DAIRY MARKET NEWS WEEK OF DECEMBER 18-22, 2017

Transcription

1 DAIRY MARKET NEWS WEEK OF DECEMBER 18-22, 2017 VOLUME 84, REPORT 51 DAIRY MARKET NEWS AT A GLANCE CME GROUP CASH MARKETS (12/22) BUTTER: Grade AA closed at $ The weekly average for Grade AA is $ (-.0300). CHEESE: Barrels closed at $ and 40# blocks at $ The weekly average for barrels is $ (-.2135) and blocks, $ (-.0215). NONFAT DRY MILK: Grade A closed at $ The weekly average for Grade A is $.6540 (-.0170). BUTTER HIGHLIGHTS: Cream for butter production is abundant as other dairy processing plants are closing for the holiday weekend. Butter production remains active as producers are pushing to fill remaining holiday orders. Some manufacturers have been focusing on producing more unsalted butter. A few industry contacts report that they have begun to aim some churning time towards the spring holiday preparation. Inventories are plentiful. Bulk butter prices range from 1 cent to 7 cents over the CME average. The market undertone is mixed. However, some Central region contacts report that the butter market has been resilient in the face of adversity. Friday s CME group cash trading saw Grade AA butter close at $2.1800, down $ from last Friday. CHEESE HIGHLIGHTS: Milk volumes are available nationwide, with some cheese producers in the Midwest receiving spot milk at marked discount prices. Spot milk prices into cheese production range from $4 to $8 under Class III. Cheese production is active in all regions, mirroring abundant milk intakes. Some cheese plant managers in the Midwest report ramping up cheese production to meet abundant milk supplies. In the Northeast, a few processing plants will be running operations through the holiday. Cheese inventories are mixed, and some plant managers relay some shared anxiety related to the currently heavy production levels. Cheese demand is mixed across the nation. Some Midwestern cheese producers who expected this holiday sales season to be exceptional have been somewhat disappointed. They relay that fluctuating and recently declining cheese market prices have deterred and/or delayed buying in what is typically the peak sales season. Friday on the CME, barrels closed at $1.4100, down $.2500 from last Friday. Blocks closed at $1.4925, down $.0375 from last Friday. FLUID MILK: Milk is available for all processing needs around the country. In the Southeast, milk production is up. In the Midwest, contacts are concerned regarding the ample supply of milk. Upper Midwestern contacts are also anxious regarding the impending inclement winter weather and how it will affect hauling/transportation. Bottling requests are down as school breaks are commencing. Cheese plants are taking on plentiful milk and at heavy discounts. Reported spot prices were discounted as low as $8 under Class III in the Midwestern region. Cream is also abundant. Cream prices have seen holiday week declines typical of this time of the year. Cream multiples into in the East, in the Midwest, and in the West. DRY PRODUCTS: s for low/medium heat nonfat dry milk (NDM) ebbed lower this week. Demand is mixed. The market tone is slow to unstable. High heat NDM prices have declined. Inventories are tight in some areas. Dry buttermilk prices have decreased. Demand is mixed as producers relay that buyers interests remain consistent. However, other contacts report that demand is insubstantial. The market undertone for dry buttermilk is mixed. Dry whole milk prices are up. Demand for dry whole milk is fair, especially from chocolatiers. Dry whey prices have moved lower in a weak market. Spot market activity was moderate to slightly up. Whey protein concentrate 34% prices declined. Industry contacts report that demand is humdrum. However, some manufacturers report that they are in the position where they are meeting tight end user specifications and are having steady demand. Lactose prices are relatively steady. Contacts describe a thorough price competition as producers try to insert lactose into some international markets. Rennet casein prices weakened, while acid casein prices are steady. INTERNATIONAL DAIRY MARKET NEWS: WESTERN OVERVIEW: Seasonal milk production increases are now noted in some major milk producing countries in Western Europe. This references increases from the previous week as well as the same week a year ago. For example, early reporting by ZMB shows German milk production in early December was up 1.4 percent from the previous week and up 4.5 percent compared to one year earlier. In France, milk output was 3.5 percent ahead of year earlier. Milk production is expected to stay above year earlier levels into Increases are boosted by dairy producers using higher quality feed, as current pricing makes this possible. - CONTINUED ON PAGE 1A - Product Highlights/CME/DMN at a Glance 1 Weekly CME Activity/Butter Markets/NDPSR 2 Cheese Markets 3 Fluid Milk and Cream 4 Nonfat Dry Milk/Dry Buttermilk/Dry Whole Milk 5 TABLE OF CONTENTS Dry Whey/WPC 34%/Lactose/Casein 6 US Dairy Cow Slaughter/Class Milk s 7 International Dairy Market News 8 CME Dairy Futures Monthly Averages Release Times 10 November Milk Production 11 November Marketing and Utilization Summary 12 Advanced Class s 13 Dairy Graphs G1 Dairy Market News Retail Report Dairy Market News Contacts CME GROUP CASH TRADING COMMODITY MONDAY TUESDAY WEDNESDAY THURSDAY FRIDAY :: WEEKLY :: WEEKLY DEC 18 DEC 19 DEC 20 DEC 21 DEC 22 :: CHANGE* :: AVERAGE# CHEESE BARRELS $ (-.0800) $ (-.1000) $ (-.0800) $ (+.0025) $ :: :: $ (+.0075) :: (-.2500) :: (-.2135) 40# BLOCKS $ $ $ $ $ :: :: $ (-.0400) (-.0400) (-.0150) (+.0075) (+.0500) :: (-.0375) :: (-.0215) NONFAT DRY MILK GRADE A $.6500 $.6475 $.6475 $.6600 $.6650 :: :: $.6540 (-.0075) (-.0025) (N.C.) (+.0125) (+.0050) :: (+.0075) :: (-.0170) BUTTER GRADE AA $ (-.0450) $ (+.0100) $ (-.0150) $ (-.0150) $ :: :: $ (N.C.) :: (-.0650) :: (-.0300) CHEESE: carload = 40,000 lbs., BUTTER: carlot = 40,000-43,000 lbs. *Sum of daily changes. # Weekly averages are simple averages of the daily closing prices for the calendar week. Computed by Dairy Market News for international purposes. This data is available on the Internet at

2 WEEK OF DECEMBER 18-22, 2017 DAIRY MARKET NEWS VOLUME 84, REPORT 51 -CONTINUED FROM PAGE 1- DAIRY MARKET NEWS AT A GLANCE Among the top five producing countries, two report increases; 2.9 percent for Italy and 0.7 percent for United Kingdom. Decreases for the ten months are reported for Germany, -1.2 percent; France, -1.5 percent; and Netherlands, -0.5 percent. The recent late year production increases mentioned above in Germany and France are expected to carry forward and persist into 2018, over time bringing production up from previous periods. EASTERN OVERVIEW: Among the stronger gains recorded in October EU milk production were a number in Eastern European countries. Poland, the sixth largest EU milk producing country, recorded October 2017 milk production up 4.63 percent from October last year. Other Eastern European October milk production results include: Bulgaria, percent; Czech Republic, percent; Romania, percent; and Slovenia, percent. AUSTRALIA: At this time of year in Australia demand for feed is low, as pastures are green and at their prime. Looking forward, concerns are increasing as to availability of quality hay later in Some producers have begun stocking now as a precaution. Recent patchy rains in Northern Australia have ended, leaving good conditions for hay. Good late spring weather in Southern Australia has left lower interest in hay and feed. Weather was a problem in recent years, but has been generally decent this year. Increasing optimism as to weather and pastures is growing. NEW ZEALAND: November 2017 New Zealand milk production was 3.0 million MT, up from November 2016 milk production, 2.8 million MT according to DCANZ. November 2017 milk solids, million kg, are up from November 2016, million kg. Stronger milk production compared with last year was announced just before this week s GDT event. The news may have contributed to some buyers feeling less imperative to secure GDT products. Many observers had looked for price strength in this week s GDT event, at least for WMP. Instead, the results were quite disappointing and mostly lower. Those familiar with New Zealand conditions, patterns and pastures, advise that November is often a good month for milk production but drought potential ahead as weather becomes hot could dial back final seasonal milk production results. A number of industry participants with that perspective were surprised at the weaker GDT results. At the December 19 GDT event #202, all contracts prices ranged from -2.3 percent lower to -7.9 percent lower from the prior event across categories. The all contracts price averages (US$ per MT) and percent changes from the previous averages are: anhydrous milk fat, $6,392, -6.7 percent; butter, $4,474, -2.3 percent; buttermilk powder, n.a.; cheddar cheese, $3,389, -7.9 percent; lactose, n.a.; rennet casein, $4,506, -6.3 percent; skim milk powder, $1,675, -4.8 percent; and whole milk powder, $2,755, -2.5 percent. SOUTH AMERICA OVERVIEW: It seems that the climate phenomenon known as La Niña is starting to take a toll in some dairy basins and crop zones across South America, according to several industrial collaborators. For example, in Argentina and Uruguay, the unusual heat and dryness are delaying the development of corn and soybeans. Furthermore, in these two countries, daytime temperatures are above normal, increasing heat stress on cows, and therefore decreasing milk production in several dairy operations. In general, milk/cream intakes in Argentina and Uruguay are sufficient to cover most processing needs. However, milk components continue falling, which is limiting cream availability for a few manufacturing products such as butter and frozen desserts. With most schools closed during the summer break, bottled/uht milk sales are down. Cheese and butter holiday orders from retailers and some food service channels have been shipped and delivered. As reported by the government, in November 2017, Argentina milk production dropped 0.4 percent from the previous month and decreased 1 percent from a year ago. During November 2017, nominal prices paid to producers increased 27 percent from November The following graph shows the monthly variation of the national milk production in Argentina. In Brazil, during the past two weeks, beneficial rain showers improved soybean/cotton conditions in some farming areas, but warmth and dryness dominated much of the southern states. Nevertheless, the variable climate in Brazil has not been an obstacle for milk production to continue increasing. In fact, the current farm milk supply is above previous year levels and is adequate to cover the main dairy product manufacturing needs such as Mozzarella cheese, UHT milk, and dairy powders. Brazil is depending less on dairy imports from nearby countries as milk/cream supplies are abundant in the domestic market. According to the Brazilian Institute of Geography and Statistics (IBGE), during Q3, 2017, Brazilian milk production totaled 6.16 billion liters, 5.2% higher compared to the same quarter of In accumulated terms, from January to September 2017, milk output was 17.9 billion liters, up 5.6% from the same period of NATIONAL RETAIL REPORT (DMN): Total conventional dairy retail advertisements increased 4 percent, total organic dairy ads declined by 19 percent. Conventional cream cheese, a holiday favorite, 8 ounce packaging, was the most advertised dairy item, up 45 percent this week. In addition, conventional eggnog is seeing cuts in ad volumes for quart and halfgallons, 31 percent and 9 percent, respectively. The weighted average price for conventional half gallon milk is $2.40. The weighted average price for organic half gallon milk is $4.10, resulting in an organic price premium of $1.70. Ad numbers for organic milk decreased 1 percent and conventional milk ad numbers decreased 45 percent from last week. The weighted average advertised price for organic butter is $5.11 compared with $3.21 for conventional, shows an organic price premium of $1.90. The average price for conventional retail 4-6 ounce yogurt is $.62, while no organic 4-6 ounce yogurt ads were recorded. The average sale price for conventional 4-6 ounce Greek yogurt is $1.00, with no ads for organic 4-6 ounce Greek yogurt recorded. The yogurt market notes total conventional yogurt ad numbers declining 18 percent, and total organic yogurt ad numbers decreasing 38 percent. NOVEMBER MILK PRODUCTION (NASS): Milk production in the 23 major States during November totaled 16.2 billion pounds, up 1.1 percent from November October revised production, at 16.7 billion pounds, was up 1.3 percent from October The October revision represented a decrease of 27 million pounds or 0.2 percent from last month's preliminary production estimate. Production per cow in the 23 major States averaged 1,861 pounds for November, 9 pounds above November This is the highest production per cow for the month of November since the 23 State series began in The number of milk cows on farms in the 23 major States was 8.73 million head, 57,000 head more than November 2016, but unchanged from October NOVEMBER MARKETING AND UTILIZATION SUMMARY (USDA): Handler reports of receipts and utilization under the Federal milk order system for November 2017 have been filed and tabulated. Combined totals for the 10 consolidated orders are being released. During November, billion pounds of milk were received from Federally pooled producers. This volume of milk is 6.0 percent higher than the November 2016 volume. Regulated handlers pooled billion pounds of producer milk as Class I products, up 0.1 percent when compared to the previous year. Class I utilization increased from last year in 3 of the 10 Federal Milk Order Marketing areas. The all-market average Class utilization percentages were: Class I = 37%, Class II = 15%, Class III = 32%, and Class IV = 17%. The weighted average statistical uniform price was $16.85 per cwt, down $0.21 from last month but up $0.71 from last year. JANUARY FEDERAL MILK ORDER ADVANCE CLASS PRICES (FMMO): Under the Federal milk order pricing system, the base Class I price for January 2018 is $15.44 per cwt. This price is derived from the advanced Class III skim milk pricing factor of $6.98 and the advanced butterfat pricing factor of $ A Class I differential for each order's principle pricing point (county) is added to the base price to determine the Class I. The base Class I price decreased $1.44 per cwt when compared to the previous month of December For selected consumer products, the price changes are: whole milk (3.25% milk fat), $0.51 per cwt, $0.044 per gallon; reduced fat milk (2%), $0.23 per cwt, $0.020 per gallon; fat-free (skim milk), -$0.12 per cwt, -$0.010 per gallon. The advanced Class IV skim milk pricing factor is $5.00. Thus, the Class II skim milk price for January 2018 is $5.70 per cwt, and the Class II nonfat solids price is $ The two-week product price averages for January 2018 are: butter $2.2256, nonfat dry milk $0.7290, cheese $ and dry whey $ A-

3 DAIRY MARKET NEWS, DECEMBER 18-22, VOLUME 84, REPORT 51 MONDAY, DECEMBER 18, 2017 CHEESE -- SALES: 11 CARS BARRELS: $1.6300, $1.6250, $1.6200, $1.6100, $1.6150, $1.6125, $1.6100, $1.6025, $1.6000, $1.5875; 2 CARS 40# BLOCKS: $1.5075, $1.5050; LAST BID UNFILLED: NONE; LAST OFFER UNCOVERED: 3 CARS BARRELS: $1.6400, $1.6000, $1.5800; 2 CARS 40# BLOCKS: $1.5100, $ NONFAT DRY MILK -- SALES: 9 CARS GRADE $0.6500; LAST BID UNFILLED: 4 CARS GRADE A: $0.6400, $0.5975, $0.6400, $0.6450; LAST OFFER UNCOVERED: 7 CARS GRADE A: $0.6900, $0.6750, $0.6850, $0.6700, $0.6600, $ BUTTER -- SALES: 6 CARS GRADE AA: $2.2275, $2.2000, $2.1925, $2.2000; LAST BID UNFILLED: 5 CARS GRADE AA: $2.1900, $2.1800, $2.1700, $2.1950, $2.1975; LAST OFFER UNCOVERED: 7 CARS GRADE AA: $2.2600, $2.2800, $2.2450, $2.2100, $2.2500, $2.2000, $ TUESDAY, DECEMBER 19, 2017 CHEESE -- SALES: 17 CARS BARRELS: $1.5550, $1.5525, $1.5500, $1.5400, $1.5375, $1.5350, $1.5325, $1.5300, $1.5325, $1.5300, $1.5000, $1.4975, $1.4925, $1.4825, $1.4800; 1 CAR 40# $1.4500; LAST BID UNFILLED: 2 CARS BARRELS: $1.4750, $1.4800; LAST OFFER UNCOVERED: 1 CAR $1.4900; 4 CARS 40# BLOCKS: $1.4775, $ NONFAT DRY MILK -- SALES: 2 CARS GRADE A: $0.6500, $0.6450; LAST BID UNFILLED: 8 CARS GRADE A: $0.6300, $0.6450, $0.6475, $0.6400; LAST OFFER UNCOVERED: 4 CARS GRADE A: $0.6800, $ BUTTER -- SALES: 9 CARS GRADE AA: $2.1900, $2.1925, $2.2000, $2.2050, $2.2100; LAST BID UNFILLED: 18 CARS GRADE AA: $2.1800, $2.1900, $2.2075, $2.1950, $2.2000, $2.1950, $2.2075; LAST OFFER UNCOVERED: 1 CAR GRADE $ WEDNESDAY, DECEMBER 20, 2017 CHEESE -- SALES: 11 CARS BARRELS: $1.4450, $1.4400, $1.4375, $1.4325, $1.4300, $1.4200; 1 CAR 40# $1.4350; LAST BID UNFILLED: 1 CAR $1.3800; 1 CAR 40# $1.4200; LAST OFFER UNCOVERED: 1 CAR $ NONFAT DRY MILK -- SALES: 3 CARS GRADE A: $0.6425, $0.6475, $0.6400; LAST BID UNFILLED: 2 CARS GRADE A: $0.6475, $0.6400; LAST OFFER UNCOVERED: 7 CARS GRADE A: $0.6800, $0.6850, $0.6725, $0.6550, $ BUTTER -- SALES: NONE; LAST BID UNFILLED: 8 CARS GRADE AA: $2.1800, $2.1000, $2.1025, $2.1500; LAST OFFER UNCOVERED: 13 CARS GRADE AA: $2.2600, $2.2700, $2.1950, $ THURSDAY, DECEMBER 21, 2017 CHEESE -- SALES: NONE; LAST BID UNFILLED: 2 CARS BARRELS: $1.4025, $1.3500; 3 CARS 40# BLOCKS: $1.4425, $1.4350; LAST OFFER UNCOVERED: NONE NONFAT DRY MILK -- SALES: 2 CARS GRADE A: $0.6600, $0.6550; LAST BID UNFILLED: 3 CARS GRADE A: $0.6600, $0.6575; LAST OFFER UNCOVERED: NONE BUTTER -- SALES: 2 CARS GRADE AA: $2.1775, $2.1800; LAST BID UNFILLED: 2 CARS GRADE AA: $2.1800, $2.1500; LAST OFFER UNCOVERED: 8 CARS GRADE AA: $2.2700, $2.2675, $ FRIDAY, DECEMBER 22, 2017 CHEESE -- SALES: 3 CARS $1.4100; 5 CARS 40# BLOCKS: $1.4525, $1.4625, $1.4725, $1.4825, $1.4925; LAST BID UNFILLED: 1 CAR 40# $1.4925; LAST OFFER UNCOVERED: 1 CAR 40# $ NONFAT DRY MILK -- SALES: 1 CAR GRADE $0.6650; LAST BID UNFILLED: 5 CARS GRADE A: $0.6600, $0.6500, $0.6400, $0.6200, $0.6525; LAST OFFER UNCOVERED: 3 CARS GRADE A: $0.6700, $ BUTTER -- SALES: NONE; LAST BID UNFILLED: 2 CARS GRADE AA: $2.1000, $2.1300; LAST OFFER UNCOVERED: 3 CARS GRADE AA: $2.1900, $2.2500, $ BUTTER MARKETS NORTHEAST The holiday closing of ice cream plants, in the region, drives elevated butter output. Cream volumes that normally clear to ice cream manufacturing were withdrawn, downgrading the processing options, apart from heavy churning, which the East region is experiencing. As such, the butter market notes gains in the stock level as consumer holiday buying interest retreats. Some butter makers are churning unsalted butter at higher rates. This week, a cooperative export assistance program accepted requests for export assistance to sell 440,925 pounds (200 metric tons) of butter. The butter market undertone is unsteady as yearend prices pivot lower. The current bulk butter prices for domestic sales are reported flat to 8 over the market of the CME Group, with various time frames and averages used. According to the DMN National Retail Report- Dairy, December 15-21, 2017, the Northeast weighted average retail price for 1-pound butter was $3.56, 34 cents higher than the national price, but up 11 cents from last week s regional price. Retail butter markets reported prices ranging $2.29-$4.99 in the Northeast. The surveyed average price in the Southeast is $3.09, 13 cents lower than the national price. s range $2.29-$3.99 in the Southeast. CENTRAL Butter sales are on par with previous years marks. Holiday retail orders are completed, thus food service is one of the priorities on the production side currently. Some butter producers report they are beginning to aim some churning time on spring holiday preparation. Cream has been abundant for butter makers. Butter producers report WEEK ENDING December 16, 2017 NATIONAL DAIRY PRODUCTS SALES REPORT U.S. AVERAGES AND TOTAL POUNDS BUTTER CHEESE 40# BLOCKS CHEESE BARRELS 38% MOISTURE ,658, ,362,049 that as Class II processors take on less cream, discounted cream availability headed to the churns will not be a concern until early The butter market tone remains somewhat resilient. Contacts continue to relay that expectations are solid, and that butter markets have continued to sustain, while other dairy commodities have yielded to bearish market tones. Bulk butter prices ranged from 1 cent to 7 cents over the CME average. DMN National Retail Report- Dairy for December noted the national weighted average advertised price for a 1 pound package of butter is $3.22, $0.15 below one week ago, but $0.45 higher than one year ago. The weighted average regional prices in the Midwest and South Central were $3.11 and $3.10, respectively. Wednesday at the CME Group, Grade AA butter closed at $2.1950, down $ from last Wednesday. WEST The western butter market is reported to be steady to weak this week. Contacts report that current prices are higher than they expected as holiday orders have mostly been fulfilled and butter supplies are plentiful. Some buyers are expecting and waiting for further price decreases. As so, they are limiting their current purchases to their immediate needs. Sellers are fulfilling unexpected last minute orders as retailers make sure that their inventories are adequate for the holidays. Butter production is ongoing. Some butter manufacturers are shifting their production focus back to making bulk butter. Many butter plants will be getting a lot of cream during ,087,712 Further data and revisions may be found on the internet at: CONTINUED ON PAGE 2A DRY WHEY ,448,126 NDM ,697,713

4 DAIRY MARKET NEWS, DECEMBER 18-22, A- VOLUME 84, REPORT 51 CONTINUED FROM PAGE 2 This week, western bulk butter pricing is stable at 2 cents to 6 cents above the market, based on the CME Group with various periods and averages used. The DMN National Retail Report Dairy for the week of December found that the U.S. weighted average advertised price of 1 pound butter is $3.22 down $.15 from last week. The U.S. weighted average price was $2.77 one year ago. In the Southwest, the weighted average advertised price of 1 pound butter is $3.24, with a price range of $2.49-$3.50. The weighted average price in the Northwest is $3.20, with a price range of $2.50-$3.99. This week, a cooperative export assistance program accepted requests for 440,925 pounds (200 metric tons) of butter. So far this year, the program has assisted member cooperatives who have contracts to sell 5.7 million pounds of butter (82% milkfat) in export markets. The Grade AA butter price at the CME Group on Wednesday closed at $2.1950, down $.0175 from a week ago.

5 DAIRY MARKET NEWS, DECEMBER 18-22, VOLUME 84, REPORT 51 NORTHEAST Leading up to the Christmas holiday, milk volumes are available. As the week progresses, some manufacturers will be closing, allowing more milk through the region for production needs. Cheese output is active at this time and a few processing plants will be running through the holiday. Market participants report inventories are healthy. Last week the demand for cheese barrels at the CME Group was strong. This week, the barrel prices are down, but spot sales continue to be active. Some industry contacts communicate the cheese demand during the holidays has generally moved lower at this point and is currently simmering the price down. The Northeast wholesale cheddar and Muenster prices declined $0.0050, but the process cheese price climbed $ The Grade A Swiss price is unchanged. At Tuesday s CME Group trading, daily cash prices saw barrels closed at $1.4800, decreased $0.1900, and blocks closed at $1.4500, inched up $ from last Tuesday. This week, a cooperative export assistance program accepted requests for export assistance to sell million pounds (1,340 metric tons) of cheese. The DMN National Retail Report-Dairy, for December 15-21, 2017, noted the U.S. weighted average advertised price for 8 ounce cheese block was $2.13, inched up 2 cents from the previous week, but down 10 cents from last year. The U.S. weighted average advertised price of 8 ounce cheese shreds was $2.14, 2 cents down from last week, but no change in price from a year ago. Northeast region s weighted average advertised price for 8 ounce cheese blocks was $2.23, 10 cents above the U.S. average, with a regional price range of $1.49-$3.00. The Southeast region s average price for 8 oz. cheese blocks was $2.31, 18 cents above the average U.S. price, with a regional price range of $1.50-$2.99. The Northeast average price for 8 oz. cheese shreds was $2.32, up 18 cents from the U.S. average price, with a regional price range of $1.59-$3.00. In the Southeast, the average price for 8 oz. shreds was $2.21, 7 cents above the U.S. average, with prices ranging $1.50-$2.50. WHOLESALE SELLING PRICES: DELIVERED, DOLLARS PER POUND ( POUNDS MIXED LOTS) Cheddar 40# Block : Process 5# Sliced : Muenster : Grade A Swiss Cuts 10-14# : MIDWEST CHEESE Cheese producers are receiving spot milk at marked discounts this week. Reported spot milk prices into cheese plants ranged from $4 to $8 under Class III. Cheese sales remained steady to slow. Some Italian type cheese producers who reported sales declines last week have pointed out slight rebounds early this week. Following some allotted days off during the final holidays, cheese plant managers plan to ramp up cheese production in order to meet the abundant milk intakes. Cheese markets are bearish. CME barrel prices have declined heavily following a steady previous week. In CME Group trading Wednesday, barrels closed at $1.4000, down $.2700 from last Wednesday and blocks closed at $1.4350, down $.0200 from last Wednesday. The DMN National Retail Report-Dairy shows that December Midwest ads for 8 ounce shred cheese have a weighted average advertised price of $1.95, 19 cents below the national average. Midwest prices range from $1.66-$2.50. One year ago, the national price was $2.14. For 8 ounce blocks, the Midwest average price is $1.87, 26 cents below the national average price. Midwest ads are priced from $1.66- $2.00. Last year, the national price was $2.23. Midwestern wholesale prices are unchanged for Swiss cuts, up $.0750 for process, but down $.0050 for all other types. CHEESE MARKETS WISCONSIN WHOLESALE SELLING PRICES: DELIVERED, DOLLARS PER POUND ( POUNDS MIXED LOTS) Process American 5# Loaf : Brick And/Or Muenster 5# : Cheddar 40# Block : Monterey Jack 10# : Blue 5# : Mozzarella 5-6# (Low Moisture, Part Skim) : Grade A Swiss Cuts 6-9# : WEST CHEESE Western cheese makers report solid domestic retail and food service demand has generally helped support the cheese market this fall. However, as the holiday shipment obligations are fulfilled, there is some concern that there may be a lull following the winter holidays, but before the football playoffs, i.e. pizza season, and the grilling season kick in. Cheese production is active and a number of contacts are anxious to see the storage report later this week. They view the report as a possible testament to whether cheese stocks have been able to clear along typical seasonal patterns, or if stocks are building. Some manufacturers think the cheese market seems to be following typical seasonal patterns. A few industry contacts say they have seen milk intakes ease back just as bit. While they empathize with dairy farmers who are feeling a financial pinch because of the global abundance of milk, they are hopeful that a reduction in milk production may occur and help take some of the pressure off manufacturing and dairy prices. Regardless, contacts are relieved to see the difference between cash market barrel and block prices return to a normal spread. The DMN National Retail Report-Dairy for the week of December shows the U.S. weighted average advertised retail price for an 8 ounce pack of natural shredded cheese is $2.14, down $.02 from last week. Packs average $2.14 in the Southwest and $2.36 in the Northwest. One year ago, the national price was $2.14. For 8 ounce blocks, the U.S. price is $2.13, up $.02 from last week. Blocks average $1.95 in the Southwest and $1.79 in the Northwest. One year ago, the national price was $2.23. In the West, wholesale prices were up $.0750 for process, but down $.0050 for cheddar block, cuts, and Monterey Jack. Swiss cut wholesale prices are unchanged from last week. This week, a cooperative export assistance program accepted requests for export assistance on contracts to sell 1.69 million pounds (1,340 metric tons) of cheese. So far this year, the program has assisted member cooperatives who have contracts to sell million pounds of American-type cheeses in export markets. In CME Group trading Wednesday, barrels closed at $1.4000, down $.2700 from a week ago and blocks closed at $1.4350, down $ WHOLESALE SELLING PRICES: DELIVERED, DOLLARS PER POUND ( POUNDS MIXED LOTS) Process 5# Loaf : Cheddar 40# Block : Cheddar 10# Cuts : Monterey Jack 10# : Grade A Swiss Cuts 6-9# : FOREIGN TYPE CHEESE European Union (EU) cheese output is generally limited. This year, the largest importers of EU cheese are as follows: the USA, Japan, Switzerland and South Korea. Reports suggest that EU exports to other countries continue to trend up. Sales are steady in the Union. In Germany, food retailers are currently ordering large quantities of sliced CONTINUED ON PAGE 3A

6 DAIRY MARKET NEWS, DECEMBER 18-22, A- VOLUME 84, REPORT 51 CONTINUED FROM PAGE 3 CHEESE MARKETS cheese for the Christmas season. With the high demand, older inventories are decreasing, but supplies are still enough to meet buyers' needs. Market participants report that Mozzarella is sold out and no additional requests can be filled at this time. Q1 contract negotiations are difficult as buyers are offering lower prices in ongoing negotiations. In the U.S., the prices for wholesale blue, gorgonzola, parmesan Italy, and Romano decreased by $.0050 while all other prices remained the same compared to last week. WHOLESALE SELLING PRICES: FOB DISTRIBUTORS DOCK DOLLARS PER POUND ( POUNDS, MIXED LOTS) : NEW YORK VARIETY : IMPORTED : DOMESTIC : : Blue : : * Gorgonzola : : * Parmesan (Italy) : -0- : * Romano (Cows Milk) : -0- : * Sardo Romano (Argentine) : : -0- Reggianito (Argentine) : : -0- Jarlsberg-(Brand) : : -0- Swiss Cuts Switzerland : -0- : Swiss Cuts Finnish : : -0- * = change. COLD STORAGE WEEKLY COLD STORAGE HOLDINGS - SELECTED STORAGE CENTERS IN THOUSAND POUNDS - INCLUDING GOVERNMENT STOCKS BUTTER : CHEESE : 12/18/17 9,248 : 92,902 12/01/17 12,779 : 96,364 CHANGE -3,531 : -3,462 % CHANGE -28 : -4

7 DAIRY MARKET NEWS, DECEMBER 18-22, VOLUME 84, REPORT 51 EAST FLUID MILK AND CREAM MIDWEST SPOT SHIPMENTS OF GRADE A MILK INTO OR OUT OF FLORIDA & SOUTHEASTERN STATES Milk off the farms in the Northeast is generally steady. With the holidays around the corner, many manufacturers are closing, allowing more available milk throughout the region for production needs. Milk production in the Southeast has increased more rapidly this week than in recent weeks. Market participants report customers for Class I have cut back orders. In addition, many bottling facilities are down this week. Some milk loads have to travel long distances to find placement. Class I sales in the Southeast are steady to decreasing. Florida s milk shipments are exporting around 40 loads. With the upcoming holiday and some production facilities closed, cream multiples range In the market, there is currently more available cream for spot purchases. Condensed skim is fairly steady compared to last week as loads are accessible, although many buyers and end users are drifting towards the powder market. According to the DMN National Retail Report-Dairy, for the period of December 15-21, 2017, the U.S. weighted average advertised price for the halfgallon pack size milk was $2.31, up 8 cents compared to last week and up 32 cents from last year. In the Northeast, the weighted average price for the egg nog half-gallon pack size was $4.47, down 52 cents from the previous week. MILK PRODUCTION: According to NASS, milk production in the 23 major states during November 2017 totaled 16.2 billion pounds, up 1.1 percent from one year ago. Eastern states milk production and percent change from one year ago are as follows: November 2017 Milk Production, (USDA-NASS) (Million Lb.) % Change From 1 Year Ago Florida New York 1, Pennsylvania Vermont Virginia THIS WEEK LAST WEEK LAST YEAR IN OUT IN OUT IN OUT FLORIDA SOUTHEAST STATES SPOT PRICES OF CLASS II CREAM, DOLLARS PER LB. BUTTERFAT: F.O.B. producing plants: Northeast F.O.B. producing plants: Upper Midwest PRICES OF CONDENSED SKIM, DOLLARS PER LB. SOLIDS, F.O.B. PRODUCING PLANTS: Northeast - Class II - includes monthly formula prices Northeast - Class III - spot prices NOTE: Due to evolving market conditions, collection and publication of the table entitled Spot Shipments of Grade A Milk Into or Out of Florida & Southeastern States will be terminated. The last Dairy Market News report to carry the table will be Report 52 of 2017, to be released on December 29, Questions and comments can be directed to: Janet.Linder@ams.usda.gov, (608) Fluid milk and cream suppliers concerns are heightened. Due to the current volumes of milk and cream, there is no room for error regarding hauling timetables and intake plant functionality. Adding to these concerns, single digit temperatures along with ice and snow are forecasted to pound the upper Midwest throughout the weekend. Bottlers have eased intakes as school breaks are approaching. Cheesemakers reported receiving spot milk loads as low as $8 under Class III. Class II processors have also surpassed their peak and have markedly eased on ordering. South Central contacts relay as Class II intakes have slowed, some milk is being diverted into Class IV powder production. Class II cream multiples ranged from 1.08 to 1.22 f.o.b. Butter makers are expecting to take on cream at flat market by early next week. The DMN National Retail Report-Dairy for December noted the national weighted average advertised price for one gallon of milk was $2.52, up 14 cents from last week, but 40 cents lower than a year ago. The weighted average regional prices in the Midwest and South Central were $2.12 and $3.10, respectively. The NASS Milk Production report noted November 2017 milk production in the 23 selected states was billion pounds, 1.1 percent above a year ago. Milk cows in the 23 selected states totaled 8.7 million head, 57,000 head more than a year ago. The following table shows Central states included in the report and the monthly milk production changes compared to a year ago: November 2017 Milk Production, (USDA-NASS) (Million Lb.) % Change From 1 Year Ago Illinois Indiana Iowa Kansas Michigan Minnesota Ohio South Dakota 211 Texas Wisconsin 2, WEST This week, milk intakes into California dairy processing plants are higher and manufacturing plants are running at full capacities. Milk requests from bottlers are down and are expected to further decrease towards the end of the week. Handlers are managing to find homes for their milk for when plants will be closed for the holiday. As so, some milk is moving from California to Nevada. Milk production in California is steady. Farm milk production in Arizona is still increasing despite the recent rain and the drought that persisted for three months prior to the rain. Milk supplies available for processing are higher than usual due to downtimes at some Class III processing plants. A few neighboring processors increased their intakes to help out. Bottling milk orders are decreasing due to schools being out and plants preparing to close for the holiday. Balancing plant operators point out that they are planning to move more milk loads to Class IV processing over the weekend. With lower multiples and abundant milk, some processors are planning to churn cream during the weekend. Milk pooled on the Arizona Order 131 totaled million -CONTINUED ON PAGE 4A-

8 DAIRY MARKET NEWS, DECEMBER 18-22, A- VOLUME 84, REPORT 51 -CONTINUED FROM PAGE 4- pounds in November Class I utilization accounted for about 28.4 percent of producer milk. The uniform price was $16.02, down $0.41 from last month, but $0.50 above one year ago. This week, Class I and II milk intakes are down in New Mexico as most orders for the holidays have been fulfilled and schools are closed. However, a late holiday push from Class III processors is helping to clear the loads of milk. With some high Class manufacturing plants closing for the holidays, handlers are planning to redirect their milk to Class IV production. Milk production in the Pacific Northwest is following typical seasonal patterns. Although, supply is not really long or short, milk handlers are working hard to find homes for the milk now available from reduced Class I and Class II processing and the upcoming holidays. Some spot loads are finding their way into balancing plants and dryers in surrounding states. In the mountain states of Colorado, Idaho and Utah, manufacturers are finding more than enough milk to process. Some discounted milk loads are available. As the holiday week unfolds, school winter breaks begin and Class II processors slow production runs, milk handlers are pushing milk into Class III facilities or any other processing space that will take the extra loads. Milk pooled on Pacific Northwest Order 124 totaled million pounds in November Class I utilization accounted for about 27.3 percent of producer milk. The uniform price was $15.69, down $0.34 from last month, but $0.62 above one year ago. Condensed skim continues to be in good supplies in the West. Loads are mainly clearing to nonfat dry milk. Interest in cream is lower in the West, and cream availability is heavier. Some processors are focusing on finding a home for their cream regardless of the price buyers are willing to pay. Others are planning to start churning over the weekend. Controversially, some buyers indicate that they are getting seasonal offers of extra cream, but not at the point where suppliers are willing to take on very low prices. Butter churn processors indicate that they are receiving unsolicited offers for spot loads of cream. Cream multiples are lower at According to the DMN National Retail Report-Dairy for the week of December 15-21, the national weighted average advertised price for one gallon of milk is $2.52, up $0.14 from last week, but $0.40 lower from a year ago. The weighted average regional price in the Southwest is $2.64, with a price range of $1.99-$2.99. No advertised prices were reported in the Northwest this week. The NASS Milk Production report noted November 2017 milk production in the 23 selected states was 16.2 billion pounds, 1.1 percent above a year ago. Milk cows in the 23 selected states totaled 8.73 million head, 57,000 head more than a year ago. The following table shows western states included in the report and the monthly milk production changes compared to a year ago: November 2017 Milk Production, (USDA-NASS) FLUID MILK AND CREAM (Million Lb.) % Change From 1 Year Ago Arizona California Colorado Idaho New Mexico Oregon Utah Washington

9 DAIRY MARKET NEWS, DECEMBER 18-22, VOLUME 84, REPORT 51 NONFAT DRY MILK, BUTTERMILK & WHOLE MILK s represent carlot/trucklot quantities for domestic and export sales packaged in 25 kg. or 50 lb. bags, or totes, spray process, dollars per pound. NONFAT DRY MILK - CENTRAL AND EAST CENTRAL: Low/medium heat nonfat dry milk (NDM) prices in the Central region decreased on the bottom of the range and both ends of the mostly price series. Low/medium heat NDM spot activity has picked up a bit, as Central region producers are matching or nearing declining market prices. Low/medium heat NDM drying is active due to condensed skim supplies nearing saturation points. Low/medium heat NDM inventories are available, and offers are abundant. The NDM market tone is unstable, and global oversupply reports have been no assistance to overall market sentiment. High heat NDM prices slipped on the bottom of the range. High heat NDM producers suggest inventories are available, although interest has been fairly light. Production of high heat NDM is slowing. EAST: Low/medium heat nonfat dry milk (NDM) prices, in the Eastern region, eased at the bottom of the range, while declining over the mostly pricing series. Low/medium heat NDM cash transaction are reasonably sluggish, as buying slows around the holiday. Production rates are steady, with substantial milk supplies streaming into NDM processing. Some plants are prepared to run full during the holiday period. Low/medium heat NDM inventories are robust. The weak NDM market tone in the East centers on the CME record price, growing domestic inventories, and slowing exports, as uncertainty strongly denotes the market. High heat NDM prices are lower at the bottom of the range, but steady at the top, on weak trading. High heat NDM production eased from the past week, as milk receipts increased, limiting drying convenience for some processors. F.O.B. CENTRAL/EAST: Includes EXTRA GRADE and GRADE A LOW/MEDIUM HEAT: MOSTLY: HIGH HEAT: CALIFORNIA MANUFACTURING PLANTS - NONFAT DRY MILK WEEK ENDING PRICE TOTAL SALES December 15 $ ,164,799 December 8 $ ,946,458 s are weighted averages for Extra Grade and Grade A Nonfat Dry Milk, f.o.b. California manufacturing plants. s for both periods were influenced by effects of long-term contract sales. Compiled by Dairy Marketing Branch, California Department of Food and Agriculture. DRY BUTTERMILK - CENTRAL AND EAST CENTRAL: s for Central dry buttermilk decreased on the top of the range. Dry buttermilk spot activity was light, and sellers continue to report that buttermilk is moving in condensed form more often than not, as dryer times are being diverted to nonfat dry milk production. Although condensed buttermilk continues to move, producers relay that buyers interests for dry buttermilk remain consistent. The dry buttermilk market tone is unsteady. Central region buyers continue to find discounted spots outside of the region, but contacts are vehement that regional processors will begin to meet demand needs in the near term. EAST: The cash price of dry buttermilk shifted lower to steady this pre-holiday week. Spot activity is insubstantial, typical for the level of trading leading up to the yearend holiday. Production is mixed. Ample supplies of condensed buttermilk are available from active churning, but measured volumes are clearing to drying as NDM commands dryer time. Still, stocks of dry buttermilk are adequate and building. The market undertone is steady, as sources suppose prices will wane more, in reflecting the present market rudiments. F.O.B. CENTRAL/EAST: NONFAT DRY MILK - WEST In the West, low/medium heat nonfat dry milk prices shifted lower on the range and at the bottom of the mostly price series. Plants' managers are expecting their intakes of condensed skim to be higher over the weekend and next week due to declining bottling orders. The market is currently slow. Contacts report that there are no incentives for buyers to purchase at the moment. Demand from Mexico is trending down as they are only buying as needed. Low/medium heat nonfat dry milk supplies are higher and above current demand. High heat nonfat dry milk prices are lower on a weak market. Throughout the holidays less drying time is being devoted to high heat nonfat dry milk production due to processors focusing on clearing their milk into low/medium heat nonfat dry milk. Therefore, supplies are very tight in some areas, but still enough to meet buyers' needs. Sales are steady. F.O.B. WEST: Includes EXTRA GRADE and GRADE A LOW/MEDIUM HEAT: MOSTLY: HIGH HEAT: DRY BUTTERMILK - WEST Western dry buttermilk prices remained steady on the range, but shifted lower at the bottom of the mostly price series. Previous support for the market moved down due to the butterfat and protein prices' decline over the previous days. The market undertone is quiet and is expected to remain the same next week. Dry buttermilk demand is light in view of the holiday. However, production is active as more milk is produced and cream clears to the churns. As the result, inventories are building up in most regions of the West. F.O.B. WEST: MOSTLY: DRY WHOLE MILK - NATIONAL F.O.B. spot prices for national dry whole milk are up conversely to recent downward pricing trends in some offshore auctions. The current national dry whole milk values are above the international prices of WMP, which could put some local sellers at a disadvantage when it comes to exporting. Nationwide, the demand for dry whole milk is fair, especially from chocolatiers. Drying schedules are less active as heavy condensed skim volumes continue clearing into NDM/SMP production. Thus, inventories of dry whole milk are less available throughout the country. F.O.B. PRODUCING PLANT:

10 -6- DAIRY MARKET NEWS, DECEMBER 18-22, 2017 VOLUME 84, REPORT 51 WHEY, WPC 34%, LACTOSE & CASEIN s represent carlot/trucklot quantities for domestic and export sales packaged in 25 kg. or 50 lb. bags, or totes, spray process, dollars per pound. DRY WHEY - CENTRAL Central whey spot prices decreased on the range and mostly price series. Spot activity was moderate to slightly up. Some whey buyers successfully executed their plan to wait out producers and have been buying more spots at favorable prices in the waning weeks of the year. Whey production continues on, as heavily discounted and abundant milk supplies flow into cheese vats. A large volume of whey was offered out in the Western region, and that has placed some pressure on whey prices across the nation. More pressure comes from the bearish higher protein concentration market, which continually has experienced downward price movements. In order to salvage some manufacturing costs, some producers have diverted production from higher protein blends to sweet whey, and this has added to the already growing accumulation of dry whey. That being said, the whey market tone is weak. Some contacts are concerned that if export markets do not pick up soon, then whey prices will see historic lows. F.O.B. CENTRAL: MOSTLY: F.O.B. CENTRAL: ANIMAL FEED MILK REPLACER: DRY WHEY - NORTHEAST This week s Northeastern dry whey prices slipped on both sides of the range. Market participants report working through regular contracts, but the overall market tone is weaker as many price indices have pushed the price down. Production is steady to strong. Dry whey supplies are fairly healthy as some traders and end users continue to purchase spot loads leading up to the holiday. F.O.B. NORTHEAST: EXTRA GRADE AND GRADE A: DRY WHEY - WEST Western whey prices moved lower in a weak market. Overall whey demand is light and most market participants are managing contractual obligations. With very little incentive to carry forward whey inventories, and whey stocks readily available, buyers are in no rush to make additional purchases. End users can find what they need fairly quickly in the spot market. Manufacturers say more milk has led to more cheese, which in turn, has led to more whey. Dry whey production is vacillating between moderate and heavy as processors try to find the right product to produce within the whey protein complex. NONHYGROSCOPIC: MOSTLY: WHEY PROTEIN CONCENTRATE 34% - CENTRAL AND WEST Whey protein concentrate 34% prices stepped lower at the bottom of both the range and mostly price series. Spot WPC34% prices continue to face headwinds from weaker prices of nonfat dry milk and other protein sources. Furthermore, burgeoning inventories of higher concentrations of whey protein are quashing the protein market. Industry contacts say demand is lackluster for WPC34% and most whey proteins in general. However, a few manufacturers find themselves in a comfortable position of meeting tight end user specifications and having a steady demand. WPC34% production is generally steady. Overall, industry stocks have increased. F.O.B. EXTRA GRADE 34% PROTEIN: MOSTLY: LACTOSE - CENTRAL AND WEST Lactose prices stepped a penny lower at the bottom of the range, but otherwise held steady. Industry contacts continue to describe profound price competition as manufacturers try to place lactose into some international markets. While a few processors report comfortable inventories, the global lactose industry tussles with heavy lactose supplies. Hefty lactose stocks, along with weakening whey prices, stultify processors efforts to rally current dairy carbohydrate, and therefore, lactose prices. Lactose production is active and along the same trajectory as cheese production. Including spot sales and up to 3 month contracts. F.O.B. EDIBLE, NON PHARMACEUTICAL MOSTLY: CASEIN - NATIONAL Rennet casein prices weakened at the lower end of the price range. Acid casein is steady. Rennet markets are spread between various producing areas, which has led to regional differences in stocks, production levels and buyer needs. While lower range pricing reflects general current realities, some buyers with pressing needs help maintain the upper end. Casein manufacturers are surprised and disappointed with current price weakness. Buyers are now extremely empowered in price discussions. Casein export activity this year has slowed from last year. January-October casein exports from the EU declined 4.8 percent compared with last year January-October. Casein exports from New Zealand this January-October are down 9.6 percent. results from this week s GDT event 202 were negative for rennet casein in each contract period. The all contracts price declined 6.3 percent. The January contract declined 6.9 percent. During the last four GDT events this year in November and December, rennet casein has been negative more than positive, with all contract price changes of -4.0 percent; percent; +3.4 percent; and -6.3 percent. SPOT SALES AND UP TO 3 MONTH CONTRACTS. PRICES ARE F.O.B., U.S. WAREHOUSE FOR EDIBLE NONRESTRICTED AND VARY ACCORDING TO MESH SIZE AND QUALITY. RENNET: ACID:

11 DAIRY MARKET NEWS, DECEMBER 18-22, VOLUME 84, REPORT 51 U.S. Dairy Cow Slaughter (1000 head) under Federal Inspection 2017 WEEKLY WEEKLY 2016 WEEK ENDING DAIRY COWS CUMULATIVE DAIRY COWS DAIRY COWS CUMULATIVE DAIRY COWS 12/02/ , ,702.1 WEBSITE: SOURCE: The slaughter data are gathered and tabulated in a cooperative effort by the Agricultural Marketing Service, The Food Safety and Inspection Service, and the National Agricultural Statistics Service, all of USDA. CLASS III MILK PRICES (3.5% Butterfat) YEAR JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC CLASS IV MILK PRCES (3.5% Butterfat) YEAR JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC FEDERAL MILK ORDER CLASS PRICES FOR 2017 (3.5% Butterfat) CLASS JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC I 1/ II III IV FEDERAL MILK ORDER CLASS PRICES FOR 2018 (3.5% Butterfat) CLASS JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC I 1/ / Specific order differentials to be added to this base price can be found by going to: then select s ; and then select Principal Pricing Points. $20.00 $19.00 Class I $19.00 $18.00 Class II $18.00 $17.00 $17.00 $16.00 $15.00 $14.00 $16.00 $15.00 $14.00 $13.00 $13.00 $12.00 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec $12.00 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec $19.00 $18.00 Class III $18.00 $17.00 Class IV $17.00 $16.00 $15.00 $14.00 $13.00 $12.00 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec $16.00 $15.00 $14.00 $13.00 $12.00 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

12 DAIRY MARKET NEWS, DECEMBER 18 22, VOLUME 84, REPORT 51 INTERNATIONAL DAIRY MARKET NEWS - EUROPE Information gathered December 11-22, 2017 s are U.S. $/MT, F.O.B. port. Information gathered for this report is from trades, offers to sell, and secondary data. This bi-weekly report may not always contain the same products and/or regions. Future reports may be included or withdrawn depending on availability of information. MT = metric ton = 2,204.6 pounds. WESTERN OVERVIEW: Seasonal milk production increases are now noted in some major milk producing countries in Western Europe. This references increases from the previous week as well as the same week a year ago. For example, early reporting by ZMB shows German milk production in early December was up 1.4 percent from the previous week and up 4.5 percent compared to one year earlier. In France, milk output was 3.5 percent ahead of year earlier. Milk production is expected to stay above year earlier levels into Increases are boosted by dairy producers using higher quality feed, as current pricing makes this possible. Results vary by country, as shown in the following graph showing January-October milk delivery in metric tons by EU country. Among the top five producing countries, two report increases; 2.9 percent for Italy and 0.7 percent for United Kingdom. Decreases for the ten months are reported for Germany, -1.2 percent; France, -1.5 percent; and Netherlands, -0.5 percent. The recent late year production increases mentioned above in Germany and France are expected to carry forward and persist into 2018, over time bringing production up from previous periods. Data from CLAL. Chart by USDA Dairy Market News BUTTER/BUTTEROIL: While Western Europe butter prices weakened to end the year, they remain above levels early in the year. Within Western Europe, among major butter producing countries, the highest prices are noted in Italy, followed by Germany and Netherlands. Retail butter sales within Western Europe are brisk, according to observers. Early last week a number of retail stores restocked. This week, however, demand has slowed because stores and businesses using butter seem well stocked. The peak of demand is now in the past. With less intense demand, buyers are more hard edged in negotiating purchases from manufacturers. More potential buyers are comfortable with a wait and see approach. Most first quarter contracting is complete. Discussions for second quarter contracts are underway. Weaker prices this week have led to more inquiries from export buyers. January-October 2017 butter production in the EU is 2.9 percent below January-October last year, according to CLAL. Among the top seven butter producing countries, only Ireland, Italy and Poland have January-October production above last year: 9.73 percent; 0.84 percent, and 3.45 percent respectively. The two largest butter producers, Germany and France, are down 5.64 percent and 6.60 percent. The UK is down percent and Netherlands is down percent. Butter production by country is shown in the graph which follows. Data from CLAL. Chart by USDA Dairy Market News 82% BUTTERFAT: 4,725-5,200 99% BUTTERFAT: 6,675-7,450 SKIM MILK POWDER (SMP): Western European skim milk powder prices have trended generally lower all of Thus, it comes as no great surprise that the year ends with lower prices, once again. Internal demand within the EU is slow for current needs as well as for early 2018 contracting. Greater activity has recently developed in export markets. Some export sales have recently closed and SMP has recently begun moving through transportation channels. Heightened discussions are occurring about deliveries in the early part of Notwithstanding this activity, the magnitude of intervention stocks hangs over markets as a damper on prices. In some cases, recent transactions have closed because sellers have been flexible with pricing to either move inventories, or chip away at production that would otherwise add to inventories. Pricing is expected to remain weak in the immediate future. January-October EU skim milk powder production is 0.4 percent above January-October 2016 SMP production according to CLAL. The two largest SMP production countries, Germany and France, both realized reductions in January-October 2017 SMP production compared to January-October 2016 production, -3.7 percent and percent respectively. SMP production by country is shown in the graph which follows. Data from CLAL. Chart by USDA Dairy Market News 1.25% BUTTERFAT: 1,575-1,700 CONTINUED ON PAGE 8A

13 DAIRY MARKET NEWS, DECEMBER 18 22, A- VOLUME 84, REPORT 51 INTERNATIONAL DAIRY MARKET NEWS - EUROPE Information gathered December 11-22, 2017 s are U.S. $/MT, F.O.B. port. Information gathered for this report is from trades, offers to sell, and secondary data. This bi-weekly report may not always contain the same products and/or regions. Future reports may be included or withdrawn depending on availability of information. MT = metric ton = 2,204.6 pounds. CONTINUED FROM PAGE 8 SWEET WHEY POWDER: Whey powder prices in Europe firmed slightly this week. Within Western Europe, prices tend to be uneven, higher in Germany but lower in Netherlands. During recent weeks, whey powder prices have narrowly fluctuated up and down. strength this week reflects slightly tighter supplies of whey for sale within Western Europe. Export sales continue to be price challenged by global pricing. NONHYGROSCOPIC: WHOLE MILK POWDER (WMP): European whole milk powder prices are lower, reaching the lowest level of the year. Markets are described as calm. Manufacturers are more focused on internal EU sales than export sales. Oceania WMP is a tough competitor and it is near the highest milk producing part of the season in Oceania, so manufacturers there are competing with vigor to move stocks. According to CLAL, January through October 2017 WMP production is 3.2 percent above 2016 production for the same time frame. Among the top four WMP producing countries, January-October production compared to year earlier in Netherlands was up percent and in France, up 3.32 percent. Production was lower in Germany, percent, and in Denmark percent. WMP production by country is shown in the graph which follows. Data from CLAL. Chart by USDA Dairy Market News 26% BUTTERFAT: 2,875-3,100 EASTERN OVERVIEW: Among the stronger gains recorded in October EU milk production were a number in Eastern European countries. Poland, the sixth largest EU milk producing country, recorded October 2017 milk production up 4.63 percent from October last year. Other Eastern European October milk production results include: Bulgaria, percent; Czech Republic, percent; Romania, percent; and Slovenia, percent.

14 DAIRY MARKET NEWS, DECEMBER 18-22, B- VOLUME 84, REPORT 51 INTERNATIONAL DAIRY MARKET NEWS - OCEANIA Information gathered December 11-22, 2017 s are U.S. $/MT, F.O.B. port. Information gathered for this report is from trades, offers to sell, and secondary data. This bi-weekly report may not always contain the same products and/or regions. Future reports may be included or withdrawn depending on availability of information. MT = metric ton = 2,204.6 pounds. AUSTRALIA: At this time of year in Australia demand for feed is low, as pastures are green and at their prime. Looking forward, concerns are increasing as to availability of quality hay later in Some producers have begun stocking now as a precaution. Recent patchy rains in Northern Australia have ended, leaving good conditions for hay. Good late spring weather in Southern Australia has left lower interest in hay and feed. Weather was a problem in recent years, but has been generally decent this year. Increasing optimism as to weather and pastures is growing. NEW ZEALAND: November 2017 New Zealand milk production was 3.0 million MT, up from November 2016 milk production, 2.8 million MT according to DCANZ. November 2017 milk solids, million kg, are up from November 2016, million kg. Stronger milk production compared with last year was announced just before this week s GDT event. The news may have contributed to some buyers feeling less imperative to secure GDT products. Many observers had looked for price strength in this week s GDT event, at least for WMP. Instead, the results were quite disappointing and mostly lower. Those familiar with New Zealand conditions, patterns and pastures, advise that November is often a good month for milk production but drought potential ahead as weather becomes hot could dial back final seasonal milk production results. A number of industry participants with that perspective were surprised at the weaker GDT results. At the December 19 GDT event #202, all contracts prices ranged from -2.3 percent lower to -7.9 percent lower from the prior event across categories. The all contracts price averages (US$ per MT) and percent changes from the previous averages are: anhydrous milk fat, $6,392, -6.7 percent; butter, $4,474, -2.3 percent; buttermilk powder, n.a.; cheddar cheese, $3,389, -7.9 percent; lactose, n.a.; rennet casein, $4,506, -6.3 percent; skim milk powder, $1,675, -4.8 percent; and whole milk powder, $2,755, -2.5 percent. BUTTER: Butter prices in Oceania continue the recent pattern of softening. Pressure from weaker EU prices is a factor. At GDT Event 202 on December 19, the butter all contracts price, $4,474, decreased 2.3 percent. The January contract, $4,495, decreased 3.3 percent. This outcome greatly surprised a number of people involved in the New Zealand dairy industry, who believed butter had already adjusted lower and would likely bounce up a bit. Many heads are being scratched as people seek some reconciliation between expectations and outcomes. Australian butter exports January-October, 2017, 13 kilotons, decreased 49.8 percent according to CLAL. Butter imports for the same period, 27 kilotons, increased 16.0 percent. New Zealand butter exports January-October, 2017, 342 kilotons, decreased 15.0 percent according to CLAL. CHEDDAR CHEESE: Cheddar cheese pr ices in Oceania weakened. Buyers feel there is a lot of cheese for sale globally. This week s news about higher milk production in New Zealand compared with last year led many possible buyers to step back to better assess options. This took a toll on prices. Australian cheese exports January-October, 2017, 136 kilotons, increased 2.2 percent according to CLAL. Cheese imports for the same period, 96 kilotons, increased 20.7 percent. New Zealand cheese exports January-November, 2017, 306 kilotons, decreased 3.8 percent according to CLAL. Cheese imports for the same period, 10.0 kilotons, increased 7.5 percent. At GDT Event 202 on December 19, the cheddar all contracts price, $3,389, decreased 7.9 percent. The January contract, $3,435, decreased 6.8 percent. 39% MAXIMUM MOISTURE: 3,325-3,525 WHOLE MILK POWDER (WMP): Whole milk powder prices are lower in Oceania, to the surprise of a number of observers. At GDT Event 202 on December 19, the WMP all contracts price, $2,755, decreased 2.5 percent. The January contract, $2,719, decreased 3.3 percent. Many observers were disappointed with the unexpected price weakness. Pre event comments often expected some WMP strength, generally attributed to concerns with drought potential in New Zealand reducing milk production, then reducing WMP production, finally resulting in price strength. Post event analysis focused on many buyers being decently stocked, not feeling pressure to buy, and not as sure that production will decline as much as some had thought. Australian WMP exports January-October, 2017, 44 kilotons, decreased 21.8 percent according to CLAL. WMP imports for the same period, 22 kilotons, increased 70.l percent. New Zealand WMP exports January-October, 2017, 1,006 kilotons, decreased 0.3 percent according to CLAL. 26% BUTTERFAT: 2,700-2,800 82% BUTTERFAT: 4,450-4,975 SKIM MILK POWDER (SMP): SMP prices in Oceania are slightly lower. The continuing concern over EU SMP stocks is driving prices down. As it happened, the weakness manifested was greater than expected. At GDT Event 202 on December 19, the SMP all contracts price, $1,675, decreased 4.8 percent. The January contract, $1,670, decreased 4.0 percent. The price weakness was not surprising to many observers. What did surprise some, was the magnitude of the price decline. Australian SMP exports January-October, 2017, 130 kilotons, decreased 0.1 percent according to CLAL. SMP imports for the same period, 7 kilotons, increased 32.2 percent. New Zealand SMP exports January-November, 2017, 346 kilotons, decreased 12.6 percent according to CLAL. 1.25% BUTTERFAT: 1,650-1,775

15 DAIRY MARKET NEWS, DECEMBER 18 22, C- VOLUME 84, REPORT 51 INTERNATIONAL DAIRY MARKET NEWS - SOUTH AMERICA Information gathered December 11-22, 2017 s are U.S. $/MT, F.O.B. port. Information gathered for this report is from trades, offers to sell, and secondary data. This bi-weekly report may not always contain the same products and/or regions. Future reports may be included or withdrawn depending on availability of information. MT = metric ton = 2,204.6 pounds. SOUTH AMERICA OVERVIEW: It seems that the climate phenomenon known as La Niña is starting to take a toll in some dairy basins and crop zones across South America, according to several industrial collaborators. For example, in Argentina and Uruguay, the unusual heat and dryness are delaying the development of corn and soybeans. Furthermore, in these two countries, daytime temperatures are above normal, increasing heat stress on cows, and therefore decreasing milk production in several dairy operations. In general, milk/ cream intakes in Argentina and Uruguay are sufficient to cover most processing needs. However, milk components continue falling, which is limiting cream availability for a few manufacturing products such as butter and frozen desserts. With most schools closed during the summer break, bottled/uht milk sales are down. Cheese and butter holiday orders from retailers and some food service channels have been shipped and delivered. As reported by the government, in November 2017, Argentina milk production dropped 0.4 percent from the previous month and decreased 1 percent from a year ago. During November 2017, nominal prices paid to producers increased 27 percent from November The following graph shows the monthly variation of the national milk production in Argentina. In Brazil, during the past two weeks, beneficial rain showers improved soybean/cotton conditions in some farming areas, but warmth and dryness dominated much of the southern states. Nevertheless, the variable climate in Brazil has not been an obstacle for milk production to continue increasing. In fact, the current farm milk supply is above previous year levels and is adequate to cover the main dairy product manufacturing needs such as Mozzarella cheese, UHT milk, and dairy powders. Brazil is depending less on dairy imports from nearby countries as milk/cream supplies are abundant in the domestic market. According to the Brazilian Institute of Geography and Statistics (IBGE), during Q3, 2017, Brazilian milk production totaled 6.16 billion liters, 5.2% higher compared to the same quarter of In accumulated terms, from January to September 2017, milk output was 17.9 billion liters, up 5.6% from the same period of SKIM MILK POWDER (SMP): During the past two weeks, in the Southern Cone region, f.o.b. export prices for skim milk powder (SMP) shifted down, in line with downward pricing trends in GDT results for all SMP contracts. Condensed skim volumes are becoming more available. Therefore, SMP production is more active while inventories are steady to building. At the GDT Event 202 on December 19, skim milk powder (SMP) prices across all contract periods averaged $1,675 per metric ton, down 4.8 percent from the last event. According to the Brazilian government, SMP imports from January to November 2017 totaled 28.6 million tons, down 13 percent from the same period in From this total, imports from Argentina, Uruguay, and the United States represented 44, 37, and 12 percent, respectively. 1.25% BUTTERFAT: 2,500-2,600 WHOLE MILK POWDER (WMP): Whole milk powder (WMP) f.o.b. export prices in the Southern Cone of South America are mixed on a broader range. At this point, Brazil is actively processing WMP for a strong domestic demand. This situation is putting pressure on imported WMP values coming to the Brazilian market principally from Uruguay and Argentina. However, some Brazilian food processors continue paying a premium for imported WMP, as supplies are tight in some regions of the country. This premium is reflected on the top of the pricing range. On the other end, moderate transactions from Mercosur to Algeria and Russia remain active with a fair/good demand. In general, WMP output is ongoing across the region. Inventories are mixed in Brazil, but in balance throughout the rest of the Southern Cone region. At the GDT Event 202 on December 19, whole milk powder (WMP) prices across all contract periods averaged $2,755 per metric ton, down 2.5 percent from the last event. According to the Brazilian government, WMP imports from January to November 2017 totaled 68.8 million tons, down 41 percent from the same period in From this total, imports from Uruguay, Argentina, and Chile represented 58, 37, and 4 percent. 26% BUTTERFAT: 2,825-3,425

16 DAIRY MARKET NEWS, DECEMBER 18-22, D- VOLUME 84, REPORT 51 INTERNATIONAL DAIRY MARKET NEWS Global/Dairy Trading (gdt) Event 202 Recap - December 19, 2017 US$/MT Contract 1 Contract 2 Contract 3 Contract 4 Contract 5 Contract 6 All Contracts Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Anhydrous Milk Fat $6, % $6, % $6, % $6, % $6, % n.a. $6, % Butter $4, % $4, % $4, % $4, % $4, % n.a. $4, % Buttermilk Powder n.a. n.a. n.a. n.a. n.a. n.a. n.a. Cheddar $3, % $3, % $3, % $3, % $3, % n.a. $3, % Lactose n.a. n.a n.a n.a. n.a. n.a. n.a Rennet Casein $4, % $4, % $4, % $4, % $4, % n.a. $4, % Skim Milk Powder $1, % $1, % $1, % $1, % $1, % n.a. $1, % Whole Milk Powder $2, % $2, % $2, % $2, % $2, % n.a. $2, % Average price US$/MT and % change in indices from previous event. Global/Dairy Trading (gdt) Event 202 Recap - December 19, 2017 US$/Pound Contract 1 Contract 2 Contract 3 Contract 4 Contract 5 Contract 6 All Contracts Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Anhydrous Milk Fat $ % $ % $ % $ % $ % n.a. $ % Butter $ % $ % $ % $ % $ % n.a. $ % Buttermilk Powder n.a. n.a. n.a. n.a. n.a. n.a. n.a. Cheddar $ % $ % $ % $ % $ % n.a. $ % Lactose n.a. n.a n.a n.a. n.a. n.a. n.a Rennet Casein $ % $ % $ % $ % $ % n.a. $ % Skim Milk Powder $ % $ % $ % $ % $ % n.a. $ % Whole Milk Powder $ % $ % $ % $ % $ % n.a. $ % Average price US$/pound and % change from previous event.

17 DAIRY MARKET NEWS, DECEMBER 18-22, VOLUME 84, REPORT 51 CME GROUP, INC FUTURES Selected settling prices Month 12/08 12/11 12/12 12/13 12/14 12/15 12/18 12/19 12/20 12/21 III MILK FUTURES (Pit-Traded) ($/cwt) DEC JAN FEB MAR APR MAY JUN JUL AUG SEP CLASS IV MILK FUTURES (Pit-Traded) ($/cwt) DEC JAN FEB MAR CASH SETTLED BUTTER FUTURES (Electronic-Traded) ( /lb) DEC JAN FEB MAR NONFAT DRY MILK FUTURES (Pit-Traded) ( /lb) DEC JAN FEB MAR WHEY (Electronic-Traded) ( /lb) DEC JAN FEB MAR CHEESE CSC (Electronic-Traded) ($/lb) DEC JAN FEB MAR APR Source:

18 DAIRY MARKET NEWS, DECEMBER 18-22, VOLUME 84, REPORT OFFICIAL MONTHLY AVERAGES RELEASE TIMES MONTH RELEASE DAY FOR DOMESTIC* RELEASE DAY FOR INTERNATIONAL** JANUARY FRIDAY, FEBRUARY 2, 2018 FRIDAY, FEBRUARY 2, 2018 FEBRUARY FRIDAY, MARCH 2 FRIDAY, MARCH 2 MARCH MONDAY, APRIL 2 MONDAY, APRIL 2 APRIL FRIDAY, MAY 4 THURSDAY, MAY 10 ** MAY FRIDAY, JUNE 1 THURSDAY, JUNE 7 ** JUNE MONDAY, JULY 2 THURSDAY, JULY 5 ** JULY FRIDAY, AUGUST 3 FRIDAY, AUGUST 3 AUGUST TUESDAY, SEPTEMBER 4 TUESDAY, SEPTEMBER 4 SEPTEMBER MONDAY, OCTOBER 1 MONDAY, OCTOBER 1 OCTOBER FRIDAY, NOVEMBER 2 THURSDAY, NOVEMBER 8** NOVEMBER MONDAY, DECEMBER 3 THURSDAY, DECEMBER 6 ** DECEMBER FRIDAY, JANUARY 4, 2019 FRIDAY, JANUARY 4, 2019 *Release time: 9:00 am Central time ** Release time: 12:00 pm Central time

19 DAIRY MARKET NEWS, DECEMBER 18-22, VOLUME 84, REPORT 51 November Milk Production Milk production in the 23 major States during November totaled 16.2 billion pounds, up 1.1 percent from November October revised production, at 16.7 billion pounds, was up 1.3 percent from October The October revision represented a decrease of 27 million pounds or 0.2 percent from last month's preliminary production estimate. Production per cow in the 23 major States averaged 1,861 pounds for November, 9 pounds above November This is the highest production per cow for the month of November since the 23 State series began in The number of milk cows on farms in the 23 major States was 8.73 million head, 57,000 head more than November 2016, but unchanged from October November 2017 Milk Cows and Milk Production, by States Milk Cows 1 Milk per Cow 2 Milk Production 2 State Change from (thousands) (pounds) (million pounds) (percent) AZ ,900 1, CA 1,757 1,743 1,830 1,825 3,215 3, CO ,130 2, FL ,595 1, ID ,970 1,955 1,180 1, IL ,610 1, IN ,815 1, IA ,905 1, KS ,890 1, MI ,085 2, MN ,690 1, NM ,980 1, NY ,925 1,905 1,194 1, OH ,670 1, OR ,615 1, PA ,640 1, SD ,820 1, TX ,875 1, UT ,875 1, VT ,700 1, VA ,535 1, WA ,915 1, WI 1,278 1,277 1,895 1,915 2,422 2, State Total 8,675 8,732 1,852 1,861 16,066 16, Includes dry cows. Excludes heifers not yet fresh. 2 Excludes milk sucked by calves. Source: U.S. Department of Agriculture. National Agricultural Statistics Service. Agricultural Statistics Board. Milk Production, (December 2017).

20 DAIRY MARKET NEWS, DECEMBER 18-22, VOLUME 84 REPORT 51 FEDERAL MILK ORDER MARKETING AND UTILIZATION SUMMARY, NOVEMBER 2017 Highlights. Handler reports of receipts and utilization under the Federal milk order system for November 2017 have been filed and tabulated. Combined totals for the 10 consolidated orders are being released. During November, billion pounds of milk were received from Federally pooled producers. This volume of milk is 6.0 pecent higher than the November 2016 volume. Regulated handlers pooled billion pounds of producer milk as Class I products, up 0.1 percent when compared to the previous year. Class I utilization increased from last year in 3 of the 10 Federal Milk Order Marketing areas. The all-market average Class utilization percentages were: Class I = 37%, Class II = 15%, Class III = 32%, and Class IV = 17%. The weighted average statistical uniform price was $16.85 per cwt, down $0.21 from last month but up $0.71 from last year. and Pool Statistics for Federal Milk Order Marketing Areas for the Month of November 2017 Federal Milk Order Marketing Area 1 Order Number Receipts of Producer Milk Total Change from Prev. Year Utilization of Producer Milk in Class I Total Change from Prev. Year Class I Utilization of Producer Milk in All Classes 3 Class II Class III Class IV Uniform 2 (million lbs) (percent) (million lbs) (percent) (percent) 3 ($ per cwt) Northeast (Boston) 001 2, Appalachian (Charlotte) Florida (Tampa) Southeast (Atlanta) Upper Midwest (Chicago) 030 2, Central (Kansas City) 032 1, Mideast (Cleveland) 033 1, Pacific Northwest (Seattle) Southwest (Dallas) Arizona (Phoenix) ALL MARKET AVERAGE OR TOTAL 3 9, , Names in parentheses are the major city in the principal pricing point of the market. 2 Statistical uniform price for component pricing orders (Class III price plus producer price differential). For other orders, uniform skim milk price times plus uniform butterfat price times Totals may not add to 100 percent due to rounding. Report Contact: Randal Stoker, randal.stoker@usda.gov or

21 DAIRY MARKET NEWS, DECEMBER 18-22, VOLUME 84, REPORT 51 Federal Milk Order Advance Class s, January 2018 Base Class I : Under the Federal milk order pricing system, the base Class I price for January 2018 is $15.44 per cwt. This price is derived from th advanced Class III skim milk pricing factor of $6.98 and the advanced butterfat pricing factor of $ A Class I differential for each order's principle pricing point (county) is added to the base price to determine the Class I Comparison to Previous Month: The base Class I price decreased $1.44 per cwt when compared to the previous month of December For selected consumer products, the price changes are: whole milk (3.25% milk fat), $0.51 per cwt, $0.044 per gallon; reduced fat milk (2%), $0.23 per cwt, $0.020 per gallon; fat-free (skim milk), -$0.12 per cwt, -$0.010 per gallon Class II Information: The advanced Class IV skim milk pricing factor is $5.00. Thus, the Class II skim milk price for January 2018 is $5.70 per cwt, and the Class II nonfat solids price is $ Product Averages: whey $ The two-week product price averages for January 2018 are: butter $2.2256, nonfat dry milk $0.7290, cheese $ and dry Federal Milk Order Class I Information 1 2 Jan 2018 Federal Milk Order Marketing Area 3 Order Number Class I Class I Class I Skim Milk Butterfat (3.5%) (dollars per cwt) (dollars per cwt) (dollars per pound) Northeast (Boston) Appalachian (Charlotte) Florida (Tampa) Southeast (Atlanta) Upper Midwest (Chicago) Central (Kansas City) Mideast (Cleveland) Pacific Northwest (Seattle) Southwest (Dallas) Arizona (Phoenix) All-Market Average To convert the Class I price per 100 pounds to the Class I price per gallon, divide by the approximate number of gallons in 100 pounds of milk. 2 Note: The mandatory $0.20 per cwt processor assessment under the Fluid Milk Promotion Order is not included in the Class I prices shown on this table. 3 Names in parentheses are the major city in the principal pricing point of the markets. 4 Class I prices at other cities are: New York City, minus $0.10; Philadelphia, minus $0.20; Baltimore, minus $0.25, and Washington, DC, minus $ Class I prices at other cities are: Knoxville, minus $0.20 and Louisville, minus $ Class I prices at other cities are: Orlando, same; Miami, plus $0.60; and Jacksonville, minus $ Class I prices at other cities are: New Orleans, same; Memphis, minus $0.90; Nashville, minus $0.90; and Springfield, MO, minus $ Class I prices at other cities are: Milwaukee, minus $0.05; and Minneapolis, minus $ Class I prices at other cities are: Des Moines, minus $0.20; Omaha, minus $0.15; Oklahoma City, plus $0.60; St. Louis, same; and Denver, plus $ Class I prices at other cities are: Indianapolis, same; Cincinnati, plus $0.20; Pittsburgh, plus $0.10; and Detroit, minus $ Class I prices at other cities are: Portland, same; and Spokane, same. 12 Class I prices at other cities are: Houston, plus $0.60; San Antonio, plus $0.45; Albuquerque, minus $0.65; and El Paso, minus $0.75. Report Contact: Randal Stoker, randal.stoker@usda.gov or

22 DAIRY MARKET NEWS, DECEMBER 18-22, G1- VOLUME 84, REPORT 51 MILLION HEAD 8.75 Milk Cow Numbers - 23 Selected States Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec DATA SOURCE, USDA, NASS; GRAPH, USDA, AMS, DMN BILLION POUNDS 18.0 Milk Production - 23 Selected States Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec DATA SOURCE, USDA, NASS; GRAPH, USDA, AMS, DMN NOTE FEB DATA FOR 2016 ADJUSTED TO 28 DAY EQUIVALENT

23 DAIRY MARKET NEWS, DECEMBER 18-22, G2- VOLUME 84, REPORT 51 1,000 MT 3,200 3,000 2,800 2,600 2,400 2,200 2,000 1,800 1,600 1,400 1,200 1, Monthly New Zealand Milk Production Jan Feb Mar Apr May Jun July Aug Sept Oct Nov Dec DATA SOURCE, DCANZ; GRAPH, USDA, AMS, DMN MILLION LITERS Monthly Austrailian Milk Production July Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun DATA SOURCE, DAIRY AUSTRALIA LTD.; GRAPH, USDA, AMS, DMN

24 DAIRY MARKET NEWS, DECEMBER 18-22, G3- VOLUME 84, REPORT 51 MILLION LITERS Monthly Brazil Milk Production Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec DATA SOURCE,IBGE; GRAPH, USDA, AMS, DMN MILLION LITERS Monthly EU-28 Milk Production Jan Feb Mar Abr May Jun Jul Ago Sep Oct Nov Dec DATA SOURCE, EUROSTAT.; GRAPH, USDA, AMS, DMN

25 Dairy Market News Branch Agricultural Marketing Service National Retail Report-Dairy Websites: and Volume 84- Number 51 Issued Weekly Friday, December 22, 2017 Advertised s for Dairy Products at Major Retail Supermarket Outlets ending during the period of 12/22/2017 to 12/28/2017 Total conventional dairy retail advertisements increased 4 percent, total organic dairy ads declined by 19 percent. Conventional cream cheese, a holiday favorite, 8 ounce packaging, was the most advertised dairy item, up 45 percent this week. In addition, conventional eggnog is seeing cuts in ad volumes for quart and half-gallons, 31 percent and 9 percent, respectively. The weighted average price for conventional half gallon milk is $2.40. The weighted average price for organic half gallon milk is $4.10, resulting in an organic price premium of $1.70. Ad numbers for organic milk decreased 1 percent and conventional milk ad numbers decreased 45 percent from last week. The weighted average advertised price for organic butter is $5.11 compared with $3.21 for conventional, shows an organic price premium of $1.90. The average price for conventional retail 4-6 ounce yogurt is $.62, while no organic 4-6 ounce yogurt ads were recorded. The average sale price for conventional 4-6 ounce Greek yogurt is $1.00, with no ads for organic 4-6 ounce Greek yogurt recorded. The yogurt market notes total conventional yogurt ad numbers declining 18 percent, and total organic yogurt ad numbers decreasing 38 percent. Top 5 Commodities Featured This Week 30K 12/22/ /15/ /08/ K with Ads 20K 15K 10K 5K 0K Cheese Cream cheese Yogurt Ice cream Butter 1 -- Dairy Market News surveys nearly 150 retailers, comprising over 23,000 individual stores, with online weekly advertised features.

26 National Retail Report - Dairy Vol 84 - No. 51 Friday, December 22, Page 2 Percentage of Total Conventional Ads by Commodity Yogurt, 12% Butter, 12% Sour cream, 11% Milk, 1% Cheese, 24% Ice cream, 12% Flavored milk, 1% Egg nog, 3% Cream cheese, 13% Cottage cheese, 4% Percentage of Total Organic Ads by Commodity Yogurt, 14% Butter, 9% Cream cheese, 9% Sour cream, 9% Ice cream, 5% Milk, 54% - Simple weighted average

27 National Retail Report - Dairy Vol 84 - No. 51 Friday, December 22, Page 3 NATIONAL -- CONVENTIONAL DAIRY PRODUCTS THIS PERIOD LAST WEEK LAST YEAR Commodity Type Pack Size With Ads With Ads With Ads Butter 1 # Cheese Natural Varieties 8 oz block Cheese Natural Varieties 1 # block Cheese Natural Varieties 2 # block Cheese Natural Varieties 8 oz shred Cheese Natural Varieties 1 # shred Cottage cheese 16 oz Cream cheese 8 oz Egg nog quart Egg nog half gallon Flavored milk All fat tests half gallon Flavored milk All fat tests gallon Ice cream 48-64oz Milk All fat tests half gallon Milk All fat tests gallon Sour cream 16 oz Yogurt Greek 4-6 oz Yogurt Greek 32 oz Yogurt Yogurt 4-6 oz Yogurt Yogurt 32 oz REGIONAL -- CONVENTIONAL DAIRY PRODUCTS NORTHEAST U.S. SOUTHEAST U.S. MIDWEST U.S. Commodity Type Pack Size with Ads Wtd Avg with Ads Wtd Avg with Ads Butter 1 # Cheese Natural Varieties 8 oz block Cheese Natural Varieties 1 # block Cheese Natural Varieties 2 # block Cheese Natural Varieties 8 oz shred Cottage cheese 16 oz Cream cheese 8 oz Egg nog quart Egg nog half gallon Flavored milk All fat tests half gallon Ice cream 48-64oz Milk All fat tests half gallon Milk All fat tests gallon Sour cream 16 oz Yogurt Greek 4-6 oz Simple weighted average

28 National Retail Report - Dairy Vol 84 - No. 51 Friday, December 22, Page 4 NORTHEAST U.S. SOUTHEAST U.S. MIDWEST U.S. Commodity Type Pack Size with Ads Wtd Avg with Ads Wtd Avg with Ads Yogurt Greek 32 oz Yogurt Yogurt 4-6 oz Yogurt Yogurt 32 oz SOUTH CENTRAL U.S. SOUTHWEST U.S. NORTHWEST U.S. Commodity Type Pack Size with Ads with Ads Wtd Avg with Ads Butter 1 # Cheese Natural Varieties 8 oz block Cheese Natural Varieties 1 # block Cheese Natural Varieties 2 # block Cheese Natural Varieties 8 oz shred Cheese Natural Varieties 1 # shred Cottage cheese 16 oz Cream cheese 8 oz Egg nog quart Egg nog half gallon Flavored milk All fat tests half gallon Flavored milk All fat tests gallon Ice cream 48-64oz Milk All fat tests half gallon Milk All fat tests gallon Sour cream 16 oz Yogurt Greek 4-6 oz Yogurt Greek 32 oz Yogurt Yogurt 4-6 oz Yogurt Yogurt 32 oz ALASKA U.S. HAWAII U.S. Commodity Type Pack Size with Ads with Ads Wtd Avg Butter 1 # Cheese Natural Varieties 8 oz block Cheese Natural Varieties 1 # block Cheese Natural Varieties 8 oz shred Cottage cheese 16 oz Cream cheese 8 oz Egg nog half gallon Flavored milk All fat tests half gallon Ice cream 48-64oz Sour cream 16 oz Yogurt Greek 4-6 oz Simple weighted average

29 National Retail Report - Dairy Vol 84 - No. 51 Friday, December 22, Page 5 ALASKA U.S. HAWAII U.S. Commodity Type Pack Size with Ads with Ads Wtd Avg Yogurt Greek 32 oz Yogurt Yogurt 32 oz NATIONAL -- ORGANIC DAIRY PRODUCTS THIS PERIOD LAST WEEK LAST YEAR Commodity Type Pack Size With Ads With Ads With Ads Butter 1 # Cheese Natural Varieties 8 oz block Cheese Natural Varieties 1 # block Cheese Natural Varieties 8 oz shred Cottage cheese 16 oz Cream cheese 8 oz Ice cream 48-64oz Milk All fat tests half gallon Milk All fat tests gallon Milk All fat tests 8 oz UHT Sour cream 16 oz Yogurt Yogurt 4-6 oz Yogurt Yogurt 32 oz REGIONAL -- ORGANIC DAIRY PRODUCTS NORTHEAST U.S. SOUTHEAST U.S. MIDWEST U.S. Commodity Type Pack Size with Ads Wtd Avg with Ads Wtd Avg with Ads Milk All fat tests half gallon Yogurt Yogurt 32 oz Simple weighted average

30 National Retail Report - Dairy Vol 84 - No. 51 Friday, December 22, Page 6 SOUTH CENTRAL U.S. SOUTHWEST U.S. NORTHWEST U.S. Commodity Type Pack Size with Ads with Ads Wtd Avg with Ads Butter 1 # Cream cheese 8 oz Ice cream 48-64oz Milk All fat tests half gallon Milk All fat tests gallon Sour cream 16 oz ALASKA U.S. HAWAII U.S. Commodity Type Pack Size with Ads with Ads Wtd Avg Cream cheese 8 oz Sour cream 16 oz As used in this report, regions include the following states: REGIONAL DEFINITIONS NORTHEAST U.S. SOUTHEAST U.S. MIDWEST U.S. SOUTH CENTRAL U.S. SOUTHWEST U.S. NORTHWEST U.S. ALASKA HAWAII NATIONAL Connecticut, Delaware, Massachusetts, Maryland, Maine, New Hampshire, New jersey, New York, Pennsylvania, Rhode Island and Vermont Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina, Tennessee, Virginia and West Virginia Iowa, Illinois, Indiana, Kentucky, Michigan, Minnesota, North Dakota, Nebraska, Ohio, South Dakota and Wisconsin Arkansas, Colorado, Kansas, Louisiana, Missouri, New Mexico, Oklahoma, and Texas Arizona, California, Nevada and Utah Idaho, Montana, Oregon, Washington, and Wyoming Alaska Hawaii Continental United States - Simple weighted average

31 Dairy Market News United States Department of Agriculture Agricultural Marketing Service Dairy Programs Market Information Branch Volume 84, Report 51 December 22, 2017 GENERAL NUMBER (608) Elizabeth Frederick (608) INTERNS Al Yang (608) Jennifer Hernandez (608) EAST/ ORGANIC Daniel Johnson (608) EAST Jessica Mueller (608) CENTRAL Israel Weber (608) SOUTHWEST/SOUTH AMERICA AJ (Angel José) Terán (608) SOUTHWEST Florence Kone-Gonzalez (608) NORTHWEST/MOUNTAIN Mike Bandli (608) ORGANIC/EUROPE & OCEANIA Eric Graf (608) NATIONAL SUPERVISOR Janet Linder (608) BRANCH CHIEF Butch Speth (608) INTERNET ADDRESS MARKET NEWS PORTAL RECORDED INFORMATION SYSTEM (608) FAX (608) USDA, Dairy Market News 4600 American Parkway, STE 106 Madison, WI USDA is an equal opportunity provider and employer