The Milk Check

T.C. Jacoby & Co. - Dairy Traders

Experienced dairy traders discuss current market trends that affect payments to dairy farmers.

  1. 3 DAYS AGO

    Mercados Lácteos en Movimiento: Leche Fluida, Proteínas y Volatilidad Global

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

    21 min

  2. 17 FEB

    Why Dairy Futures Seem Irrational

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

    25 min

  3. 6 FEB

    The Nonfat Short Squeeze

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

    25 min

  4. 16 JAN

    The Market is Lying to Us

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

    27 min

  5. 28/12/2025

    Valley Queen on casein vs. whey. Plus, where whey goes from here.

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

    28 min

  6. 11/12/2025

    One Bull in a Barn Full of Bears

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

    23 min

  7. 18/11/2025

    When Will Dairy Prices Turn Around: GLP-1 and Oversupply

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

    26 min

  8. 17/10/2025

    Bears in Butter. Bulls in Protein.

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

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About

Experienced dairy traders discuss current market trends that affect payments to dairy farmers.

Information

  • Creator
    T.C. Jacoby & Co. - Dairy Traders
  • Years Active
    2018 - 2026
  • Episodes
    18
  • Rating
    Clean
  • Show Website
    The Milk Check

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