DAIRY MARKET NEWS WEEK OF FEBRUARY 11-15, 2019

Transcription

1 DAIRY MARKET NEWS WEEK OF FEBRUARY 11-15, 2019 VOLUME 86, REPORT 7 DAIRY MARKET NEWS AT A GLANCE CME GROUP CASH MARKETS (2/15) BUTTER: Grade AA closed at $ The weekly average for Grade AA is $ (-.0325). CHEESE: Barrels closed at $ and 40# blocks at $ The weekly average for barrels is $ (+.0985) and blocks, $ (+.0865). NONFAT DRY MILK: Grade A closed at $ The weekly average for Grade A is $.9925 (+.0015). DRY WHEY: Extra grade dry whey closed at $ The weekly average for dry whey is $ (-.0270). BUTTER HIGHLIGHTS: Throughout the country, cream is readily available for butter churning, and butter producers are capitalizing on lower cream premiums. In this way, butter production remains ongoing in each region of the nation, while inventories continue growing into cold storage for near future usage. In general, demand for print/bulk butter is fair to good. Bulk butter pricing varies among the regions: East, 5.0 cents to 8.0 cents over the market; Central, 5.0 cents to 7.0 cents above the market; West, 2.0 cents to 7.5 cents over the market, with various periods and averages used. CHEESE HIGHLIGHTS: Milk supplies continue to meet cheesemaking needs in all regions of the country. Fewer milk spot loads were reported by Midwestern cheese producers, those prices range from $1 to $2 under Class. Cheese demand is in an ebb and flow position with recently increasing market prices. Western contacts suggest Q4 cheese consumption bettered expectations. However, some suggest demand is not meeting current expectations, and inventories are undoubtedly long. Midwestern producers relay they are slowing production to manage inventory levels. Some Eastern producers also report shaving down inventories. Cheese market tones have shown some improvements week over week. That said, some contacts relay that without some recent market data it has been difficult to grasp recent market conditions. FLUID MILK: Farm milk production is steady to increasing in most regions of the country. In the Midwest and Northeast, wintry conditions have caused some trucking/hauling delays, but milk yields continue to meet both bottling and production needs. In the the Pacific Northwest, approximately 1,600 cows died due to a blizzard. Nevertheless, milk outputs were reported as even in these regions. Elsewhere in the West, milk production remains strong. Class I sales are mixed throughout the nation: from slow in the Midwest, to a bit up in the East, and generally steady in most areas of the Western region. Nationwide, cream volumes are readily available for most manufacturing needs. Butter churners are taking on plentiful cream intakes, as ice cream production has yet to pick up steam. F.O.B. cream multiples are in the East, in the Midwest, and in the West. DRY PRODUCTS: Low/medium heat nonfat dry milk (NDM) price ranges narrowed in the Central/East, while decreasing in the West. points continue to hover at around $1 in the Central/East, while Western contacts suggest inventories are increasing and finding less market traction. The high heat NDM price remained steady in the Central/East, while the bottom of the price range slipped in the Western region. Dry buttermilk prices remained steady in all regions. Demand is fairly health in the Central and East regions, while buyers are hesitant in the West as loads are mostly moving to meet contract needs. The dry whole milk pricing range held steady and well above the current WMP international values. Dry whey prices are noticeably lower in the West and Central regions, while slightly shifting down in the East. Nationwide inventory levels are higher as export marketers are looking elsewhere for dried whey outlets. Whey protein concentrate (WPC) 34% cash values are unchanged. Some producers have shifted focus to higher protein concentrations due to their healthier market conditions. Lactose prices increased one penny on the bottom of the mostly, while holding steady elsewhere. There were more offers of lower-mesh count lactose, but contact suggest Q2 contract prices are expected to be slightly higher than those of Q1. Rennet and acid casein prices were steady to slightly lower. -CONTINUED ON PAGE 1A- Product Highlights/CME/DMN at a Glance 1 Weekly CME Cash Trading/Butter Markets/NDPSR 2 Cheese Markets 3 Fluid Milk and Cream 4 Nonfat Dry Milk/Dry Buttermilk/Dry Whole Milk 5 Dry Whey/WPC 34%/Lactose/Casein 6 TABLE OF CONTENTS U.S. Dairy Cow Slaughter / Class Milk s 7 International Dairy Market News 8 Dairy Futures 9 February Supply and Demand Estimates 10 December Milk Sales Market Summary and Utilization Report 13 Consumer Index and Average Retail s 14 Dairy Graphs G1 National Retail Report Dairy Dairy Market News Contacts

2 WEEK OF FENBRUARY 11-15, 2019 DAIRY MARKET NEWS VOLUME 86, REPORT 7 -CONTINUED FROM PAGE 1- DAIRY MARKET NEWS AT A GLANCE INTERNATIONAL DAIRY MARKET NEWS: EUROPE OVERVIEW: WESTERN: Semi hard cheese demand in Western Europe is strong and supplies are tight. Buying interest comes from inside the EU as well as export demand elsewhere. A number of potential buyers are disappointed to be turned away. Almost all current production is committed and has been sold in advance. Aging stocks have been drawn down to help meet demand. EASTERN: Ukraine has been striving to increase dairy production and dairy exports. These efforts have achieved positive results for some products. There are dairy plant expansions underway in Ukraine to manufacture some of the exported milk and cream into dairy products with greater profit returns. The EU-Singapore free trade agreement was ratified by the European Parliament this week. EU dairy products already enter Singapore duty free. OCEANIA OVERVIEW: AUSTRALIA: Temperatures in some areas still exceed 100 degrees Fahrenheit. The extreme temperatures noted two weeks ago are less intense. Hotter current temperatures tend to be in Eastern Australia. Perth has reached the low 90s, while Melbourne is better, in the 60s. NEW ZEALAND: A mild summer continues to benefit the dairy industry in New Zealand. New Zealand has generally not experienced temperatures above the mid-80s. The North Island and some of the South Island received about one half inch of rain. The rest of the South Island received intense showers leaving several inches of water. SOUTH AMERICA OVERVIEW: In Argentina/Uruguay, the sunny weather favored development of corn and soybean crops and helped to minimize muddy/flood conditions in several dairy farms. Meanwhile, showers intensified over central Brazil, while dryness persisted in the southern region of the country. In general, farm milk production in Brazil and all the Southern Cone region is seasonally trending down due to higher summer temperatures, which continue raising heat stress on dairy herds. NATIONAL RETAIL REPORT (DMN): Total conventional dairy advertisements decreased by 9 percent, and total organic dairy advertisements decreased by 17 percent. Compared to the previous week, the number of ads for conventional half gallon milk increased 33 percent, while for organic decreased 25 percent. Total conventional cheese advertisements decreased 2 percent, while organic cheese ads increased 13 percent compared to last week. The weighted average price of conventional 8 ounce block cheese is $2.17, and $4.99 for organic, representing an organic premium of $2.82. The U.S. average conventional one pound butter price is $3.75, up 17 cents from a week ago. The U.S. average organic one pound butter price is $5.29, up 11 cents from a week ago. FEBRUARY SUPPLY AND DEMAND ESTIMATES (USDA): Milk production for 2018 is lowered on available data through December. The milk production forecast for 2019 is reduced on lower expected first-half dairy cow numbers and continued slow growth in milk per cow. The 2018 and 2019 fat basis import forecasts are reduced from December on recent trade data and lower expected cheese and butterfat imports. The fat basis exports are unchanged for 2018 but the forecast is raised for 2019 primarily on strong expected demand for butter and butterfat products. On a skim-solids basis, the 2018 imports are raised on current trade data while the 2019 import forecast is unchanged. Skim-solids basis exports for 2018 are lowered, but the 2019 export forecast is raised from December on anticipated strong demand for nonfat dry milk (NDM). Dairy product prices for 2018 are adjusted to reflect available December price data. For 2019, the cheese price forecast is lowered while butter, NDM, and whey price forecasts are raised from December. The Class III price for 2019 is unchanged from December while the Class IV price is raised on higher butter and NDM prices. The 2019 all milk price forecast is raised to $16.90 to $17.60 per cwt. DECEMBER MILK SALES (USDA, FMMO, AND CDFS): During December 4.0 billion pounds of packaged fluid milk products were shipped by milk handlers in December This was 2.1 percent lower than a year earlier. Estimated sales of total conventional fluid milk products decreased 2.4 percent from December 2017 and estimated sales of total organic fluid milk products increased 2.0 percent from a year earlier. DECEMBER MARKET AND UTILIZATION SUMMARY (USDA): During 2018, billion pounds of milk were received from Federally pooled producers. This volume of milk is 4.6 percent higher than the 2017 pooled volume. Regulated handlers pooled 41.0 billion pounds of producer milk as Class I products, up 0.8 percent when compared to the previous year. The Class I utilization increase over last year is primarily due to the addition of the California Federal Order which became effective November 1, Class I utilization decreased in 9 of the 10 Federal Milk Order Marketing areas prior to the addition of the California Order and increased in the Southwest Federal Milk Order Marketing area. The allmarket average Class utilization percentages were: Class I = 29%, Class II = 13%, Class III = 43%, and Class IV = 15%. The weighted average statistical uniform price for 2018 was $15.51 per cwt, $1.45 lower than 2017's $ JANUARY CONSUMER PRICE INDEX (BLS): The Consumer Index (CPI) for the all food category is 256.4, up 1.6 percent from The dairy products index is 217.1, down 0.4 percent from a year ago. The following are the January 2018 to January 2019 changes for the selected products: fresh whole milk is -0.5 percent; cheese, -2.1 percent; and butter, +0.7 percent. -1A-

3 DAIRY MARKET NEWS, FEBRUARY 11-15, VOLUME 86, REPORT 7 COMMODITY MONDAY FEB 11 TUESDAY FEB 12 WEDNESDAY FEB 13 THURSDAY FEB 14 FRIDAY FEB 15 :: WEEKLY CHANGE :: WEEKLY AVERAGE CHEESE BARRELS $ ( ) $ ( ) $ ( ) $ (N.C.) $ (N.C.) :: :: ( ) :: :: $ ( ) 40 POUND BLOCKS $ ( ) $ (N.C.) $ ( ) $ ( ) $ (N.C.) :: :: ( ) :: :: $ ( ) NONFAT DRY MILK GRADE A $ ( ) $ ( ) $ ( ) $ ( ) $ ( ) :: :: ( ) :: :: $ ( ) BUTTER GRADE AA $ ( ) $ ( ) $ ( ) $ ( ) $ (N.C.) :: :: ( ) :: :: $ ( ) DRY WHEY EXTRA GRADE $ ( ) $ ( ) $ ( ) $ ( ) $ ( ) :: :: ( ) :: :: $ ( ) s shown are in U.S. dollars per lb. in carlot quantities. Carlot unit weights: CHEESE, 40,000-44,000 lbs.; NONFAT DRY MILK, 41,000-45,000 lbs.; BUTTER, 40,000-43,000 lbs.;dry WHEY, 41,000-45,000 lbs. Weekly Change is the sum of Daily Changes. Weekly Average is the simple average of the Daily Cash Close prices for the calendar week. Weekly Average Change is the difference between current and previous Weekly Average. Computed by Dairy Market News for informational purposes. This data is available on the Internet at NOTICE: Five days of trading information can be found at BUTTER MARKETS NORTHEAST Harsh snowy and icy weather conditions are hitting the Northeast this week. Currently there are little to no reports of disruptions in transportation or power outages. In the region, milk loads are available. Cream availability is following suit, as supplies are accessible for production needs. The cream demand is steady to soft. Some butter manufacturers are not purchasing spot cream due to heavy milk volumes clearing into their intakes. Butter production is strong in the region currently. Manufacturers are making both salted and unsalted butter. Inventories are balanced to growing. Spot prices are fairly unchanged. Some industry contracts report that current spot sales are moderately positive. Market conditions are steady this week. The bulk butter price is reported 5 cents to 8 cents over the market of the CME Group, with various time frames and averages used. s for: Eastern U.S., All First Sales, F.O.B., Grade AA, Conventional, and Edible Butter Bulk Basis Pricing - 80% Butterfat $/LB: Secondary Sourced Information: This week, a cooperative export assistance program accepted requests for export assistance to sell 220,462 pounds (100 metric tons) of butter. Tuesday's CME Group butter price closed the day at $2.2550, down $.0225 from the previous Tuesday's closing price. CENTRAL Some market contacts suggest butter sales have been stunted recently, while others maintain sales are seasonally slower, but meeting expectations. Cream is readily available for butter churning, and butter producers are taking advantage of the quantities. Butter plant managers relay they are booking cream loads well ahead of time, indicating what they suggest may be a sign of near to mid-term oversupplies. Butter markets remain rangebound, but prices are starting to push nearer to the low end of that range. s for: Central U.S., All First Sales, F.O.B., Grade AA, Conventional, and Edible Butter Bulk Basis Pricing - 80% Butterfat $/LB: WEST Western butter processors are proactively running churns to clear ample supplies of cream. Cream is plentiful throughout the West, and some distressed loads are moving out of the region at discounted prices. Bulk butter is being intensively stored for use later in the year. In general, retail and club store sales of butter are good. Although producers would prefer to make more sales right now, they are content with their current inventory levels and are managing their supplies efficiently. Some of the processors have increased their production capacities and are manufacturing butter at a higher rate than last year. Bulk butter is priced at 2 cents below to 7.5 cents above the market, based on the CME Group with various periods and averages used. s for: Western U.S., All First Sales, F.O.B., Grade AA, Conventional, and Edible Butter Bulk Basis Pricing - 80% Butterfat $/LB: Secondary Sourced Information: The Grade AA butter price at the CME Group on Wednesday closed at $2.2375, compared to last week's weekly average price of $ CONTINUE ON 2A NATIONAL DAIRY PRODUCTS SALES REPORT U.S. AVERAGES AND TOTAL POUNDS WEEK ENDING 02/09/2019 BUTTER ,129,686 CHEESE 40# BLOCKS ,728,379 CHEESE BARRELS 38% MOISTURE ,260,514 DRY WHEY ,069,313 NDM ,069,102 Further data and revisions may be found on the internet at:

4 DAIRY MARKET NEWS, FEBRUARY 11-15, A- -2- VOLUME 86, REPORT 7 CONTINUED FROM PAGE 2 This week, a cooperative export assistance program accepted requests for 220,462 pounds (100 metric tons) of butter. So far this year, the program has assisted member cooperatives who have contracts to sell 928,146 pounds of butter (82% milkfat) in export markets. National Retail Report Dairy Butter Summary Advertised s at Major Retail Supermarket Outlets ending period of 2/08/2019 to 2/14/2019 Butter 1# Weighted Average National This Period Last Week Last Year Organic $5.18 n.a. $5.22 Conventional $3.58 $3.55 $3.56 s This Period Regional (Conventional) Wtd. Ave. Low High Alaska $4.00 $4.00 $4.00 Hawaii $4.99 $4.99 $4.99 Midwest $1.99 $1.99 $1.99 Northeast $4.07 $2.99 $4.99 Northwest $3.46 $2.50 $3.99 South Central $2.89 $1.99 $3.49 Southeast $3.05 $3.00 $3.50 Southwest $4.52 $3.49 $4.99

5 DAIRY MARKET NEWS, FEBRUARY 11-15, VOLUME 86, REPORT 7 NORTHEAST Northeast milk production is level to increasing. Milk volumes are flowing heavily into manufacturers' intakes. Cheese makers are receiving all the milk they need to run full production schedules. Cheddar, mozzarella and provolone cheese production is active in the region. Inventories are stable to growing, but a few operations have decreased their supplies. Cheddar cheese block and barrel spot prices have strengthened currently. Spot trading activity is steady to slower. Northeast wholesale cheese prices for cheddar and Muenster shifted higher by $0.0275, also the process cheese prices moved up by $ The Grade A Swiss price is unchanged this week. WHOLESALE SELLING PRICES: DELIVERED DOLLARS PER POUND(MIXED LOTS ( POUNDS)) Cheddar 40 pound Block Muenster Process American 5 pound Sliced Swiss pound Cuts Secondary Sourced Information: This week, a cooperative export assistance program accepted requests for export assistance on contracts to sell million pounds (1,225 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. When combined with butter and whole milk powder, the program has assisted members with sales of million pounds of milk on a milkfat basis. MIDWEST Relentless winter weather is the topic du jour among cheesemakers in the Midwest. Cheese production remains slower as plant managers work on inventories, and weather-related production stoppages have done its part to slow/stop production in some cases. Contacts suggest cold weather and snow in the upper-midwest are affecting both milk and cheese deliveries. Reported spot milk prices ranged from $1 under to $2 under, although fewer trades were reported week over week. One thing weather has not hindered is the cheese markets, which continue to progress from their late 2018/early 2019 slump. Midwestern wholesale prices are unchanged for Swiss Cuts, up $.0500 for barrels and up $.0275 for other types. WISCONSIN WHOLESALE SELLING PRICES: DELIVERED DOLLARS PER POUND(MIXED LOTS ( POUNDS)) Blue 5 pounds Brick 5 pounds Cheddar 40 pound Block Monterey Jack 10 pounds Mozzarella 5-6 pounds Muenster 5 pounds Process American 5 pound Loaf Swiss 6-9 pound Cuts WEST CHEESE MARKETS from the winter holidays and the Super Bowl. Others say marketers are getting prepared for some upcoming export tenders. Some also report more cheese moving into aging programs. Regardless, industry contacts are in agreement that inventories are long, and demand does not seem to be at levels hoped for. Industry contacts also suggest that in the recent absence of regular market production and stock number reports, it is difficult to get a picture of true supply and demand. Manufacturers say cheese production is running mostly seven days per week, but winter storms over the weekend have slowed cheese production in some regions due to challenges transporting milk and the need to refill the bottling pipeline following the storms. Cheese makers expect production in those regions to resume normal levels soon barring any further weather or market disruptions. In the West, wholesale prices were up $.0500 for process, and up $.0275 for cheddar block, cuts and Monterey Jack. Swiss cut wholesale prices are unchanged from the previous week. WHOLESALE SELLING PRICES: DELIVERED DOLLARS PER POUND(MIXED LOTS ( POUNDS)) Cheddar 10 pound Cuts Cheddar 40 pound Block Monterey Jack 10 pounds Process American 5 pound Loaf Swiss 6-9 pound Cuts FOREIGN TYPE Semi-hard cheese market conditions are firm in Germany. Domestic and global inquiries are both ongoing. However, cheese offers are just enough to meet current demand. Spot loads' availability is very small. Most cheese outputs are sold out before being produced, leaving almost non-existent stocks in warehouses. In current contractual negotiations, cheese providers are requesting higher premiums, which buyers are accepting to pay as they want to ensure that their future needs are covered. In the U.S., domestic prices for wholesale blue, gorgonzola, parmesan Italy, and Romano increased $.0275 whereas the prices of other cheese types have remained stable. WHOLESALE SELLING PRICES: FOB DISTRIBUTORS DOCK DOLLARS PER POUND ( POUNDS, MIXED LOTS) : NEW YORK VARIETY : IMPORTED : DOMESTIC : : Blue : : * Gorgonzola : : * Parmesan : -0- : * Romano : -0- : * Sardo Romano (Argentina) : : -0- Reggianito (Argentina) : : -0- Jarlsberg : : -0- Swiss : -0- : Swiss (Finland) : : -0- * = change. Western cheese makers say that at the moment, new business deals are harder to come by. Demand for American style blocks and barrels is slow. Buyer interest seemingly ebbs and flows as the market price for cheese rises and falls. Cheese is moving steadily through regular contracts, but industry contacts say there does not seem to be anything right now that will give a boost to sales. However, cash market prices have risen the last few weeks leading to a cacophony of possible explanations. Some contacts suggest Q4 consumption was better than expected and the industry is seeing a bit of a refill CONTINUED ON PAGE 3A

6 DAIRY MARKET NEWS, FEBRUARY 11-15, A- VOLUME 86, REPORT 7 CONTINUED FROM PAGE 3 CHEESE MARKETS National Retail Report Dairy Cheese Summary Advertised s at Major Retail Supermarket Outlets ending during the period of 2/08/2019 to 2/14/2019 Cheese 8 oz. Blocks Weighted Average National This Period Last Week Last Year Organic $5.42 $3.99 $3.91 Conventional $2.32 $2.05 $2.10 Regional (Conventional) Wtd. Ave. Low High Alaska $2.00 $2.00 $2.00 Hawaii $2.59 $2.00 $3.00 Midwest $2.28 $1.00 $3.50 Northeast $2.17 $1.33 $3.50 Northwest $2.02 $1.50 $2.99 South Central $2.83 $2.49 $3.00 Southeast $2.39 $1.50 $3.99 Southwest n.a. n.a. n.a. Cheese 8 oz. Shred Weighted Average National This Period Last Week Last Year Organic n.a. $3.99 $4.20 Conventional $2.51 $2.11 $2.16 Regional (Conventional) Wtd. Ave. Low High Alaska $2.00 $2.00 $2.00 Hawaii $2.56 $2.00 $3.00 Midwest $1.83 $1.00 $2.50 Northeast $2.19 $1.87 $3.29 Northwest $2.22 $1.50 $2.50 South Central $2.51 $1.67 $3.00 Southeast $2.78 $1.50 $3.99 Southwest $2.50 $1.88 $3.00

7 DAIRY MARKET NEWS, FEBRUARY 11-15, VOLUME 86, REPORT 7 FLUID MILK AND CREAM EAST Northeast milk output is level to growing. Harsh snowy and icy weather conditions are hitting parts of the region. There are little to no reports of transportation issues or power outages. Milk volumes are available for production needs. Manufacturers are receiving adequate milk loads for full production schedules. Class I sales are level to a bit higher this week. Mid-Atlantic milk output is coming up. Balancing operations are not at capacity. Southeast milk production is up. Class I sales are steady to a bit lower. More milk is moving into cheese manufacturing this week. Florida milk output is starting to slow in growth and level off. Class I sales are steady to slightly lower. Cream supplies are readily available on the spot market. Multiples range Some operations are not purchasing extra cream loads due to heavy milk volumes clearing into their intakes. Supplies are outweighing demand. The cream market is soft right now. Condensed skim sales are steady to strong and prices are fairly unchanged currently. Northeastern U.S., F.O.B. Condensed Skim Range - Class II; $/LB Solids: Range - Class III; $/LB Solids: Northeastern U.S., F.O.B. Cream Multiples Range - All Classes: Range - Class II; $/LB Butterfat: MIDWEST Late winter weather continues to affect upper Midwestern fluid milk and cream regarding logistics. Hauling delays have been reported regularly from a number of contacts in Wisconsin and Minnesota. Even still, fluid milk and cream is readily available. Bottling is somewhat slow, thus more milk is making its way into cheese making and drying. Cheesemakers are hesitant to take on extra milk, and the number of reported spot milk purchases has declined for two consecutive weeks. Class III spot milk prices ranged from $1 under to $2 under Class. Ice cream production and demand are slower as we work towards the last month of winter. Butter producers continue to take on cream at increasing levels. there are a few new farms that came on board in the state and are contributing to the increase in milk volumes produced. Balancing plants are running on busy schedules. Mechanical issues created an unplanned redistribution of milk to processors. However, milk holdovers remain high, but would likely decrease in the coming days. Class I sales are down while Class II and III requests have slightly improved. Pacific Northwest milk production and milk intakes took a step back this week. Winter storms in the early part of the week covered large portions of the region in snow, cold temperatures and high winds. Industry contacts say blizzard conditions closed roads and made milk pickups and distribution challenging. Contacts suggest milk may have been discarded at some farms because milk trucks could not get in to collect the milk. Local media outlets also reported nearly 1,600 cows died in the Yakima Valley snowstorm. In the short term, bottling demand across the Pacific Northwest spiked due to the storms. Grocery store shelves were cleaned out of available milk. Dairy contacts say it will take a little time to refill the bottling pipeline. While it may be too early to tell what lasting effect the storms will have on dairy production, the losses compound the financial stress faced by farmers from several years of low milk prices. Milk production in the mountain states of Idaho, Utah and Colorado is strong and in generally good balance with processing needs. Industry contacts say aside from a few days of repairs and maintenance, most manufacturers are running at or near seven day schedules. A few loads of milk continue to get moved into or from surrounding states as milk handlers seek to balance fluid and processing needs. Condensed skim supplies are plentiful in the West. They are mostly going into cheese processing and a bit is also moving into ice cream. According to some industry players, condensed skim is extremely pricy in California. With increasing customers' demand, more condensed skim has been moving into California compared to cream. In the West, the market is flooded with cream. Demand seems minimal, so some manufacturers are churning in-house in lieu of selling. Some distressed loads are also moving out of the region at discounted prices. Cream multipliers for all usages are 1.00 to Western U.S., F.O.B. Cream Multiples Range - All Classes: Midwestern U.S., F.O.B. Cream Multiples Range - All Classes: Range - Class II; $/LB Butterfat: Multiples Range - Class II: WEST Milk production in California has remained strong and steady. Manufacturing facilities are being run seven days per week to make sure that all the milk available is balanced. Compared to the previous week, a few more loads of milk are moving into balancing facilities. Fluid milk demand is flat. Despite strong milk yield in Arizona, milk volumes continue to be lower compared to the previous year. Weather conditions are chilly, especially in the morning and are favorizing cows' milk throughput. Milk pulls from local handlers are at seasonal levels. Bottled milk sales are stable. There have been very limited volumes of milk moving to out-of-state processors. The flush has also started in Arizona, but so far, the milk market tone is stable. In New Mexico, farm milk output is a bit up. Some of our sources stated that CONTINUED ON PAGE 4A

8 DAIRY MARKET NEWS, FEBRUARY 11-15, A- VOLUME 86, REPORT 7 CONTINUED FROM PAGE 4 National Retail Report Dairy Fluid Milk Summary Advertised s at Major Retail Supermarket Outlets ending during the period of 2/08/2019 to 2/14/2019 Half Gallon, All Fat Tests Weighted Average National This Period Last Week Last Year Organic $3.98 $3.63 $3.63 Conventional $1.54 $2.46 $2.00 Regional (Conventional) Wtd. Ave. Low High Alaska n.a. n.a. n.a. Hawaii n.a. n.a. n.a. Midwest $0.88 $0.77 $0.99 Northeast $1.99 $1.99 $1.99 Northwest $2.59 $2.59 $2.59 South Central $1.89 $1.89 $1.89 Southeast $0.79 $0.79 $0.79 Southwest $0.88 $0.88 $0.88 Regional (Organic) Wtd. Ave. Low High Alaska n.a. n.a. n.a. Hawaii n.a. n.a. n.a. Midwest $3.26 $2.79 $3.99 Northeast $4.53 $3.49 $5.49 Northwest $3.99 $3.99 $3.99 South Central $2.99 $2.99 $2.99 Southeast $3.98 $3.49 $4.78 Southwest $4.49 $4.49 $4.49 Gallon, All Fat Tests Weighted Average National This Period Last Week Last Year Organic $5.62 $6.01 $7.13 Conventional $2.60 $2.65 $2.33 Regional (Conventional) Wtd. Ave. Low High Alaska $2.99 $2.99 $2.99 Hawaii n.a. n.a. n.a. Midwest $2.50 $1.19 $2.99 Northeast $4.29 $4.29 $4.29 Northwest $1.99 $1.99 $1.99 South Central $2.67 $1.99 $3.78 Southeast n.a. n.a. n.a. Southwest $2.32 $1.99 $2.50 Regional (Organic) Wtd. Ave. Low High Alaska n.a. n.a. n.a. Hawaii n.a. n.a. n.a. Midwest n.a. n.a. n.a. Northeast $8.99 $8.99 $8.99 Northwest $5.00 $5.00 $5.00 South Central n.a. n.a. n.a. Southeast $3.99 $3.99 $3.99 Southwest n.a. n.a. n.a. FLUID MILK AND CREAM

9 DAIRY MARKET NEWS, FEBRUARY 11-15, VOLUME 86, REPORT 7 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) spot trading was quiet to steady this week. Some traders have reported continued interest and shipments from the Midwest into Mexico. Trading that have recently been in the low to mid $.90s and conversely, those that were nearing $1.05, have begun to trend toward the $1 mark. NDM production has increased, as more milk is finding its way into drying. NDM availability has begun to reflect this in certain areas. Off-grade NDM trades are also increasing, and those are taking place in the low $.80s. High heat NDM trading was slower this week, as inventories are generally contractually obligated. Overall, NDM markets are steady to slightly softer this week. EAST: Low/medium heat nonfat dry milk (NDM) prices are mixed on the range and mostly series. In general, prices are narrowing on the spot market. Milk is available in the East for active low/med heat NDM production. There are manufacturers producing to fill immediate orders. There are reports some market participants are not purchasing at this time to reevaluate market conditions. Also, many buyers have efficient supplies to clear to their customers, yet their customers' demand is somewhat weaker. Inventories are balanced to growing. The market tone is steady. High heat NDM market prices are unchanged. The market tone is fairly unchanged, with limited supplies and interest. Some operations' outputs are made to order. s for: Eastern and Central U.S., All First Sales, F.O.B., Extra Grade & Grade A, Conventional, and Edible Nonfat Dry Milk Range - Low & Medium Heat; $/LB: Mostly Range - Low & Medium Heat; $/LB: s for: Eastern and Central U.S., All First Sales, F.O.B., Extra Grade & Grade A, Conventional, and Edible Nonfat Dry Milk Range - High Heat; $/LB: Secondary Sourced Information: Wednesday at the CME Group, Grade A NDM closed at $0.9925, down from last week average price of $ NONFAT DRY MILK - WEST Western low/medium heat nonfat dry milk (NDM) spot prices decreased on both ends of the range and at the bottom of the mostly price series. Production is active as milk is readily available in the West. A good volume of condensed skim is moving into cheese production; however, this has a negligible impact on NDM output levels. Current stocks of NDM are increasing. Some industry players are worried about the possibility of oversupply during the spring flush. This week, sales have been stable both in the domestic and international markets. However, there is a pessimistic view about the ability of demand to absorb new supplies. Overall, the market tone is unsettled. The high heat NDM saw a decline in prices at the bottom of the range. Sales are at the same levels as the prior week, while stocks are minor. The manufacturing of high heat NDM continues to be contractually focused. s for: Western U.S., All First Sales, F.O.B., Extra Grade & Grade A, Conventional, and Edible Nonfat Dry Milk Range - Low & Medium Heat; $/LB: Mostly Range - Low & Medium Heat; $/LB: s for: Western U.S., All First Sales, F.O.B., Extra Grade & Grade A, Conventional, and Edible Nonfat Dry Milk Range - High Heat; $/LB: DRY BUTTERMILK POWDER - CENTRAL AND EAST CENTRAL: Dry buttermilk trading in the Central region has held steady this week, along with prices. Regarding most powders, there is a sentiment that markets are weakening. In the buttermilk powder markets, however, the limited supply of recent production is keeping market bears in check, for the near term. Demand remains active regionally. Some Central buyers are finding deals out West, but trucking shortages and increasing costs hinder longer hauls and, in some cases, buying from outside the region. EAST: Dry buttermilk spot prices are unchanged this reporting week. Some less than truckload sales are occurring at premium prices. Market conditions are fairly steady. An uptick in butter churns are giving a slight boost to dry buttermilk output. However, dry buttermilk manufacturing remains intermittent. Supplies are mostly clearing to contracts. Buyers' demand is steady to somewhat soft as some market participants are not purchasing on the spot market. s for: Eastern and Central U.S., All First Sales, F.O.B., Conventional, and Edible Buttermilk Range ; $/LB: DRY BUTTERMILK POWDER - WEST Dry buttermilk trading has been light in the West this week. At the moment, buyers do not have much incentive to buy more products. Nonetheless, they are taking contractual volumes as scheduled. Generally, the prices for dry buttermilk have remained at last week's strong levels. Manufacturing of dry buttermilk is steady and mostly taking place as the need arises. Therefore, current stocks are small. Market conditions for dry buttermilk are even. s for: Western U.S., All First Sales, F.O.B., Conventional, and Edible Buttermilk Range ; $/LB: Mostly Range - ; $/LB: DRY WHOLE MILK - NATIONAL National free on board spot prices for dry whole milk are steady and well above the WMP international values. In some cases, the current cash pricing for national whole milk powder is limiting competitiveness of some manufacturers/brokers when exporting to overseas markets. Nevertheless, the domestic market seems to be in balance as in general, supply is even with demand in each region of the country. Spot trading activity is light to moderate throughout the nation as sales are mostly driven by contractual requirements. In the near term, drying schedules for condensed whole milk are expected to be more active as the spring flush approaches. s for: U.S., All First Sales, F.O.B., Conventional, and Edible Dry Whole Milk Range - 26% Butterfat; $/LB: Secondary Sourced Information: Grade A nonfat dry milk price at the CME Group on Wednesday closed at $.9925, up from last week's average price of $.9910.

10 DAIRY MARKET NEWS, FEBRUARY 11-15, VOLUME 86, REPORT 7 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 Dry whey trading activity is a little busier, but prices are pulling in a bearish direction. As more offers roll in, buyers are taking advantage of prices which are trending into and/or toward the $.30s. Some buyers remain on the sideline as they are fully stocked. That said, reported spot trades are still well-above market prices, which has sunk into the low $.30s. There are a culmination of bearish factors facing dry whey in the region. Namely, Chinese buyers have backed away just as production has increased with discounted milk loads headed into cheese manufacturing. Animal feed whey prices remain unchanged on slower reported trading this week. s for: Central U.S., All First Sales, F.O.B., Extra Grade & Grade A, Conventional, and Edible Dry Whey Range - Animal Feed; $/LB: s for: Central U.S., All First Sales, F.O.B., Extra Grade & Grade A, Conventional, and Edible Dry Whey Range - Non-Hygroscopic; $/LB: Mostly Range - Non-Hygroscopic; $/LB: WHEY PROTEIN CONCENTRATE Whey protein concentrate 34% prices are unchanged across both the range and mostly price series. Production is generally steady, but some manufacturers are shifting more production focus to higher protein concentrations as they see a firming trend for those products. WPC 34% inventories are mixed. Buyers say they have no trouble getting WPC34% from some sources, but cannot get any WPC34% from other sources. A few manufacturers report stocks have grown somewhat, while others suggest end users, eager to assure coverage, are keeping supplies tight. WPC 34% is moving well through existing contracts. Spot demand is relatively steady. However, that demand is dependent on how finicky the buyer and how easily the end user can substitute the WPC34% with other protein sources. A few manufacturers report getting pushback on prices from some buyers. s for: Central and Western U.S., All First Sales, F.O.B., Extra Grade, Conventional, and Edible Whey Protein Concentrate Range - 34% Protein; $/LB: Mostly Range - 34% Protein; $/LB: DRY WHEY NORTHEAST Dry whey spot prices in the East are steady to decreased, as some prices are following suit along with lower price movements happening in other regions of the U.S. Exports are decreased at this time. Currently, domestic sales are steady to slower. Dry whey production is stable. Supplies are steady to somewhat tight in the region. The demand for spot loads is stable to lower as ice cream production is down. Market conditions are steady to soft. s for: Eastern U.S., All First Sales, F.O.B., Extra Grade & Grade A, Conventional, and Edible Dry Whey Range - Non-Hygroscopic; $/LB: DRY WHEY WEST LACTOSE Lactose prices are unchanged across the range and top of the mostly price series. However, the bottom of the mostly price series stepped a penny higher. Manufacturers report spot sales across the full price range as buyers seek out lactose that meets specific requirements or lactose that is bargain priced. U.S. lactose production is relatively steady. Although inventories are tight to committed for many producers, a few end users report getting regular offers for lower mesh lactose, and some lower priced edible lactose is moving into feed channels. Industry contacts say higher mesh lactose, or lactose certified by end users, has not been hard to move. Some processors are working on Q2 contracting. Initial reports suggest Q2 prices for favorite brands are coming in at, or slightly higher, than Q1 contract prices. s for: Central and Western U.S., Spot Sales And Up to 3 Month Contracts, F.O.B., Conventional, and Edible Lactose Range - Non Pharmaceutical; $/LB: Mostly Range - Non Pharmaceutical; $/LB: Western whey prices moved lower at the bottom of the range and both ends of the mostly price series. The top of the range stepped slightly higher due to a few remaining spot sales of preferred brands of whey. The market tone is weak, and both domestic and international demand is lackluster. Industry contacts hope buyer activity from Southeast Asia, prescinded during the Lunar New Year celebrations, can return and stabilize dry whey demand. Manufacturers say sales in the near term are proving challenging and many buyers are asking for prices below published prices. Inventories are not necessarily burdensome, but according to some contacts, are growing. Dry whey production is higher as some manufacturers are choosing to make dry whey instead of permeate. s for: Western U.S., All First Sales, F.O.B., Extra Grade & Grade A, Conventional, and Edible Dry Whey Range - Non-Hygroscopic; $/LB: Mostly Range - Non-Hygroscopic; $/LB: CASEIN Markets overall for the bulk of available casein from traditional sources are called steady. Rennet casein prices are steady at the bottom of the price range but dipped slightly at the top due to additional new casein availability. Acid casein prices dipped at the low end of the price range but are steady at the top. There are signs of possible price increases but now, many buyers and sellers are assessing the strength of skim milk powder and nonfat dry milk prices before committing to higher casein pricing. s for: Spot Sales And Up to 3 Month Contracts, Free on Board - Warehouse, Non -Restricted, All Mesh Sizes, Conventional, and Edible Casein Acid; Range - $/LB: Rennet; Range - $/LB:

11 DAIRY MARKET NEWS, FEBRUARY 11-15, VOLUME 86, REPORT 7 U.S. Dairy Cow Slaughter (1000 head) under Federal Inspection 2018 WEEKLY WEEKLY 2017 WEEK ENDING DAIRY COWS CUMULATIVE DAIRY COWS DAIRY COWS CUMULATIVE DAIRY COWS 12/29/ , , WEEKLY WEEKLY 2018 WEEK ENDING DAIRY COWS CUMULATIVE DAIRY COWS DAIRY COWS CUMULATIVE DAIRY COWS 01/05/ 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 2018 (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 2019 (3.5% Butterfat) CLASS JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC I 1/ II III IV / 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. $18.00 Class I $18.00 Class II $17.00 $17.00 $16.00 $16.00 $15.00 $15.00 $14.00 $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

12 DAIRY MARKET NEWS, FEBRUARY 11-15, A- VOLUME 86, REPORT 7 $18.00 Class III $17.00 Class IV $17.00 $16.00 $16.00 $15.00 $15.00 $14.00 $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

13 DAIRY MARKET NEWS, FEBRUARY VOLUME 86, REPORT 7 INTERNATIONAL DAIRY MARKET NEWS - EUROPE Information gathered February 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 Official December EU data is pending but unofficial data from ZMB reports that Ireland set a December 2018 milk production record, up 23.2 percent from December 2017.The 2018 annual increase, +3.4 percent, was constrained by cold and wet spring 2018 weather, in addition to a July drought. Nevertheless the 2018 annual increase yielded al all time high annual milk production total of 7.8 million MT. The 2018 fat content for 2018, 4.14 percent, was up from 4.09 percent in Early reporting also noted that Denmark achieved all-time record production during 2018, 5.6 million MT, up 2.3 percent from Semi hard cheese demand in Western Europe is strong and supplies are tight. Buying interest comes from inside the EU as well as export demand elsewhere. A number of potential buyers are disappointed to be turned away. Almost all current production is committed and has been sold in advance. Aging stocks have been drawn down to help meet demand. That is a disappointment to customers who are specifically inter4ewsted in cheese with more age. The EU-Singapore free trade agreement was ratified by the European Parliament this week. EU dairy products already enter Singapore duty free. However, ratification freezes dairy tariffs at 0, so ratification is welcome. Reaching agreement with Vietnam is next on the EU agenda. BUTTER/BUTTEROIL Butter prices in Western Europe dipped slightly at the low end of the price range while increasing at the top. Some manufacturers were seeking to entice sales from buyers holding back. Other buyers in some locations were motivated to close deals with preferred manufacturers. These factors led to the mixed price outcome. The overall market is considered stable for the mainstay of transactions, excepting the specific situations mentioned. Butteroil prices are slightly lower. A number of buyers are being cautious about making commitments. Retail demand for packaged butter in early February is relatively stable. Slight price declines are noted in Germany, also Netherlands. Overall it is viewed as a stable market. Block butter needs for Q seem to have been mostly covered already. Buying focused on Q2 is proceeding, but the most buying interest is for the second half of Sellers tend to be reticent to commit for the second half unless buyers will meet the seller price. It remains a sellers market because sellers firmly do not want to get in a position of having committed now at lower prices than may prevail later in the year. There is great seller confidence that they will do just fine selling bulk butter closer to the second half and there is little seller urgency to commit now for then. Buyers are the opposite. The Japanese entity ALIC has announced a butter tender on February 28, with the delivery deadline July 31, Another butter tender on March 14, 2019, has an August 30, 2019 delivery deadline. Another tender on April 11, 2019, has a September 30, 2019 delivery deadline. A total of 8,000 MT is scheduled between the three events. Western Europe, 82% Butterfat, Free on Board - Port Butter Range - $/MT: 4,850-5,375 Western Europe, 99% Butterfat, Free on Board - Port Butteroil Range - $/MT: 6,300-6,625 SKIM MILK POWDER The skim milk powder price range in Western Europe widened. This resulted from a slightly weaker low-end range price, as well as a stronger upper range price. Factors related to location, timing, sale volumes, and customer relationships, were all factors contributing to the outcome. The SMP market has slowed from the active situation early this year. Many customers have finalized contracts through Q1 this year. That reduces the urgency in finalizing deals. Negotiations for the balance of the year are ongoing, and deals are being finalized. Buying interest comes from internal EU customers as well as from outside the EU. The February 5 tender of intervention SMP offered 3,651 MT, all the remaining stocks. A minimum selling price of 1,622 euros/mt was set according to Eucolait. That resulted in sale of 584 MT. There were 7 bids ranging from 1,500 euros/mt to 1,707 euros/mt. Of the SMP sold, 500 MT were from Spain, and 84 MT from Finland. The next tender date is February 19 when the remaining 3,067 MT will be available. If the remaining SMP is not sold on February 19, March 19 will be the next opportunity. The Japanese entity ALIC has announced a SMP tender on February 21, with the delivery deadline July 31, Another SMP tender on April 25 has a September 30, 2019 delivery deadline. A total of 10,000 MT is scheduled between the two events. s for: Europe, All First Sales, Free on Board - Port, Conventional, and Edible Skim Milk Powder Range % Butterfat; $/MT: 2,100-2,425 WHEY Western European whey markets are mixed. The lower price range is weaker, with buying activity slowing. Upper range prices firmed due to determined buyers seeking preferred sourcing with timing being an issue. Whey markets are considered quiet in the main. While cheese output is limiting whey output, this has been the situation for some time and participants are accustomed to the situation. Little is expected to change in any significant way in coming weeks. The Japanese entity ALIC has announced a whey tender on April 23, 2019, with the delivery deadline December 27, A total of 2,5000 MT is scheduled. s for: Western Europe, All First Sales, Free on Board - Port, Conventional, and Edible Dry Whey Range - Non-Hygroscopic; $/MT: 950-1,125 CONTINUED ON PAGE 8A

14 DAIRY MARKET NEWS, FEBRUARY A- VOLUME 86, REPORT 7 INTERNATIONAL DAIRY MARKET NEWS - EUROPE Information gathered February 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 WHOLE MILK POWDER Western European whole milk powder prices firmed at the low end of the price range. s remained steady at the top. Some buyers have come forward with short term needs, which contributed to the low range price firming. WMP markets are overall in decent balance and many potential buyers are stocked, so they are selective about the pacing and price for future contracting. The market tone is quiet for the most part. Buying and selling creeps along within the EU internal market. Not much export activity is currently noted. s for: Europe, All First Sales, Free on Board - Port, Conventional, and Edible Whole Milk Powder Range - 26% Butterfat; $/MT: 3,225-3,375 EASTERN OVERVIEW Ukraine has been striving to increase dairy production and dairy exports. These efforts have achieved positive results for some products. Dairy export percentage increases through November 2018, compared with 2017, for some products are shown in the following table (CLAL data). Export % Change Product Jan.-Nov.2018/2017 Milk and Cream Butter WMP Casein There are dairy plant expansions underway in Ukraine to manufacture some of the exported milk and cream into dairy products with greater profit returns. In particular, casein and butter production will be expanding.

15 DAIRY MARKET NEWS, FEBRUARY 11-15, B - VOLUME 86, REPORT 7 INTERNATIONAL DAIRY MARKET NEWS - OCEANIA Information gathered February 4-15, 2019 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. OCEANIA DAIRY MARKET OVERVIEW AUSTRALIA: Temperatures in some areas still exceed 100 degrees Fahrenheit. The extreme temperatures noted two weeks ago are less intense. Hotter current temperatures tend to be in Eastern Australia. Perth has reached the low 90s, while Melbourne is better, in the 60s. There are mixed results from strong winds that have developed. Victoria ande Tasmania have benefitted from rain. Near Canberra the wind has brought severe dust storm which resulted in health warnings and power outages. New season hay is being made in most regions of Australia. Western Australia tends to have the best growth. Northern Australia has limited new season hay. That has resulted in hay being brought to the region from other parts of Australia. Southern Australia has limited carryover hay, so new hay is eagerly sought. Drought related government subsidies continue to be available for transporting fodder, water and livestock. Hay exports continue to come primarily from Western Australia. NEW ZEALAND: A mild summer continues to benefit the dairy industry in New Zealand. New Zealand has generally not experienced temperatures above the mid-80s. The North Island and some of the South Island received about one half inch of rain. The rest of the South Island received intense showers leaving several inches of water. There is some anxiety within the dairy industry about changes that may come to dairy farming practices in New Zealand from the Zero Carbon Act, anticipated to be introduced early this year for consideration to become law. The magnitude of the dairy industry in New Zealand is expected to result in standards that will necessitate as yet to be determined actions to reduce carbon emissions resulting from dairying. Some observers are braced for a substantial upheaval in current practices. An obvious uncertainty is how production volumes and production costs will be affected. BUTTER/BUTTEROIL Butter prices in Oceania moved higher. Some observers believe prices are more likely to remain steady to higher, than to decline in coming months. Production volumes are anticipated to gradually decline while demand will remain good. Manufacturers are also producing to increase stocks for late season needs. Australia was a net importer of butter during New Zealand was the primary source of butter imports. No single country stood out as the primary destination for Australian butter exports. Oceania, 82% Butterfat, Free on Board - Port Butter Range - $/MT: 4,425-4,525 Secondary Sourced Information: Butter exports from Australia during 2018, 16 million MT, were up 1.6 percent from 2017, according to CLAL. The table below shows the top export destinations and country percent change comparing 2018 with Australia Butter Exports % Change Jan. Dec. Destination 2018/2017 Thailand Malaysia China Singapore Hong Kong Butter imports to Australia during 2018, 40,000 MT, were up 17.5 percent from 2017, according to CLAL. The table below shows the top import origins and country percent change comparing 2018 with Australia Butter Imports % Change Jan. Dec. Origin 2018/2017 New Zealand France India New Zealand 2018 butter production, 530,000 MT, increased 1.0 percent from 2017 according to CLAL and FAS-USDA. Butter exports from New Zealand during 2018, 459,000 MT, were up 5.7 percent from 2017, according to CLAL. The table below shows the top export destinations and country percent change comparing 2018 with New Zealand Butter Exports % Change Jan. Dec. Destination 2018/2017 China Australia Philippines Saudi Arabia Mexico At GDT event 229 on February 6, the butter all contracts price, $4,445, increased 4.2 percent. The March contract, $4,490, increased 5.2 percent. SKIM MILK POWDER Skim milk powder prices in Oceania are higher. Near term SMP production is mostly committed. Some buyers are uncomfortably tugged between wanting assurance of future supplies but hoping to defer making commitments until prices might weaken a bit. Other buyers do not expect significant price movements in the near term, They are moving ahead with contracts. Australia was a significant net exporter of SMP during China and Indonesia were the two primary destinations for Australian SMP exports. Exports were about 12 times greater than imports. New Zealand was the most significant source of Australian SMP imports. CONTINUED ON PAGE 8C

16 DAIRY MARKET NEWS, FEBRUARY 11-15, C - VOLUME 86, REPORT 7 INTERNATIONAL DAIRY MARKET NEWS - OCEANIA Information gathered February 4-15, 2019 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 8B s for: Oceania, All First Sales, Free on Board - Port, Conventional, and Edible Skim Milk Powder Range % Butterfat; $/MT: 2,500-2,700 Secondary Sourced Information: SMP exports from Australia during 2018, 156,000 MT, were down 1.1 percent from 2017, according to CLAL. The table below shows the top export destinations and country percent change comparing 2018 with Volumes exported to China and Indonesia are very similar and each received multiples of the volumes going to each of the other countries listed. Australia SMP Exports % Change Jan. Dec. Destination 2018/2017 China Indonesia Malaysia Thailand Singapore SMP imports to Australia during 2018, 13,000 MT, were up 59.4 percent from 2017, according to CLAL. New Zealand was the most significant single source of SMP. Austria and Germany sourced much of the increase 2017 to Australia SMP Imports % Change Jan. Dec. Origin 2018/2017 New Zealand Austria +1,237.5 Germany +2,253.7 United States SMP production in New Zealand during 2018, 390,000 MT, was 3.0 percent lower than SMP exports from New Zealand during 2018, 362,000 MT, were down 9.6 percent from 2017, according to CLAL. The table below shows top export destination country percent change comparing 2018 with Exports to China were greater than the next four countries combined. NEW ZEALAND SMP EXPORTS % Change Jan. Dec. Destination 2018/2017 China Malaysia Philippines Thailand Singapore At GDT event 229 on February 6, the SMP all contracts price, $2,534, increased 3.9 percent. The March contract price, $2,700, increased 2.7 percent. CHEESE Cheddar prices in Oceania increased slightly. Buyers are increasingly moving to secure contracts to carry them through coming months. Manufacturers are producing heavy schedules with available milk to keep buyers stocked. Australia was a net cheese exporter during The primary export destination was Japan. The primary source of cheese imports was New Zealand. s for: Oceania Cheese, Cheddar, Free on Board - Port, Range - $/MT: 3,500-3,600 Secondary Sourced Information: Cheese exports from Australia during 2018, 173,000 MT, were up 0.7 percent from 2017, according to CLAL. The table below shows the top export destinations sequentially ranked and percent change comparing 2018 with Australia Cheese Exports % Change Jan. Dec. Destination 2018/2017 Japan China South Korea Malaysia Philippines Cheese imports to Australia during 2018, 98,000 MT, were down 15.2 percent from 2017, according to CLAL. The table below shows the top import origins and country percent change comparing 2018 with More imports come from New Zealand than the next five countries combined. New Zealand supplies nearly twice as much as the United States, the number two source. Australia Cheese Imports % Change Jan. Dec. Origin 2018/2017 New Zealand United States Italy Netherlands France Germany New Zealand 2018 cheese production,380,000 MT, increased 0.5 percent from 2017 according to CLAL and FAS-USDA. Cheese exports from New Zealand during 2018, 323,000 MT, were down 5.7 percent from 2017, according to CLAL. The table below shows top export destination country percent change comparing 2018 with During 2018, cheese imports were 12,000 MT, +2.2 percent. Primary sources were Australia, United States and Denmark. CONTINUED ON PAGE 8D

17 DAIRY MARKET NEWS, FEBRUARY 11-15, D- VOLUME 86, REPORT 7 INTERNATIONAL DAIRY MARKET NEWS - OCEANIA Information gathered February 4-15, 2019 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 8C NEW ZEALAND CHEESE EXPORTS % Change Jan. Dec. Destination 2018/2017 Japan China Australia South Korea Indonesia At GDT event 229 on February 6, the cheddar all contracts price, $3,565, increased 1.4 percent. The March contract, $3,590, increased 3.0 percent. WHOLE MILK POWDER Whole milk powder prices in Oceania are higher. Most buyers do not expect a trend reversal with price easing in coming months. Only slight trading price movements seem to be viewed as any possible deviation from overall price strength being the norm. Australia was a net exporter of WMP through Exports were nearly twice the magnitude of imports. China was the most significant destination for Australian WMP exports. New Zealand was the largest single source of WMP imports. s for: Oceania, All First Sales, Free on Board - Port, Conventional, and Edible Whole Milk Powder Range - 26% Butterfat; $/MT: 3,000-3,075 Secondary Sourced Information: WMP exports from Australia during 2018, 55,000 MT, were up 0.8 percent from 2017, according to CLAL. The table below shows the top export destinations and country percent change comparing 2018 with Significantly more is exported to China than the other countries. Australia WMP Exports % Change Jan. Dec. Destination 2018/2017 China Thailand Bangladesh Singapore Oman Algeria Australia WMP Imports % Change Jan. Dec. Origin 2018/2017 New Zealand Austria Germany Netherlands New Zealand WMP production during 2018, 1.42 million MT, was 2.9 percent higher than during Virtually all WMP produced in New Zealand during 2018 was exported. WMP exports from New Zealand during 2018, 1.38 million MT, were up 2.7 percent from 2017, according to CLAL. The table below shows top export destination country percent change comparing 2018 with Exports to China were greater than the next four countries combined. NEW ZEALAND WMP EXPORTS % Change Jan. Dec. Destination 2018/2017 China Algeria United Arab Emirates Sri Lanka Bangladesh At GDT event 229 on February 6, the WMP all contracts price, $3,027, increased 8.4 percent. The March contract, $3,012, increased 7.2 percent. Exchange rates for selected foreign currencies: February 11, Argentina Peso.0140 India Rupee.7061 Australian Dollar.0091 Japan yen.2661 Brazil Real.0518 Mexican Peso.7519 Canadian Dollar.6733 New Zealand Dollar.0015 Chile Peso.2607 Poland Zloty Euro.0307 Uruguay Peso Conversion example: To compare the value of 1 US Dollar to Mexican Pesos: (1/.0518) = Mexican Pesos. Source: "Wall Street Journal" WMP imports to Australia during 2018, 28,000 MT, were up 1.1 percent from, according to CLAL. The table below shows the top import origins and country percent change comparing 2018 with Imports from New Zealand are significantly greater than imports from the other listed countries.

18 DAIRY MARKET NEWS, FEBRUARY 11-15, E- VOLUME 86, REPORT 7 INTERNATIONAL DAIRY MARKET NEWS - SOUTH AMERICA Information gathered February 4-15, 2019 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 In Argentina/Uruguay, the sunny weather favored development of corn and soybean crops and helped to minimize muddy/flood conditions in several dairy farms. Meanwhile, showers intensified over central Brazil, while dryness persisted in the southern region of the country. In general, farm milk production in Brazil and all the Southern Cone region is seasonally trending down due to higher summer temperatures, which continue raising heat stress on dairy herds. In addition, the fat/ protein milk components are constantly decreasing, contributing to higher cream premiums paid by buyers. In general terms, although milk production has decreased at the continental level, it is still adequate to comply with most requests from manufacturers of bottled/ UHT milk, cheese, and yogurt. Nevertheless, cream supplies are very tight, while demands from butter churners, ice cream, and milk caramel processors are robust. With the reopening of most educational institutions in the next few weeks, bottlers' requests are steadily increasing. s for: South America, All First Sales, Free on Board - Port, Conventional, and Edible Whole Milk Powder Range - 26% Butterfat; $/MT: 2,550-3,150 Secondary Sourced Information: At the GDT Event 229 on February 6, whole milk powder (WMP) prices across all contract periods averaged $3,027 per metric ton, up 8.4 percent from the last event. SKIM MILK POWDER Although the prices of skimmed milk powder (SMP) have continued to increase in some auctions abroad, prices within the Mercosur bloc have dropped. There are some factors that look to be softening the regional prices of SMP. For example, last week, the Brazilian government put an end to import tariffs implemented 18 years ago to the European Union and New Zealand, which were 14.8 and 3.9 percent respectively, for milk powder. In this way, regional manufacturers are lowering prices to be more competitive in a more open market. However, it is important to remember that the Mercosur tariff of 28 percent is still effective, which continues to be an advantage for regional manufacturers when exporting to Brazil. In terms of production, SMP manufacturing is more active compared to one month ago, thus, inventories are slightly more available in the market. Having said this, during the past two weeks, South America f.o.b. export prices for SMP shifted down on light to moderate trading. s have been very volatile during the past couple of weeks, which is typical for a niche market, especially in the current political/economic circumstances. s for: South America, All First Sales, Free on Board - Port, Conventional, and Edible Skim Milk Powder Range % Butterfat; $/MT: 2,275-2,575 Secondary Sourced Information: At the GDT Event 229 on February 6, skim milk powder (SMP) prices across all contract periods averaged $2,534 per metric ton, up 3.9 percent from the last event. WHOLE MILK POWDER In the Southern Cone region of South America, free on board export prices for whole milk powder (WMP) are mixed as a few sales outside the region slightly pushed down the bottom price of the range. In terms of demand and supply, the market seems to be mostly in balance or equilibrium, according to several manufacturers. The regional production of WMP is stable, while the interest from Brazil is fair. However, with the end of the protectionist tariff on imports of E.U. and Zew Zeland, now the Brazilian market is more open to receive offers. This could make regional processors, especially from Argentina and Uruguay, to adjust prices down to be more competitive when exporting to Brazil.

19 DAIRY MARKET NEWS, FEBRUARY 11-15, VOLUME 86, REPORT 7 CME GROUP, INC FUTURES Selected settling prices Month 02/01 02/04 02/05 02/06 02/07 02/08 02/11 02/12 02/13 02/14 III MILK FUTURES (Pit-Traded) ($/cwt) FEB MAR APR MAY JUN JUL AUG SEP OCT CLASS IV MILK FUTURES (Pit-Traded) ($/cwt) FEB MAR APR MAY CASH SETTLED BUTTER FUTURES (Electronic-Traded) ( /lb) FEB MAR APR MAY NONFAT DRY MILK FUTURES (Pit-Traded) ( /lb) FEB MAR APR MAY WHEY (Electronic-Traded) ( /lb) FEB MAR APR MAY CHEESE CSC (Electronic-Traded) ($/lb) FEB MAR APR MAY Source:

20 DAIRY MARKET NEWS, FEBRUARY 11-15, VOLUME 86, REPORT 7 February Supply and Demand Estimates Milk production for 2018 is lowered on available data through December. The milk production forecast for 2019 is reduced on lower expected first-half dairy cow numbers and continued slow growth in milk per cow. The 2018 and 2019 fat basis import forecasts are reduced from December on recent trade data and lower expected cheese and butterfat imports. The fat basis exports are unchanged for 2018 but the forecast is raised for 2019 primarily on strong expected demand for butter and butterfat products. On a skim-solids basis, the 2018 imports are raised on current trade data while the 2019 import forecast is unchanged. Skim-solids basis exports for 2018 are lowered, but the 2019 export forecast is raised from December on anticipated strong demand for nonfat dry milk (NDM). Dairy product prices for 2018 are adjusted to reflect available December price data. For 2019, the cheese price forecast is lowered while butter, NDM, and whey price forecasts are raised from December. The Class III price for 2019 is unchanged from December while the Class IV price is raised on higher butter and NDM prices. The 2019 all milk price forecast is raised to $16.90 to $17.60 per cwt. Milk U.S. Milk Supply and Use 2018 Commodity 2017 Projected Estimated 2019 Projected Dec Feb Dec Feb (billion pounds) Production Farm Use Fat Basis Supply Beginning Commercial Stocks Marketings Imports Total Commercial Supply Fat Basis Use Commercial Exports Ending Commercial Stocks CCC Donations Domestic Commercial Use Skim-Solid Basis Supply Beginning Commercial Stocks Marketings Imports Total Commercial Supply Skim-Solids Basis Use Commercial Exports Ending Commercial Stocks CCC Donations Domestic Commercial Use NOTE: Totals may not add due to rounding. Continued on page 11

21 DAIRY MARKET NEWS, FEBRUARY 11-15, VOLUME 86, REPORT 7 February Supply and Demand Estimates-cont d Commodity 2017 U.S. Dairy s 2018 Projected 2019 Projected Estimated Dec Feb Dec Feb (dollars per pound) Product s 1 Cheese Butter Nonfat Dry Milk Dry Whey (dollars per cwt) Milk s 2 Class III Class IV All Milk Quarterly 2018 IV 2019 I II III IV 4 (billion pounds) Milk Production (dollars per cwt) All Milk 2, Class III Class IV Simple average of monthly prices calculated from AMS weekly average dairy product prices for class price computations. Details may be found by going to scroll down to Publications, National Dairy Products Sales Reports, and select Current Release & Archives. 2 Annual and quarterly Class III and Class IV prices are the simple average of monthly minimum Federal order milk prices paid by regulated plants for milk used in the respective classes. All milk price is the simple average of monthly prices received by farmers for milk at average test. 3 Does not reflect any deductions from producers as authorized by legislation. 4 Projection. Source: U.S. Department of Agriculture. World Agricultural Outlook Board. World Agricultural Supply and Demand Estimates, WASDE-585, February 8, Approved by the Interagency Commodity Estimates Committee [members for Dairy are: Shayle Shagam, Chairperson, WAOB; Carolyn Liebrand, AMS; Paul Kiendl, FAS; Jerry Cessna, ERS; and Milton Madison, FSA].

22 DAIRY MARKET NEWS, FEBRUARY 11-15, VOLUME 86, REPORT 7 December Milk Sales During December 4.0 billion pounds of packaged fluid milk products were shipped by milk handlers in December This was 2.1 percent lower than a year earlier. Estimated sales of total conventional fluid milk products decreased 2.4 percent from December 2017 and estimated sales of total organic fluid milk products increased 2.0 percent from a year earlier. Product Name Estimated Total U.S. Sales of Fluid Milk Products, December 2018, with Comparisons 1 Sales 2 Change from: November Year to Date 4 Previous Year 4 Year to Date 4 (million pounds) (percent) Conventional Production Practice Whole Milk 1,315 14, Flavored Whole Milk Reduced Fat Milk (2%) 1,272 14, Low Fat Milk (1%) 476 5, Fat-Free Milk (Skim) 303 3, Flavored Fat-Reduced Milk 271 3, Buttermilk Other Fluid Milk Products Total Fat-Reduced Milk 3 2,321 28, Total Conventional Milk Products 3,827 44, Organic Production Practice Whole Milk 94 1, Reduced Fat Milk (2%) Low Fat Milk (1%) Fat-Free Milk (Skim) Flavored Fat-Reduced Milk Other Fluid Milk Products 0 1 1, Total Fat-Reduced Milk , Total Organic Milk Products 219 2, Total Fluid Milk Products 4,046 47, These figures are representative of the consumption of fluid milk products in Federal milk order marketing areas, which account for approximately 92 percent of total fluid milk sales in the United States. An estimate of total U.S. fluid milk sales is derived by interpolating the remaining 8 percent of sales from the Federal milk order data. 2 Data may not add due to rounding. 3 Both conventional and organic fat-reduced milk categories are the total of reduced fat, lowfat, skim and flavored fatreduced milk. 4 Year to Date Sales, Change from Previous Year, and Change in Year to Date figures are influenced by the shift of California from being administered by the California Department of Food and Agriculture (CDFA) to a Federal order (i.e., changes in product classification, etc.). The California Federal Milk Marketing Order became effective on November 1, Package Sales of Total Fluid Milk Products in Federal Milk Orders and California, December 2018, with Comparisons 1 Marketing Area Order Sales 2 Change from: Number December Year to Date Previous Year Year to Date (million pounds) (percent) Northeast , Appalachian , Florida , Southeast , Upper Midwest , Central , Mideast , California , Pacific Northwest , Southwest , Arizona , All Areas (Totals) ¹ 3,723 43, These figures are representative of the consumption of total fluid milk products in the respective area. 2 Data may not add due to rounding. 3 The figures for California include data obtained from the California Department of Food and Agriculture (CDFA) for the months of January through October 2018, and prior years. The California Federal Milk Marketing Order became effective November 1, 2018

23 DAIRY MARKET NEWS, FEBRUARY 11 15, VOLUME 86 REPORT 7 Market Summary and Utilization Report, 2018 Highlights: During 2018, billion pounds of milk were received from Federally pooled producers. This volume of milk is 4.6 percent higher than the 2017 pooled volume. Regulated handlers pooled 41.0 billion pounds of producer milk as Class I products, up 0.8 percent when compared to the previous year. The Class I utilization increase over last year is primarily due to the addition of the California Federal Order which became effective November 1, Class I utilization decreased in 9 of the 10 Federal Milk Order Marketing areas prior to the addition of the California Order and increased in the Southwest Federal Milk Order Marketing area. The all-market average Class utilization percentages were: Class I = 29%, Class II = 13%, Class III = 43%, and Class IV = 15%. The weighted average statistical uniform price for 2018 was $15.51 per cwt, $1.45 lower than 2017's $ Federal Milk Order Marketing Area 1 Order Number Utilization of Producer Milk Receipts of Producer Milk in Class I Change from Change from Total Total Prev. Year Prev. Year (million lbs) (percent) (million lbs) (percent) Northeast (Boston) , , Appalachian (Charlotte) 005 5, , Florida (Tampa) 006 2, , Southeast (Atlanta) 007 5, , Upper Midwest (Chicago) , , Central (Kansas City) , , Mideast (Cleveland) , , California (Los Angeles) , Pacific Northwest (Seattle) 124 8, , Southwest (Dallas) , , Arizona (Phoenix) 131 5, , All Market Total or Average 2 141, , Names in parentheses are the major city in the principal pricing point of the market. 2 Averages are the weighted average percent change. 3 The California Federal Milk Order became effective November 1, Federal Milk Order Marketing Area 1 Order Number Utilization of Producer Milk in All Classes 2 Class I Class II Class III Class IV Uniform 3 (percent) 2 ($ per cwt) Northeast (Boston) Appalachian (Charlotte) Florida (Tampa) Southeast (Atlanta) Upper Midwest (Chicago) Central (Kansas City) Mideast (Cleveland) California (Los Angeles) Pacific Northwest (Seattle) Southwest (Dallas) Arizona (Phoenix) All Market Total or Average Names in parentheses are the major city in the principal pricing point of the market. 2 Totals may not add to 100 percent due to rounding. Averages are weighted averages. 3 Statistical uniform prices for component pricing orders (Class III price plus producer price differential). For other orders, uniform skim milk price times plus uniform butterfat price times 3.5.

24 DAIRY MARKET NEWS, FEBRAUARY 11 15, VOLUME 86, REPORT 7 Consumer Index and Average Retail s for Selected Products, U.S. City Average 1 Month Consumer Index All Food Dairy Products Fresh Whole Milk Cheese Butter Meat, Poultry, Fish, and Eggs CPI 2 Pct. Chg 3 CPI 2 Pct. Chg 3 CPI 2 Pct. Chg 3 CPI 2 Pct. Chg 3 CPI 2 Pct. Chg 3 CPI 2 Pct. Chg 3 Nov Dec Jan Month U.S. City Average Retail s Whole Milk 4 Butter 5 Process Cheese 6 Natural Cheese 7 Ice Cream (dollars) Nov N/A N/A Dec N/A N/A (dollars) Jan N/A N/A N/A = Not available. 1 "CPI Detailed Report," "Consumer s: Energy and Food," BLS, U.S. Department of Labor. According to BLS, average prices are best used to measure the price level in a particular month. To measure price change over time, the CPI is more appropriate. 2 The standard reference base period for these indexes is = Percent change over previous year. 4 Per gallon. 5 Per pound. Grade AA, salted, stick butter. 6 Per pound, any size and type of package. 7 Per pound, cheddar cheese in any size and type of package and variety (sharp, mild, smoked, etc. ). 8 Per 1/2 gallon prepackaged regular.

25 DAIRY MARKET NEWS, FEBRUARY 11-15, G1- VOLUME 86, REPORT 7 Million Pounds Cheese Exports (various H.S. Codes) JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC GRAPH USDA, DMN; SOURCE USDA,FAS Million Pounds JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC GRAPH, USDA, DMN; SOURCE, USDA,FAS

26 DAIRY MARKET NEWS, FEBRUARY 11-15, G2- VOLUME 86, REPORT 7 Million Pounds Monthly Nonfat Dry Milk Exports: H.S. Code (FAS) JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC GRAPH USDA, DMN; SOURCE USDA,FAS Million Pounds Monthly Lactose Exports: H.S. Code (FAS) JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC GRAPH USDA, DMN; SOURCE USDA,FAS

27 DAIRY MARKET NEWS, FEBRUARY 11-15, G3- VOLUME 86, REPORT 7 Million Pounds Monthly Dry Whey Exports: H.S. Code (FAS) JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC GRAPH USDA, DMN; SOURCE USDA,FAS Million Pounds Monthly WPC <80% Exports: H.S. Code (FAS) JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC GRAPH USDA, DMN; SOURCE USDA,FAS

28 Dairy Market News Branch Agricultural Marketing Service National Retail Report-Dairy Websites: and Volume 86- Number 7 Issued Weekly Friday, February 15, 2019 Advertised s for Dairy Products at Major Retail Supermarket Outlets ending during the period of 02/15/2019 to 02/21/2019 Total conventional dairy advertisements decreased by 9 percent, and total organic dairy advertisements decreased by 17 percent. Compared to the previous week, the number of ads for conventional half gallon milk increased 33 percent, while for organic decreased 25 percent. The national weighted average advertised conventional milk price for half gallons is $2.26, an increase of 72 cents from a week ago. Meanwhile, organic milk half gallon prices averaged $3.97, down only one cent from one week ago. Based on this week average prices, the organic premium for one half gallon of milk is $1.71. Total conventional cheese advertisements decreased 2 percent, while organic cheese ads increased 13 percent compared to last week. The weighted average price of conventional 8 ounce block cheese is $2.17, and $4.99 for organic, representing an organic premium of $2.82. The U.S. average conventional one pound butter price is $3.75, up 17 cents from a week ago. The U.S. average organic one pound butter price is $5.29, up 11 cents from a week ago. Thus, the resulting organic butter premium is $1.54. The total numbers of ads for organic yogurt decreased by 4 percent, while for conventional decreased by 8 percent. The weighted average advertised price for organic yogurt in 4-6 ounce containers is $1.00, while for conventional is 96 cents, resulting in an organic premium of 4 cents. Top 5 Commodities Featured This Week 28K 02/15/ /08/ /01/ K with Ads 20K 16K 12K 8K 4K 0K Yogurt Cheese Ice cream Cream cheese Milk 1 -- Dairy Market News surveys nearly 150 retailers, comprising over 23,000 individual stores, with online weekly advertised features.

29 National Retail Report - Dairy Vol 86 - No. 7 Friday, February 15, Page 2 Percentage of Total Conventional Ads by Commodity Butter, 4% Yogurt, 25% Cheese, 25% Sour cream, 7% Cottage cheese, 2% Milk, 3% Cream cheese, 11% Ice cream, 12% Flavored milk, 2% Percentage of Total Organic Ads by Commodity Yogurt, 19% Butter, 2% Cheese, 7% Cottage cheese, 3% Cream cheese, 4% Sour cream, 9% Milk, 57% Wtd Avg - Simple weighted average

30 National Retail Report - Dairy Vol 86 - No. 7 Friday, February 15, Page 3 NATIONAL -- CONVENTIONAL DAIRY PRODUCTS THIS PERIOD LAST WEEK LAST YEAR Commodity Type Pack Size With Ads Wtd Avg With Ads Wtd Avg With Ads Wtd Avg 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 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 Range with Ads Wtd Avg Range with Ads Wtd Avg Range with Ads Wtd Avg Butter 1 # Cheese Natural Varieties 8 oz block Cheese Natural Varieties 1 # block Cheese Natural Varieties 8 oz shred Cheese Natural Varieties 1 # shred Cottage cheese 16 oz Cream cheese 8 oz 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 Yogurt Greek 32 oz Yogurt Yogurt 4-6 oz Yogurt Yogurt 32 oz Wtd Avg - Simple weighted average

31 National Retail Report - Dairy Vol 86 - No. 7 Friday, February 15, Page 4 SOUTH CENTRAL U.S. SOUTHWEST U.S. NORTHWEST U.S. Commodity Type Pack Size Range with Ads Wtd Avg Range with Ads Wtd Avg Range with Ads Wtd Avg 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 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 Range with Ads Wtd Avg Range with Ads Wtd Avg Butter 1 # Cheese Natural Varieties 8 oz 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 Ice cream 48-64oz Sour cream 16 oz Yogurt Greek 4-6 oz Yogurt Yogurt 4-6 oz NATIONAL -- ORGANIC DAIRY PRODUCTS THIS PERIOD LAST WEEK LAST YEAR Commodity Type Pack Size With Ads Wtd Avg With Ads Wtd Avg With Ads Wtd Avg Wtd Avg - Simple weighted average

32 National Retail Report - Dairy Vol 86 - No. 7 Friday, February 15, Page 5 Butter 1 # Cheese Natural Varieties 8 oz block Cheese Natural Varieties 8 oz shred Cottage cheese 16 oz Cream cheese 8 oz Flavored milk All fat tests half gallon Milk All fat tests half gallon Milk All fat tests gallon Milk All fat tests 8 oz UHT Sour cream 16 oz Yogurt Greek 4-6 oz Yogurt Greek 32 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 Range with Ads Wtd Avg Range with Ads Wtd Avg Range with Ads Wtd Avg Butter 1 # Cream cheese 8 oz Milk All fat tests half gallon Milk All fat tests gallon Yogurt Greek 4-6 oz 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 Range with Ads Wtd Avg Range with Ads Wtd Avg Range with Ads Wtd Avg Cheese Natural Varieties 8 oz block Cheese Natural Varieties 8 oz shred Cottage cheese 16 oz Milk All fat tests half gallon Sour cream 16 oz Yogurt Yogurt 4-6 oz Yogurt Yogurt 32 oz Wtd Avg - Simple weighted average

33 National Retail Report - Dairy Vol 86 - No. 7 Friday, February 15, Page 6 ALASKA U.S. HAWAII U.S. Commodity Type Pack Size Range with Ads Wtd Avg Range with Ads Wtd Avg Milk All fat tests half gallon 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 Wtd Avg - Simple weighted average

34 Dairy Market News United States Department of Agriculture Agricultural Marketing Service Dairy Programs Market Information Branch Volume 86, Report 7 February 15, 2019 GENERAL NUMBER (608) Elizabeth Frederick (608) Elizabeth.Frederick@USDA.GOV ORGANIC/ EAST Daniel Johnson (608) Daniel.Johnson@USDA.GOV EAST/ORGANIC Jessica Mueller (608) Jessica.Mueller@USDA.GOV CENTRAL Israel Weber (608) Israel.Weber@USDA.GOV SOUTHWEST/SOUTH AMERICA AJ (Angel José) Terán (608) Angel.Terán@USDA.GOV SOUTHWEST Florence Kone-Gonzalez (608) Florence.KoneGonzalez@USDA.GOV NORTHWEST/MOUNTAIN Mike Bandli (608) Mike.Bandli@USDA.GOV EUROPE & OCEANIA/ ORGANIC Eric Graf (608) Eric.Graf@USDA.GOV NATIONAL SUPERVISOR Janet Linder (608) Janet.Linder@USDA.GOV BRANCH CHIEF Butch Speth (608) Butch.Speth@USDA.GOV INTERNET ADDRESS MARKET NEWS PORTAL RECORDED INFORMATION SYSTEM (608) FAX (608) USDA, Dairy Market News 4600 American Parkway, STE 106 Madison, WI Additional Dairy Market News Information: DMN Website: DMN MARS (MyMarketNews): USDA is an equal opportunity provider and employer