing. For those of you that were on the call last Friday with Alan, that ITR economics presentation, we actually had talked about this exact graph, the consumer loans and how it's a pretty eye popping number. He basically said it's nothing. It's really irrelevant. It's more or less on trend, and I agree completely. That's what we had been saying for months now, that this is showing up in a lot of newspapers, ignore it. The one thing I do have to add that I've actually learned in the past couple months, just talking around, that there is something to pay attention to on the consumer loan side, that is just not in this graph at all, and I had no idea about, frankly. It is buy now, pay later. Buy now, pay later was a 2 billion market in 2019. Anybody want to guess what it was last year? Any brave soul going to stick a number out? Joe: 5 billion. Don: 50. T3: 30. 30 billion, isn't it...? Jake: Ted's closest. Ted's closest. It's like 25. Okay, so we went about 10 x on the buy now pay later market, and it's still going up. And here's the rub. Of all buy now pay later users, about 10% have a credit card, the other 90% don't. And that tells you they probably have such poor credit, they can't even access the formal credit lending market with protections on it. And so, this is the exact kind of thing that preceded 08, where they basically had not enough checks and balances on a certain credit lending market, and eventually, it got overworked. And you know the rest of the story. So that's the kind of thing to pay attention to. There are things in the background that are kind of sketchy. There's a million apps that you can do buy now pay later on literally anything now. So it's kind of interesting. Now, it's 25 billion. You look at total revolving credit here, which is 900 to a trillion. We're not talking a huge percent, just call it two to 3%. Okay? Not huge, but still, it could be a domino, that starts some ugliness. Because the valuation of these buy now pay later companies is massive. The regulations around it are basically nothing. It does not show up on credit reports. So literally, you could have $2,000 a month in buy now pay later and go apply for a home loan or go apply for a credit card, and everyone pulling your credit report has no idea that you have these other bills outstanding. So that's the kind of thing that, even though officially credit cards don't look risky right now, how much else is tied up here? This is not the big one or anything to me, but it's just something that I thought was kind of interesting and kind of indicative of the economy as a whole, that people are starting to really ramp up use of products like that. Over to the fun stuff here. Going to start with cheese. We talked about this. We haven't done one of these charting meetings in a while, but we talked about this buck 93 level, which I think, in Class III, was... What was it? Like 1980? We were right on that line, and that has been a sticky, sticky support or resistance line for a long time. And we cruised right through it. There's a little bit of hesitation, but we are firmly below that now, and there's just not a ton of support anywhere up until like a buck 80, I would say.

The USDA's milk production report for December surprised us and sparked some interesting discussion in a recent mass balance and charting meeting. We thought it made sense to pull back the curtain and share some of that discussion on the podcast. What does the USDA revision of cow numbers tell us? Should we worry about falling Texas cow numbers with cheese plants coming online this year? Director of Global Strategy Don Street talks through his expectations for Q1 milk production in the wake of recent numbers, which leads to some back-and-forth about the adverse economics facing producers now. Don: All right. Do you want to get rolling? T3: Yeah, let's go ahead and get rolling. Don: Okay. I've struggled to come up with a title. I finally settled on, Once You Count the Cows Before the Barn Door is Opened, which I realize doesn't make any sense. But USDA is having some difficulties on cows. So, November production was revised lower by three-tenths of a percent. And to do that, USDA reduced cow numbers by 9000 head, kind of spread over a whole bunch of states. Nobody more than 2000 down a couple, or even a 1000 or 2000 up. And milk per cow was down 0.2%. So, given where margins are, not much excitement on pushing cows to really produce more milk. December, production was reported as up 0.9. Again, this is 24 states. I was at 1.7. So clearly, an overshoot because I was two-tenths of a percent off on number of cows at the end of the day. And then about again, a half percent off on milk per cow. So, even though December of '21 was weaker on milk production, it didn't translate into a bump in December. The other interesting thing to note is that USDA dropped the herd 5000 head in Texas in December. And we continue, well, we, me, continue to think that Texas cow numbers have to go up. But there again, counting cows is more of an art than a science, apparently. All of this leads to thinking the milk supply will be more limited going into '23. So, we're at the end of January tomorrow. We'll have January milk numbers in three weeks after that. But my projections now, down to 1.7. I think at one time, I even threw out the number it could be up 2.5 in January. That just simply isn't going to happen with the downward pressure on milk per cow. Stated differently, the lack of growth in milk per cow. Q1 2023, I'm now at up 1.1%. I think originally when we first started to look at this, I was at just over two. So, this is much less surplus milk in Q1 than I was expecting. And the next step from that is looking at Q2, not a lot of change. I think we're going to be stuck for some months in about 1% overall growth in milk production, probably for the first-half of the year. January continuing to be the exception because it was down so heavily. There will be a little bit of a bounce just from the math of that reality. If you assume, and this is where we ended 2022, 24 states, 8,918,000 cows, and just hold that steady for the whole year. You can see in January we're up a half percent less than February. And then we're just kind of even with the prior year, a tenth percent up down a little bit, up barely. So, without more cows coming into the system, all the growth after February is going to be dependent on milk per cow. And we already know that's pretty minimal. So, earlier this month, because of the delay in Christmas, we did talk about that you could expect 100,000 cows added to the herd for the two plants that are coming online in Q1 and Q2. If you actually had a 100,000 cows coming in, then your growth in number of cows would contribute much more significantly to overall milk production growth. I think at best, this is probably half of this number. So, I think even with that expansion, with depressed margins, non-aggressive feeding of cows, we're going to be in a milk production environment where we're kind of 1% up. Just to review quickly, the plants that are coming online, that's where you get 98,

The USDA's milk production report for December surprised us and sparked some interesting discussion in a recent mass balance and charting meeting. We thought it made sense to pull back the curtain and share some of that discussion on the podcast. What does the USDA revision of cow numbers tell us? Should we worry about falling Texas cow numbers with cheese plants coming online this year? Director of Global Strategy Don Street talks through his expectations for Q1 milk production in the wake of recent numbers, which leads to some back-and-forth about the adverse economics facing producers now. Don: All right. Do you want to get rolling? T3: Yeah, let's go ahead and get rolling. Don: Okay. I've struggled to come up with a title. I finally settled on, Once You Count the Cows Before the Barn Door is Opened, which I realize doesn't make any sense, because if you're Nelson Freya, the cows are always in the barn. But USDA is having some difficulties on cows. So, November production was revised lower by three-tenths of a percent. And to do that, USDA reduced cow numbers by 9000 head, kind of spread over a whole bunch of states. Nobody more than 2000 down a couple, or even a 1000 or 2000 up. And milk per cow was down 0.2%. So, given where margins are, not much excitement on pushing cows to really produce more milk. December, production was reported as up 0.9. Again, this is 24 states. I was at 1.7. So clearly, an overshoot because I was two-tenths of a percent off on number of cows at the end of the day. And then about again, a half percent off on milk per cow. So, even though December of '21 was weaker on milk production, it didn't translate into a bump in December. The other interesting thing to note is that USDA dropped the herd 5000 head in Texas in December. And we continue, well, we, me, continue to think that Texas cow numbers have to go up with panhandle cheese coming online. But there again, counting cows is more of an art than a science, apparently. All of this leads to thinking the milk supply will be more limited going into '23. So, we're at the end of January tomorrow. We'll have January milk numbers in three weeks after that. But my projections now, down to 1.7. I think at one time, I even threw out the number it could be up 2.5 in January. That just simply isn't going to happen with the downward pressure on milk per cow. Stated differently, the lack of growth in milk per cow. Q1 2023, I'm now at up 1.1%. I think originally when we first started to look at this, I was at just over two. So, this is much less surplus milk in Q1 than I was expecting. And the next step from that is looking at Q2, not a lot of change. I think we're going to be stuck for some months in about 1% overall growth in milk production, probably for the first-half of the year. January continuing to be the exception because it was down so heavily. There will be a little bit of a bounce just from the math of that reality. If you assume, and this is where we ended 2022, 24 states, 8,918,000 cows, and just hold that steady for the whole year. You can see in January we're up a half percent less than February. And then we're just kind of even with the prior year, a tenth percent up down a little bit, up barely. So, without more cows coming into the system, all the growth after February is going to be dependent on milk per cow. And we already know that's pretty minimal. So, earlier this month, because of the delay in Christmas, we did talk about that you could expect 100,000 cows added to the herd for the two plants that are coming online in Q1 and Q2. If you actually had a 100,000 cows coming in, then your growth in number of cows would contribute much more significantly to overall milk production growth. I think at best, this is probably half of this number. So, I think even with that expansion, with depressed margins, non-aggressive feeding of cows, we're going to be in a milk production environment where we're k...

T3 and Ted Jr. got together to talk next year's milk pricing, and they made pretty quick work of the topic. Both have bearish outlooks to start the year. After Q1, their predictions start to diverge. How far down will milk prices go? Will they jump back up above $20 next year? When? How will the market respond to recession? The duo works through Class III and Class IV supply and demand to come up with some answers. T3 expects macroeconomics to stifle demand, and Ted Jr. puts his faith in butter to maintain its position as a staple spread. They skim the surface of an exports discussion, with China in lockdown but looming. Fifteen minutes and a friendly wager later, they settle on a confident outlook for most of next year. T3: Alright. So, Dad, you tend to be bullish, especially compared to me, but lately it seems to me that you've been a little bit more bearish than me. So since we're sitting here in the middle of November, what do you think markets are going to be like in 2023? What are your thoughts right now? Ted Jr: Well, I think it's rather scary that I'm the bearish one right now and evidently you're not. T3: I'm not saying that I'm not bearish. I'm just saying I'm not as bearish as you are. Ted Jr: First of all, let's look at the overall marketplace. We've got production now on the upside in the US. Cow numbers are up. Production's up over 1%. We're heading into a recession. I think that's generally an accepted dogma. But the international environment is also changing. The European production is starting to mosey up a little bit. And evidently, feed is moving out of the Ukraine and feed prices are not on an upward trajectory anymore. I'm not saying that the feed prices are going to go down. I guess, the point that I'm trying to make is that the dichotomy has ratcheted up to a little bit lower level. So if we go back a couple of years, pulling numbers from the air, the lower level was probably Class III somewhere around $15. And today with the corn price doubling or more, I'm going to argue that the lower level is probably somewhere around $19 on the Class III. That translates to cheese prices around a $1.90 and it translates to for whey prices to be somewhat higher than they are now, which my suspicion is even though China's got their own ration economic problems, they're still going to need to feed pigs. And then the butter market is going to be stronger than normal, but it's certainly not going to be $3. So that also would translate to a Class IV price somewhere in the $19 range. So look at where we are. We're up limit today and evidently people are buying cheese and I don't really get the feeling that cheese is all that short. I think filling the pipelines for Christmas is more than likely still the reason it's going up. But with butter and with cheese and other dairy products, when we get to Christmas time, as far as I can see, it's over. So I'm not arguing that the bottom is going to drop out and we're going to get down into the lower teens, but I'm arguing that the market is going to settle to what I consider a lower ratchet level in the $19 range. So that's the extent of my bearishness. There's obviously other things that could happen. I mean, you have a war going on in Europe and maybe the feed price situation changes and maybe a lot of cows expire and so on. T3: And actually I would agree with you. I think we'll be right about in there too. So, Dad, here's my question for you. I've got my Class III and Class IV calculator spreadsheet out. So what do you think the butter market's going to be in the first quarter? Ted Jr: I'm going to say $2. T3: What do you think the nonfat market will be? Ted Jr: It's hard to say bucking a quarter $1.30 maybe, somewhere in the area. T3: I'll put in $1.30. So if we have $2 butter in 1.30 non-fat, you're talking a Class IV price of $17.48. Let's go ahead and round it up to $17.50. Now in this case,

Geoff Vanden Heuvel of Milk Producers Council and Sarina Sharp of Ag Business Solutions and Daily Dairy Report joins T3, Gus and Ted Jr. for a discussion on California water today and moving forward. Geoff enlightens the group on localized production cost challenges and shares some anecdotes about farmers dealing with expensive feed. Sarina and Gus talk about regional challenges to expansion and the adverse economics limiting dairy in much of the eastern U.S.  T3 sees cause for Class IV prices to stay high, and, after a lively conversation, the group shares a healthy laugh at Ted Jr.'s expense. T3: Welcome everybody to the Milk Check. This month we've got two guests. Welcome Sarina Sharp with the Daily Dairy Report in Ag business and also Geoff Vanden Heuvel. Geoff, why don't you quickly introduce yourself? Geoff Vanden Heuvel: Well, Ted, it's great to be here. I'm a faithful listener of the Milk Check, so it's fun to see you guys by the power of Zoom. I'm not sure if our listeners will see that. But I was a dairy farmer in Southern California for 39 years, and at 2018, urbanization took my dairy. I was very involved in water and milk pricing issues as part of the Milk Producer's Council, which is Dairy Farmer Trade Association board. And when I sold my cows in 2018, I was going to move to the Central Valley because I had kids and grandkids here. Given my experience in water policy, the Sustainable Groundwater Management Act had just been passed in California and was being implemented throughout the Central Valley. And Milk Producers Board asked me to be the dairy industry's guy on water supply, and the implementation of what we call SGMA, Sustainable Ground and Water Management Act. So since 2018, mid-year, that's what I've been focusing a lot of my time on. That particular Act is designed to be implemented at the local level. So what that meant was I needed to identify where we had dairies in the Central Valley that were in what the state had designated as critically overdrafted basins. That turns out that's pretty much all of the Central Valley. It's critically overdrafted. There were dozens of new groundwater sustainability agencies that had been formed as a result of that law. They were all in the early stages of organization, and then gathering data, with a goal of putting plans together for how they were going to bring their area into basically balance or sustainability. So in the course of that I cover, we have dairies from south of Bakersfield all the way up to Stockton that are in overdrafted basins. That's about a little over 200 miles. So north to south, I spent a lot of time on the road. But that's what I do, is focus on water supply for the California Dairy Industry. T3: Well thanks Geoff and welcome. Dad, I know you've got a question that you're burning to ask, so I'll let you go ahead and start it off. Ted Jr: I've bet every time you open the papers these days you're seeing pictures, and hearing dissertations on how miserable the water supply is in California. Just yesterday I picked up the Sunday edition, and I had pictures of parched land, perfectly brown, not a bit of green on it, but the last number we have on milk production is up 2.5%. So how do we manage to have all these dire predictions of drought? And we've had predictions about drought for 50 years. And every time we hear it, the milk production in California goes up. Is this the year that all of a sudden we're going to have a drought that really counts? Let me pose that question to you as a matter of getting the ball rolling. Geoff: I hope not. We would hope that we can manage our way through it. But it's real. If we don't get some rain and snow, and we don't have any surface water, I think we are going to begin to bite down on the water availability, particularly in the Southern San Joaquin. Because those water districts there now, the groundwater sustainability agencies that I've described to you,

With August's milk production report in mind, the trading team gathered for another monthly mass balance and charting meeting. This month, though, we were blessed by two special guests: Steve Spencer and Vuko Karov from Freshagenda. Don kicked the meeting off by modeling domestic milk production and mass balance expectations for the rest of the year, with special focus on Q4. Then, we handed the reigns over to Steve and Vuko, who guided us through a workshopping version of their Dairy Trade Simulator (DTS). The Freshagenda team tested some ‘What if?' questions on their model and argued that market fundamentals suggest that we should see cheese futures over $2 soon. T3 countered with some points about difficult domestic freight and contractual obligations forcing cheese from high-growth areas. Then, to shift perspective entirely, Jacob suggested that historic correlations driving market fundamentals could break, and that there may be reason to feel bullish Class IV and bearish Class III after all. T3: Welcome back to The Milk Check. This month we return to our mass balance discussion with Don Street and the rest of the trading gang, and this time we have a couple of special guests: Steve Spencer and Vuko Karov from Freshagenda, an Australia-based supply chain and market analysis firm with some great data about how milk production and pricing may evolve in 2023. Welcome to this discussion, let's get started. Steve: Thank you. Vuko: Thanks so much. Steve: Thanks for having us in your meeting. We appreciate the opportunity to join the discussion, let's have some fun and see what it brings. T3: That sounds great. So Don, why don't you go ahead and lead us off. Don: All right, here we go. Balance update, August, 2022. So in spite of Ted being more accurate than I am on these projections and winning bourbon from me, I just want to say that if USDA would get the cow numbers right the first time, I'd be much more accurate. But June was revised downwards to where it was flat. I had actually had a negative 0.02 prediction, so I think that's reasonably close. And for Q2, which we finished down an average of 4/10 for a percent on milk. July finally goes positive. If that holds through the revision, when August is announced again, I was 2/10 of a percent over the 3/10 that was actually reported. Steve and Vuko, these are all 24 state numbers, not national numbers. I think I'm reasonably dialed in spite of the revisions, which brings us to August. I'm, at this point, thinking we'll be up 1% on milk, but the bottom line is that the cow herd will, in the couple of months, be higher than prior year instead of lower than prior year. Instead of being 60 or 78,000 cows below a year ago in August, when we see the numbers, we're going to be 25 to 30,000 cows below a year ago. And in September, we're going to more or less be equal. And then we start to see whether this grows or not. We're going to have more cows than we did in the prior year, which will contribute to higher milk production numbers. I've tried to recast this a little bit to just show you the impact, because June, July, we're up 8/10, one full percent on milk per cow, but fewer cows is the offset. In August, I think we'll be a little bit higher, mostly because of the poor performance of August '21. So I think we'll be up 1% on milk for August, but then I don't want to say that we're just going to continue to move higher but these changes in milk per cow are going to be 1.2, 1.3, maybe 1.4, but we're going to be something over 1%. And then you start to add more cows. And this is of whole certainty, unless we all of a sudden see a shrink in the herd that we don't anticipate because slaughter rates still seem to be lower, not higher. You're going to wind up with 1.4% more milk, maybe as much as 1.8 but somewhere in that range, but it'll be a marked difference than what we've experienced so far this year. Maybe just to take a look at components.

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

A special guest joins this mostly macro-level episode of The Milk Check. Dr. Andrew Novakovic compares today's inflation with U.S. inflation eras past, and the group examines evidence toward the unlikelihood of another Great Recession as well as downward pressure holding back a forceful economic rebound. Both Ted Jr. and T3 still see some upside in dairy markets, Dr. Novakovic sees a continuation of the trend toward larger farms finding more success and T3 expects inflation to “pull back significantly.” To close out the podcast, Ted Jr. and Dr. Novakovic talk Federal Orders, “urgent marketing” and the challenges in removing or updating federal regulations and/or terms of trade. T3: Hello and welcome, everybody, to the Milk Check podcast. This month, we have the pleasure of welcoming Dr. Andrew Novakovic, professor emeritus at the Dyson School at Cornell University, professor of dairy markets and policy. Andy, it's a pleasure for us to have you on our podcast this month. Thank you very much for joining us. Dr. Andrew Novakovic: Yeah. It's always a pleasure to work with you guys, and I'm anxious to see where the conversation goes. T3: So we also have, besides the usual suspects, my father and Anna, Josh White, and Jacob Menge from our trading team are joining us as well. So I'd like to start off this conversation this month, Andy, by asking you a question that's been on my mind since you and I were talking a couple of months ago, and you mentioned this almost as a passing comment, but it really piqued my interest. And it was this. We were talking about inflation and how inflation was probably going to affect our economy. And you mentioned that the inflation we're going through this time in 2022 is a lot more like the inflation of the 1940s and '50s than it is like the inflation of the 1970s and '80s. What did you mean by that? What's the difference? What are we experiencing right now? Dr. Andrew Novakovic: So of course, inflation means that prices pretty much across the board are rising, so it's not a sector event. It's not we had a bad corn crop, and that's having an impact on beef. It's something broad. So what kind of things have that broad sweep of effect? And like so many thing in economics, there's a supply side and a demand side that could theoretically be at play. And a lot of times when we look at inflationary periods, they come from a certain amount of government overheating, fiscal policy that's relaxed where money is kept in consumer pockets, as opposed to going into government coffers. So we reduce taxes, and people get to keep more in their pocketbook, or we spend money in a way that gains income for people. It might be through jobs, it might be through direct income subsidies or what have you. Those people go out and spend that money, and that heats up the economy. The other inflationary route is supply side, which is leading to cost. And there was an element of the '70s that for sure does relate to what we see now, and that's energy. OPEC had been around for a while. Their obvious goal was to monopolize, to a certain degree, world oil markets. The first time they tried that, it didn't really work. But in the '70s, they started to get their act together. And those of us who lived through that time can remember just this catapulting of gasoline prices going from 20, 30 cents a gallon to over a dollar a gallon. You had to change all the pumps to put on an extra digit. That was pretty remarkable. And of course, energy is a big part of what's going on now. But when we were talking, what struck me is that when you think of all the supply chain stuff that's occurring now, lot has to do with labor, but computer chips and resin availability for plastics, and just a variety of things that are impacting supply chain. That reminds me a little bit more of post world war disruptions that we saw in the late teens, early '20s. Late teens also was a pandemic period,

On this remarkably bullish episode of The Milk Check, the Teds bring in T.C. Jacoby & Co's fluid milk team to talk about the market from their perspective. Gus Jacoby, president of fluid dairy ingredients and dairy support, leads the discussion with help from milk marketing manager Greg Scheer and fluid sales manager Jared Miklasz. Discussion lingered on tightness in the market, which points to a Q4 where we are short on milk domestically and internationally. Ted Jr. suggests the market is underestimating its own upside potential after being spoiled by long milk for about ten years. Gus agrees, and T3 teases the topic of discussion for the podcast's 50th episode. T3: Welcome to the Milk Check podcast. Today, we have our fluid group joining us. While my dad and I like to get on this podcast and just debate back and forth what we think markets are doing, picking out certain issues, it's Gus and Jared and Greg and Anna, who really are in the trenches, working with the dairy farmers in the different processors on the fluid side that we work with. And we thought it would be a great idea to have them lead the discussion today. And so I'd like to welcome Greg Scheer, who leads our Milk team, Jared Miklasz, who leads our Cream and UF Milk team, and my brother, Gus, who runs our fluid group. And really just give us their analysis of what they're seeing in the market today. With that Gus, I'll just turn it over to you. Gus: All right. Well, thank you, Teddy. We have a very interesting marketplace at this moment in time. A number of months now we've seen contraction, but with respect to milk production. But we've also seen some other areas, some manufactured liquids that have been pretty dynamic. And I guess, adverse for some of those folks who are looking for solids in one way, shape or form. And then we have that dynamic of Class IV and Class III, where Class IV is hovering above Class III which presents some challenges as well as opportunities for folks within our industry. But just to start with, I think what we want to mention is that at this moment in time, we've all seen the most recent milk production report showing that April was down a percentage point in milk production. We had a year ago, nine and a half million cows in the US dairy herd. And now we have 100,000 less cows in the US dairy herd. So that puts things in perspective for what we're dealing with and what we're looking at as we get out of this spring flush so to speak and into the second half of the year when folks, I think are a little bit more concerned about finding the solids they need to fill orders. To begin with, I think the Eastern half of the country is tight milk. And in addition to tight milk, we also have a major cheese plant that has come online in Michigan that has soaked up a bunch of butter fat, and that presents a prospect for cream supplies as well. And then you have the freight impact of traveling product throughout our country, whether it be farm milk and the impact on the producer there, whether it be manufactured liquids and the impact on folks trying to get solids from one part of the world to the other. I think there's a lot of good information we can get from our leadership team here. And I think the best place to start is with Greg in milk, and then we'll move into some other areas. Greg. Greg Scheer: Thanks, Gus. Yeah. And like you said, milk production down 1%. If you would've told us that milk prices would be where they're at today and we'd have declining milk, you'd say you're crazy. But you have the high cost of feed, the high cost of inputs, limited heifer supply, all those factors. And in some regions, a quota system that has really limited our milk production. Most years, we would see a long market. When we're getting into May and Memorial weekend, right around the corner into June, it's less long than we normally see at this time. You just have tightening milk market where milk is not ...

On this two-part edition of The Milk Check, the Jacoby team lets listeners in on a monthly mass balance and charting meeting. The meeting splits neatly into two episodes, one led by Global Strategy Director Don Street and the other led by Head of Risk Management and Trading Strategy Jacob Menge. In part one, we evaluated milk production data and predicted what Q2 will look like in terms of overall milk production and class allocation. In part two, we zoom out to talk inflation, interest rates and the macroeconomic factors impacting dairy markets. Jacob makes a strong case that farmers should continue investing in increasing their capacity despite an increasing nominal interest rate before presenting a bird's eye view of various commodities markets and interesting trends to note in dairy and beyond. T3: Hi everybody. And welcome to the milk check. This month, we recorded our monthly mass balance and charting meeting. It is a monthly meeting that we hold internally where our whole trading team gets together. We look at the milk production and cold storage reports, and we look at some of the technical charts and we share our opinions about what we think this data is telling us and what we think this data is predicting about what'll happen in the future. We had some really interesting discussions this month. I think you'll really enjoy eavesdropping into these discussions. It was a long meeting. It was an hour long, but it was a really good meeting. So what we've decided to do this month is split it into two parts. And the second part is what we call our charting meeting led by Jacob Menge, our risk manager and trading strategy director, who talked about some of the technical charts and what they're telling us about our dairy markets and even other markets such as the interest rate markets. It was a great discussion, I hope you enjoy it. Thanks for listening in. Jacob: So I'm going to start kind of outside of dairy and move rapidly into dairy here, but there's kind of a common theme at ADPI in before. And a lot of it was surrounding the dairy farmer and kind of the tough headwinds they're facing here. You've got rising interest rates, you've got rising input costs. And at first glance, you're going to say, "Hey, if I'm a dairy farmer that maybe is getting close to retirement, maybe now is the time to just get out." And again, at first glance that passes the sniff test. The problem is there's interest rates and then there's real interest rates. And while interest rates have been rising, which is our little black line right here as has inflation, which is our red line, real interest rates have been dropping. And I'll zoom back out a little bit more here. We have not been at these kinds of levels since the inflation eras in the late seventies and early eighties, we are actually lower on real interest rate terms than we were back then. And so in these real interest rate environments, you tend to want to continue to invest. If you're a business, that is telling you just keep pouring money into buying machines. In the economics textbooks, they always frame it as machines, buy the machine to produce the output. And that output is making you more money than you are not making by just capitalizing on interest rates. Opportunity costs pretty basic there, those economics should apply to farms as well. You have a machine. It just happens to be a living, breathing machine called a cow, but you're facing kind of this classic economics example of real interest rates are telling us, invest in your machine to make your product. And a really good example of that right now is happening over in crude oil. So we have the crack spread here and it's a traditional 3:2:1 crack spread where they're basically saying, "If you buy three barrels of crude and turned it into two barrels of gasoline and one barrel of diesel, how much money are you making?" And the answer is basically more money than ever before.

On this two-part edition of The Milk Check, the Jacoby team lets listeners in on a monthly mass balance meeting. The meeting splits neatly into two episodes, one led by Global Strategy Director Don Street and the other led by Head of Risk Management and Trading Strategy Jacob Menge. In part one, we evaluate milk production data and forecast what Q2 will look like in terms of overall milk production and class allocation. Ted disagrees with Don about supply-side expectations moving forward, and Don puts forward a modification to his predictive model. In part two, we will zoom out to talk inflation, interest rates and the macroeconomic factors impacting dairy markets. Jacob presents a bird's eye view of various commodities markets and interesting trends to note in dairy and beyond. T3: Hi everybody, and welcome to the Milk Check. This month, we recorded our monthly mass balance and charting meeting. It is a monthly meeting that we hold internally where our whole trading team gets together. We look at the milk production and cold storage reports, and we look at some of the technical charts and we share our opinions about what we think this data is telling us and what we think this data is predicting about what'll happen in the future. We had some really interesting discussions this month. I think you'll really enjoy eavesdropping into these discussions. It was a long meeting but it was a really good meeting. So, what we've decided to do this month is split it into two parts. The first part is Don leading the discussion about the mass balance. What we think is happening in Class I milk, Class II milk, Class III milk, and Class IV milk. It was a great discussion. I hope you enjoy it. Thanks for listening in. Don Street: All right. You should see the PowerPoint for Mass Balance, April 2022. At this point, not completely, but all the data for Q1 that really counts we have. We'll get more early next week with dairy products. But we have it and now we're really at the point of what will Q2 hold. And I'm going to walk you through a couple of scenarios on that, and then we'll look for your guys' input. So again, Q1s in the book, down 9/10ths of a percent on milk for the quarter. But clearly a steady progression towards trying to get to zero change year over year on milk. January was the big down, February less, March even less. We still have this reality that Q2 of last year was up 4% on average. And I think that's going to be difficult to be positive over it. It's just a question of how much negative under that will be. But nonetheless, with these improving milk numbers, my projection is getting stronger. So, a month ago I thought we'd be down 1.7% for the quarter. Now I'm at 1.4% negative. You could argue, well, it's all in the same ballpark and I would concede that point. But nonetheless, two months ago I think I was talking over that we would have a reduction of over 2%. So, when you add two months together, the second quarters not looking as dire as I once thought, but I still don't think the market's anticipating this very well. And to maybe add that, had several people tell me in Chicago this week that they thought we'd be even on milk production year over year by the end of the quarter. I just don't think that's possible. And mainly it's because of cow numbers. Now, USDA really threw a curve when they restated the February numbers last week, adding about 10,000 cows that apparently shouldn't have been taken out of the herd. But I've now taken this forward projection and trying to listen to all the voices that will not see a strong change in cow numbers, but we should be past bottom. So, I've just added or increased this herd at 5,000 head a month from March. March is a known number until it's revised. So, you can just see this as you go down on the 2022 column. It's 5,000 head more a month. And that puts Q2 down on cows at about 0.9%. So, two months ago, that was 1.3% down,

The crew comes back to the mic to predict how demand will respond to milk prices approaching record highs across the market. Between widespread inflation and rising interest rates, the economy hasn't been in a remotely similar situation since at least the 80s. The discussion touches on potential for a European recession, how interest rate increases affect nonfat trade with Mexico, milk consumption expectations and the barriers to a rapid supply response to record-high prices. The team comes up with potential answers and a few more good questions. Ted Jr. closes out by backing T3 into holding onto a bullish position. T3: So, this week, joining my dad and I in the discussion is Don Street, our head of global strategy, Jacob Menge, our head of trading strategy and risk management, and Joshua White, our vice president of whey and feed ingredients, and we thought this podcast, the conversation that would be pretty appropriate would be, given the current economic environment we're in, dairy products are 50% higher in price than they were just six months ago, and interest rates are climbing. Are the combination of those two factors going to start stifling dairy demand, and if so, how is it going to play through the system? The old adage has always been the cure for high prices is high prices, which means as dairy prices go up, there'll be pushback from those high prices, and ultimately, demand will go down and it'll correct itself. Meanwhile, producers are making more money at higher prices, so they increase supply at the same time. The increase in supply, the decrease in demand tend to start getting prices to adjust. But we're in a very different environment this time around. The kind of inflation that we're experiencing is unlike anything I think we've seen in this country since the 1980s, and the interest rate response by the Fed is going to be probably unlike anything we've seen since the '80s, and I think as demand will adjust this time, it's not going to be like anything we've seen in the last 10 to 15 years, so I think it's worth bearing a discussion. Jacob, how do you think high dairy prices are going to affect demand from your point of view? Jacob Menge: I think the first and most important thing to address is, are these prices high? What is a high price? I think that's an important part of the question to address because you said the old adage is the cure for high prices is high prices, but I think there's a lot baked into that statement. Part of that is historically when prices are high, that's an indication that suppliers probably have good margin baked into that number because their costs didn't really increase that much. So, when these prices really increase, suddenly they've got a lot of margin. That's an environment that can't really stick around. I would maybe push back and say prices aren't even that high, quote-unquote, anymore because we've really had the inputs increase so much, and I think that's really an important thing to address here, is you just need to reframe what the definition of a high price is and reframe the market overall in your head. Let's just run with it, though. The consumer's still going to push back with the higher number. You add to the overall prices, you're going to get pushback from consumers. I don't think we're there yet. Consumers are pretty flush still with cash, just looking at consumer sentiment numbers, looking at all the numbers that we could get. We have a very good economy still, as much as it might not seem like it to the average household. You hear your good costs twice as much, but at the end of the day, if the consumer has the cash to pay for the goods, it's pretty unlikely that they change their buying habits. So, taking this one step further, it's then what does change the buying habits, and I think it can either be recession hits, and suddenly we don't have the cash on hand. The consumer doesn't have the cash on hand that they do today,