DAIRY MARKET NEWS WEEK OF JANUARY 29 -

Transcription

1 DAIRY MARKET NEWS WEEK OF JANUARY 29 - FEBRUARY 2, 2018 VOLUME 85, REPORT 5 DAIRY MARKET NEWS AT A GLANCE CME GROUP CASH MARKETS (2/2) BUTTER: Grade AA closed at $ The weekly average for Grade AA is $ (+.0090). CHEESE: Barrels closed at $ and 40# blocks at $ The weekly average for barrels is $ (-.0245) and blocks, $ (-.0510). NONFAT DRY MILK: Grade A closed at $ The weekly average for Grade A is $.7095 (-.0045). BUTTER HIGHLIGHTS: Cream into butter production is available to abundant. Butter output is generally heavy. Churns are mostly active as manufacturers are working on burning through their cream supplies. However, some producers are only churning to meet already set orders. Contacts report growing inventories as preparation for the upcoming spring holidays. Demand is meeting seasonal expectations. Bulk butter prices range from 2 cents under to 9 cents over the market, based on the CME Group with various time periods and averages used. The butter market tone is resilient and showing signs of firming. Friday s CME Group cash trading saw Grade AA butter close at $2.1150, down $.0150 from last Friday. CHEESE HIGHLIGHTS: Cheese output is generally heavy as some plants are running at or near full capacity, although other operations are focusing on managing warehouse space and facility needs. Milk availability varies throughout the regions. Some facilities report just enough milk to meet pre-set production schedules. However, some plants are experiencing an abundance of milk. Reported spot milk prices from contacts in the Midwest ranged from $3 under to $1 over Class III. Cheese stocks remain substantial due to heavy milk supplies and heavy production. As the Super Bowl looms, demand has increased and a rise in buyer activity has been noted. There is some positivity regarding market tones among cheese contacts, as prices have experienced a notably steady week. Friday on the CME, barrels closed at $1.3250, up $.0050 from last Friday. Blocks closed at $1.4625, down $.0100 from last Friday. FLUID MILK: Farm milk output varies across the nation. In the Southeast, New Mexico and the mountain states of Colorado, Utah, and Idaho, milk production is steady. However, in the Midwest, California, Arizona, and the Pacific Northwest, milk yields are stronger. Due to unpleasant weather conditions and poor feed quality, milk production in the Northeast is steady to decreasing. Milk supplies are steady to limited in the Southeast, forcing manufacturers to pull some milk from other regions to fulfill processing needs. In the other regions, milk is sufficient to meet all demands. Some states of the West even have too much milk and are concerned with their balancing capacities for the weeks to come. Bottling intakes are steady. Condensed skim market tone is steady in the East, but dreary in the West. Sales of condensed skim at discounted prices have been reported in the West. Some loads are moving from California to other states. Cream is readily available to buyers in all the regions. Nonetheless, demand is flat to lackluster in the East and the West. In the Upper Midwest, Class II and III manufacturers are showing more interest for cream. Multiples for all Classes range in the East, in the Midwest, and in the West. DRY PRODUCTS: Low/medium heat nonfat dry milk (NDM) spot prices are steady to lower throughout the regions. Demand varies. However, demand is slightly increasing in some regions due to interest from bakers. High heat NDM prices are steady to higher. The NDM undertone is unsettled. Dry buttermilk prices are flat to decreasing. Demand for dry buttermilk is steady to slightly higher amidst the current baking season. The dry buttermilk undertone is mixed. Dry whole milk prices are steady nationwide. Chocolatiers are showing interest in dry whole milk. The market tone is balanced. Dry whey prices are steady to lower. In general, demand is mostly lackluster. The dry whey market tone is bearish. Whey protein concentrate 34% prices are steady. Demand is active. -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 9 January Dairy Market News Averages 10 January CME Group Monthly Averages 13 December Agricultural s Highlights 14 December Dairy Product Highlights 15 January FMMO Class and Component s 16 January 1 Milk Cow Inventory 17 Dairy Graphs G1 Dairy Market News Retail Report CME GROUP CASH TRADING COMMODITY MONDAY TUESDAY WEDNESDAY THURSDAY FRIDAY :: WEEKLY :: WEEKLY JAN 29 JAN 30 JAN 31 FEB 01 FEB 02 :: CHANGE* :: AVERAGE# CHEESE BARRELS $ (N.C.) $ (N.C.) $ (N.C.) $ (+.0025) $ :: :: $ (+.0025) :: (+.0050) :: (-.0245) 40# BLOCKS $ $ $ $ $ :: :: $ (-.0050) (-.0050) (N.C.) (N.C.) (N.C.) :: (-.0100) :: (-.0510) NONFAT DRY MILK GRADE A $.7050 $.7050 $.7050 $.7100 $.7225 :: :: $.7095 (-.0050) (N.C.) (N.C.) (+.0050) (+.0125) :: (+.0125) :: (-.0045) BUTTER GRADE AA $ (N.C.) $ (+.0125) $ (N.C.) $ (-.0200) $ :: :: $ (-.0075) :: (-.0150) :: (+.0090) 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 JANUARY 29 - FEBRUARY 2, 2018 DAIRY MARKET NEWS VOLUME 85, REPORT 5 -CONTINUED FROM PAGE 1- DAIRY MARKET NEWS AT A GLANCE Lactose prices are mostly unchanged. Demand for lactose is steady. s for acid and rennet casein are steady. INTERNATIONAL DAIRY MARKET NEWS (DMN): WESTERN AND EASTERN EUROPE: WESTERN OVERVIEW: Milk production in the EU January-November 2017 was 1.6 percent higher than the same period of 2016, according to CLAL. Among the top five milk producing countries, The EC Milk Market Observatory reports that November 2017 production was strongly up from November 2016: Germany, +6.4 percent; France, +5.4 percent; United Kingdom, +7.8 percent; Netherlands, +2.9 percent; and Italy, +5.3 percent. On average, 5.5 percent more milk was delivered in the EU-28 in November 2017 than November 2016, according to Dairy World MarktSpiegel Milch. A large Netherlands based dairy cooperative is paying farmers to graze cows on pasture as demand for grass-fed milk products increases. Numbers of dairy producer members grazing is increasing. A premium is paid for the milk. The coop s goal is to have at least 80 percent of members grazing at least some of the time by Milk from pasture grazed cows is supplying an expanding line of Dutch Gouda cheese made from pasture milk. EASTERN OVERVIEW: A number of Eastern European countries also show November 2017 milk production increases over November Among them, Poland, +5.4 percent; Czech Republic, +4.4 percent; Finland, +1.2 percent; and Lithuania, +2.1 percent. OCEANIA OVERVIEW: AUSTRALIA: Dairy processing plant expansion in Australia this fiscal year has been announced by a large dairy cooperative. Added capacity in Victoria and Tasmania will result when plans are implemented. A goal of the expansion plans is to be able to handle increased milk volumes more efficiently. Part of the plans will be added capacity while site improvements for existing capacity are also planned. NEW ZEALAND: December 2017 New Zealand milk production was 2.6 million MT, down from one year ago December 2016 milk production, 2.7 million MT according to DCANZ. December 2017 milk solids, million kg, are down from December 2016, million kg. New Zealand has been very dry and hot over the past week. Some measure of recovery had started with more consistent rain. However, recently that reversed with returning quite dry conditions. Many areas have been hitting record high temperatures for January. For example, at least 93 degrees Fahrenheit in Manawatu which is not usually above 85 degrees Fahrenheit as a summer high. A tropical cyclone (Fehi) is forecast to hit the country over the next couple of days. Concerns are that this could lead to flooding because soil is so dry again. The New Zealand government declared that a medium-scale adverse event classification for the drought in parts of the country would be extended to the whole of Southland plus Otago s Queenstown Lakes, Central Otago and Clutha districts. An impact of weather conditions is that many farmers have been unable to grow sufficient feed for winter, and have been using stored feed and buying supplements for stock, as well as selling off animals. SOUTH AMERICA OVERVIEW: Southeast Brazil and the rest of the Southern Cone of South America, consisting of Paraguay, Uruguay, Argentina, and Chile, are experiencing the effect of La Niña with mixed climate conditions. Because of this, the milk production at the farm level has been affected in different ways throughout the region. For example, in the main dairy states of Brazil, specifically in Minas Gerais and Goiás, milk production continues improving. On the contrary, high temperatures and dry conditions in several dairy basins of Argentina such as Buenos Aires, Córdoba, and Entre Rios continue hampering farm milk yields on most dairy farms. In general, farm milk intakes in Argentina and Uruguay are tending lower, but are above last year s levels. Nevertheless, with most schools closed, requests from bottlers are down, thus, manufacturing milk volumes are more than sufficient to cover other main dairy product processing needs such as cheese and yogurt. Meanwhile, due to seasonality, cream supplies are becoming less available as their demand strengthens among the cream-based dairy market. Butter production is still active, especially in Uruguay, with good demand from the domestic market, as well as from Russia. As reported by the government, in December 2017, Argentina milk production dropped 5 percent from the previous month, but increased 3 percent from a year ago. During December 2017, nominal prices paid to producers increased 22 percent from December Meanwhile, in Brazil, as mentioned before, milk production is higher. Fluid or bottled milk requests from several retail outlets are improving as some educational institutions are reopening during this week. In fact, UHT milk sales are up as buyers interest is ramping up. In general, the volumes of manufacturing milk are more than adequate. Hence, cheese production remains active while its demand from wholesalers and food service is fair to good. Nevertheless, the inventories of cheese, especially Mozzarella remain high in numerous processing plants. NATIONAL RETAIL REPORT (DMN): A number of featured retail advertisements centered on football themes and dairy cases were well-represented, targeting shoppers who are likely to take part in Super Bowl festivities. Ad volume, in general, rose 3 percent for conventional dairy items, but declined 8 percent for organic dairy items this period. The national weighted average advertised conventional milk price for half gallons this period, $1.27, decreased 45 cents from a week ago. Milk gallons averaged $2.88, up 6 cents. Organic half-gallon prices averaged $3.96, up 38 cents from one week ago. The resulting organic-conventional half-gallon price spread is $2.69, as the organic premium rose 83 cents from the previous report. Cream cheese ads in the conventional category were nearly threefold the rate of one week ago, while conventional sour cream ads increased 24 percent. Conventional ice cream ads were 2 percent higher. As well, total conventional cheese ads increased 7 percent higher. U.S. average conventional butter prices for one-pound packs were $3.79 this period, down 1 cent from a week ago. Cheese shreds in 8 oz. packs averaged $2.18, down 9 cents. Cream cheese in 8 oz. packs were $1.65, down 15 cents. Ice cream in oz. packs was $3.03, down 15 cents. Sour cream in 16 oz. packs was $1.75, up 8 cents. In 4-6 oz. packs, Greek yogurt averaged 97 cents, up 2 cents; while regular yogurt 4-6 oz. packs were 52 cents, unchanged from one week ago. DECEMBER AGRICULTURAL PRICES HIGHLIGHTS (NASS): The All Milk price received by farmers was $17.20 in December, down $1.70 from December The alfalfa hay price was $ in December, up $21.00 from December The corn price was $3.23 in December, down $0.09 from December The -1A- -CONTINUED ON PAGE 1B-

3 WEEK OF JANUARY 29 - FEBRUARY 2, 2018 DAIRY MARKET NEWS VOLUME 85, REPORT 5 -CONTINUED FROM PAGE 1A- DAIRY MARKET NEWS AT A GLANCE The milk-feed price ratio was 2.38 in December, down 0.35 from December The index of prices received by farmers for dairy products during the month of December 2017 was down 4.4 to Compared to December 2016, the index was down 8.4 points (8.9 percent). The index of prices paid by farmers for commodities and services, interest, taxes, and wage rates in December 2017 was up 0.3 points to Compared with December 2016, the index was up 4.2 points (4.0 percent). DECEMBER DAIRY PRODUCT HIGHLIGHTS (NASS): Butter production was 170 million pounds, 4.2 percent above December 2016, and 15.5 percent above November American type cheese production totaled 433 million pounds, 2.9 percent above December 2016, and 7.5 percent above November Total cheese output (excluding cottage cheese) was 1.09 billion pounds, 2.6 percent above December 2016, and 3.0 percent above November Nonfat dry milk production, for human food, totaled 163 million pounds, 5.4 percent above December 2016, and 14.7 percent above November Dry whey production, for human food, was 81 million pounds, 6.2 percent above December 2016, and 2.1 percent above November Ice cream, regular hard production totaled 49.6 million gallons, -0.2 percent below December 2016, and -1.5 percent below November JANUARY FEDERAL MILK ORDER CLASS AND COMPONENT PRICES (FMMO): The following are the January 2018 class prices under the Federal milk order pricing (-$0.38), Class III: $14.00 (-$1.44), and Class IV: $13.13 (-$0.38). Component Information: Under the Federal milk order pricing system, the butterfat price for January 2018 is $ per pound. Thus, the Class II butterfat price is $ per pound. The protein and other solids prices for January 2018 are $ and $ per pound, respectively. These component prices set the Class III skim milk price at $5.61 per cwt. The January 2018 Class IV skim milk price is $4.71, which is derived from the nonfat solids price of $ per pound. Product Averages: The product price averages for January 2018 are: butter: $2.1972, nonfat dry milk: $0.6966, cheese: $ and dry whey: $ JANUARY 1 MILK COW INVENTORY SUMMARY (NASS): The number of milk cows in the United States as of January 1, 2018, totaled 9.40 million head, up 1 percent from the previous year. Milk cow replacement heifers totaled 4.78 million head, up 1 percent from the previous year. The percentage of milk cow replacement heifers per 1,000 milk cows on January 1, 2018 was 50.9, unchanged from the previous year. Milk cow replacement heifers expected to calve during the year totaled 3.03 million head, down 1 percent from the previous year. -1B-

4 DAIRY MARKET NEWS, JANUARY 29 - FEBRUARY 2, VOLUME 85, REPORT 5 MONDAY, JANUARY 29, 2018 CHEESE -- SALES: 3 CARS $1.3200; 3 CARS 40# BLOCKS: $1.4725, $1.4675; LAST BID UNFILLED: 1 CAR 40# $1.4500; LAST OFFER UNCOVERED: 1 CAR $1.3200; 2 CARS 40# BLOCKS: $1.5500, $ NONFAT DRY MILK -- SALES: 6 CARS GRADE A: $0.7025, $0.7000, $0.7025, $0.7050; LAST BID UNFILLED: 4 CARS GRADE A: $0.6875, $0.6800, $0.7000; LAST OFFER UNCOVERED: 12 CARS GRADE A: $0.7375, $0.7275, $0.7175, $0.7300, $0.7100, $0.7125, $ BUTTER -- SALES: NONE; LAST BID UNFILLED: 2 CARS GRADE AA: $2.1100, $2.1000; LAST OFFER UNCOVERED: 2 CARS GRADE AA: $2.1400, $ TUESDAY, JANUARY 30, 2018 CHEESE -- SALES: 4 CARS $1.3200; LAST BID UNFILLED: 1 CAR $1.2900; 1 CAR 40# $1.4500; LAST OFFER UNCOVERED: 2 CARS $1.3500; 2 CARS 40# BLOCKS: $1.4900, $ NONFAT DRY MILK -- SALES: NONE; LAST BID UNFILLED: 4 CARS GRADE A: $0.6950, $0.6800, $0.6900; LAST OFFER UNCOVERED: 6 CARS GRADE A: $0.7175, $0.7300, $0.7225, $0.7275, $ BUTTER -- SALES: 4 CARS GRADE AA: $2.1400, $2.1425; LAST BID UNFILLED: 5 CARS GRADE AA: $2.1000, $2.1100, $2.1200, $2.1400, $2.1375; LAST OFFER UNCOVERED: 2 CARS GRADE $ WEDNESDAY, JANUARY 31, 2018 CHEESE -- SALES: 9 CARS BARRELS: $1.3100, $1.3200; LAST BID UNFILLED: 1 CAR $1.3100; LAST OFFER UNCOVERED: 1 CAR $1.3500; 2 CARS 40# BLOCKS: $1.5000, $ NONFAT DRY MILK -- SALES: 4 CARS GRADE $0.7050; LAST BID UNFILLED: 7 CARS GRADE A: $0.6800, $0.6900, $0.7025; LAST OFFER UNCOVERED: 13 CARS GRADE A: $0.7500, $0.7400, $0.7375, $0.7350, $0.7100, $0.7150, $0.7100, $ BUTTER -- SALES: NONE; LAST BID UNFILLED: 3 CARS GRADE AA: $2.1325, $2.1350; LAST OFFER UNCOVERED: 6 CARS GRADE AA: $2.1475, $2.1500, $2.1525, $2.1600, $ THURSDAY, FEBRUARY 1, 2018 CHEESE -- SALES: 9 CARS BARRELS: $1.3225, $1.3200, $1.3225, $1.3200, $1.3225; LAST BID UNFILLED: 1 CAR $1.3100; LAST OFFER UNCOVERED: 1 CAR 40# $ NONFAT DRY MILK -- SALES: 2 CARS GRADE A: $0.7100, $0.7075; LAST BID UNFILLED: 6 CARS GRADE A: $0.7000, $0.7100, $0.7000, $0.7050, $0.5000, $0.7100; LAST OFFER UNCOVERED: 11 CARS GRADE A: $0.7450, $0.7375, $0.7400, $0.7150, $ BUTTER -- SALES: 3 CARS GRADE AA: $2.1250, $2.1300, $2.1225; LAST BID UNFILLED: 1 CAR GRADE $2.0525; LAST OFFER UNCOVERED: 4 CARS GRADE AA: $2.1500, $2.1400, $2.1375, $ FRIDAY, FEBRUARY 2, 2018 CHEESE -- SALES: NONE; LAST BID UNFILLED: 2 CARS BARRELS: $1.3100, $1.3250; 1 CAR 40# $1.4625; LAST OFFER UNCOVERED: 1 CAR 40# $ NONFAT DRY MILK -- SALES: 9 CARS GRADE A: $0.7200, $0.7250, $0.7225, $0.7200; LAST BID UNFILLED: 5 CARS GRADE A: $0.7000, $0.7225, $0.7200; LAST OFFER UNCOVERED: 5 CARS GRADE A: $0.7350, $0.7275, $ BUTTER -- SALES: 2 CARS GRADE AA: $2.1175, $2.1150; LAST BID UNFILLED: 2 CARS GRADE AA: $2.0500, $2.1025; LAST OFFER UNCOVERED: 7 CARS GRADE AA: $2.1400, $2.1375, $2.1350, $2.1400, $2.1200, $2.1400, $ BUTTER MARKETS NORTHEAST CENTRAL Cream into butter production is mostly steady. However, cream supplies are not as available as the previous week. Sources note cream multiples ranging in markets. Some manufacturers are only churning to fill customers orders, while others add to stocks in anticipation of seasonal increases in demand. Sales of bulk butter in domestic markets are 5 to 7 cents over the market of the CME Group, with various time periods and averages used. CME prices for butter are steadily trending upwards. Tuesday s CME Group trading saw the daily cash butter price settle at $2.1425, up $ from last Tuesday. In general, the market tone indicates signs of firming. This week, a cooperative export assistance program accepted requests for export assistance to sell 729,730 pounds of butter. COLD STORAGE: The NASS Cold Storage report noted U.S. butter stocks as of December 31, 2017 were million pounds, up 2 percent from last year, and up 6 percent from last month. Bulk stocks in all warehouses were million pounds last year at this time. According to the DMN National Retail Report- Dairy, January 26- February 1, 2018, the Northeast weighted average retail price for 1-pound butter was $4.10, 30 cents higher than the national price and 54 cents higher than last week s regional price. Retail butter markets reported prices ranging $3.19-$4.99 in the Northeast. NATIONAL DAIRY PRODUCTS SALES REPORT Butter sales are seasonally quiet, but demand is generally meeting seasonal expectations. Butter producers suggest the time between the winter and spring holidays is the period to focus on production. Butter makers suggest production activity is steady, as cream remains available from within and outside the Midwest. An uptick in microfixing is also keeping plant operations on the go. Although cream intakes from Eastern and Western suppliers remain consistent, reported Class IV multiples moved upward, ranging from 1.05 to 1.15 f.o.b. Butter contacts suggest that the uptick in butter stocks, according to the NASS Cold Storage report, is less concerning for butter than other commodities. As butter s public perception has shown marked improvements in recent years, contacts suggest a need for increased supplies. That being said, other contacts question whether the butter market tones can remain resilient, as all other dairy commodities bear the brunt of low prices and/or instability. Bulk butter prices ranged from flat to 9 cents over the CME. Wednesday at the CME Group, Grade AA butter closed at $2.1425, up $.0225 from last Wednesday. DMN National Retail Report-Dairy for January 26-February 1 noted the national weighted average advertised price for a 1 pound package of butter is $3.80, $.33 above one week ago and $.49 above one year ago. The NASS Cold Storage report noted U.S. butter stocks as of December 31, 2017 were million pounds, up 2 percent from last year and 6 percent from November 30, Bulk stocks in all warehouses were 166 million pounds last year at this time. CONTINUED ON PAGE 2A WEEK ENDING January 27, 2018 BUTTER CHEESE 40# BLOCKS CHEESE BARRELS 38% MOISTURE ,120, ,355, ,877,950 DRY WHEY ,942,092 NDM ,946,995 Further data and revisions may be found on the internet at:

5 DAIRY MARKET NEWS, JANUARY 29 - FEBRUARY 2, A- VOLUME 85, REPORT 5 CONTINUED FROM PAGE 2 WEST Butter output is heavier in the West due to above needs supplies of cream in the market. Although processors manage to sell some of their cream, cream supplies are so abundant that they have to churn more butter. Processing capacities for cream seem to be limited in some areas, forcing certain manufacturers to refrain from helping other plants churn their cream. Butter inventories are also growing as current demand is alive, but seems to not be enough to keep up with the speed of production. According to a few contacts, retail sales are diminishing as well as the requests from the baking sector. However, orders for the spring holidays are starting to come through. This week, western bulk butter prices are steady at 2 cents below to 6.5 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 January 26-February 1 found that the U.S. weighted average advertised price of 1 pound butter is $3.80 up $.33 from last week. The U.S. weighted average price was $3.31 one year ago. The weighted average price in the Southwest is $2.85, with a price range of $2.50-$3.49. The weighted average price in the Northwest is $3.24, with a price range of $1.99-$3.69. The Grade AA butter price at the CME Group on Wednesday closed at $2.1425, up $.0225 from a week ago.

6 DAIRY MARKET NEWS, JANUARY 29 - FEBRUARY 2, VOLUME 85, REPORT 5 NORTHEAST Northeast cheese production is busy as milk continues to clear into vats. Milk availability is steady to tight as some cheese makers report they are receiving just enough loads for scheduled production levels. With the upcoming Super Bowl, domestic cheddar cheese block sales are up. Spot sale cheese trading activities are stable to light as prices on some indices are solid, however some market participants are content with their orders and do not need to purchase immediate loads. The Northeast wholesale cheddar and Muenster prices decreased $0.0125, but the process cheese price increased $ The Grade A Swiss price is steady. This week, a cooperative export assistance program accepted 25 requests for export assistance to sell million pounds (1,982 metric tons) of cheese. At Tuesday s CME Group trading, daily cash prices saw barrels closed at $1.3200, down $0.0450, and blocks closed at $1.4625, decreased $ from last Tuesday. The DMN National Retail Report-Dairy, for January 26-February 1, 2018, noted the U.S. weighted average advertised price for 8 ounce cheese block was $2.28, decreased 21 cents from the previous week, but up 23 cents from last year. The U.S. weighted average advertised price of 8 ounce cheese shreds was $2.27, down 13 cents from last week, but up 8 cents from a year ago. Northeast region s weighted average advertised price for 8 ounce cheese blocks was $2.11, 17 cents below the U.S. average, with a regional price range of $1.67-$3.50. The Southeast region s average price for 8 oz. cheese blocks was $2.40, 12 cents above the average U.S. price, with a regional price range of $1.99-$3.50. The Northeast average price for 8 oz. cheese shreds was $2.37, up 10 cents from the U.S. average price, with a regional price range of $1.88-$3.00. In the Southeast, the average price for 8 oz. shreds was $2.27, same price as the U.S. average, with prices ranging $1.99-$2.50. COLD STORAGE: According to NASS, U.S. stocks of total natural cheese as of December 31, 2017 totaled 1.3 billion pounds, 2 percent higher than the previous month, and up 7 percent from a year ago. Swiss cheese totaled 26.4 million pounds, 9 percent higher than a year ago, and up 6 percent from last month. In New England, stocks of American cheese totaled 67.7 million pounds, 6 percent higher than December 2016 and 7 percent higher than November 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 production in the Midwest region varies by plant. Some operations have continued to mete cheese creation in order to work out facility needs and manage warehouse space. Some traditional style cheesemakers have suggested that days off will be seldom between now and the summer. Generally, all cheese sales are meeting expectations, which is a turnaround from as recently as mid-january. Process cheesemakers, in particular, have suggested that sales have increased from a very slow start in Pizza cheese suppliers also report a demand uptick from previous weeks. Milk into cheese, for the most part, is discounted. Spot milk prices ranged from $3 under to $1 over again this week. There is some positivity regarding market tones among cheese contacts. Although the path to some steadiness has not been cogent, there is currently a bullish sentiment as prices are appealing to buyers who have, until recently, been very hesitant to purchase more than absolutely necessary. The DMN National Retail Report-Dairy shows that January 26-February 1 Midwest ads for 8 ounce shred CHEESE MARKETS cheese have a weighted average advertised price of $2.00, 27 cents below the national average. Midwest prices range from $1.67-$2.50. One year ago, the national price was $2.19. For 8 ounce blocks, the Midwest average price is $2.09, 19 cents below the national average price. Midwest ads are priced from $1.67-$3.50. Last year, the national price was $2.05. Midwestern wholesale prices are unchanged for Swiss cuts, up $.0225 for process, but down $.0125 for all other types. According to the NASS Cold Storage report, U.S. stocks of cheese (total natural) at the end of December 2017 were billion pounds, 2 percent above November 2017 and up 7 percent from December American stocks were 3 percent higher, other natural stocks were 13 percent more, and Swiss stocks were 9 percent higher than last year. In the East North Central region (Wisconsin, Illinois, Michigan, Indiana and Ohio), American cheese stocks at the end of December 2017, were 6 percent higher than last year and unchanged from last month. Other cheese stocks in the East North Central region were 20 percent higher than December 2016 and 3 percent higher than the previous month. In the West North Central region (Minnesota, Iowa, Missouri, Kansas, Nebraska, South Dakota and North Dakota), American cheese stocks at the end of December 2017, were unchanged from last year and 6 percent higher than November Other cheese stocks in the West North Central region were 11 percent lower than December 2016 and 1 percent below November 2017.In CME Group trading Wednesday, barrels closed at $1.3200, down $.0400 from last Wednesday and blocks closed at $1.4625, down $.0325 from last Wednesday. 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 continue to push milk through cheese vats. With ample milk supplies, cheese production is active and many facilities are running at or near full capacity. However, some Class II manufacturers have pulled a little more milk into their facilities, helping ease the pressure on cheese processors. Industry contacts report an increase in demand from both export and domestic markets, possibly due to lower prices. Whether due to more favorable prices or the Super Bowl surge, manufacturers note an increase in buyer activity. Although inventories are still heavy, the uptick has drawn total cheese stocks down slightly. The DMN National Retail Report-Dairy for the week of January 26-February 1 shows the U.S. weighted average advertised retail price for an 8 ounce pack of natural shredded cheese is $2.27, down $.13 from last week. Packs average $2.47 in the Southwest and $2.06 in the Northwest. One year ago, the national price was $2.19. For 8 ounce blocks, the U.S. price is $2.28, down $.21 from last week. Blocks average $2.79 in the Southwest and $1.79 in the Northwest. One year ago, the national price was $2.05. In the West, wholesale prices were up $.0225 for process, but down $.0125 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 4.37 million pounds (1,982 metric tons) of cheese. So far this year, the program has assisted member cooperatives who have contracts to sell 9.71 million pounds of American-type cheeses in export markets. According to the CONTINUED ON PAGE 3A

7 DAIRY MARKET NEWS, JANUARY 29 - FEBRUARY 2, A- VOLUME 85, REPORT 5 CONTINUED FROM PAGE 3 NASS Cold Storage report, U.S. stocks of cheese (total natural) at the end of December 2017 were 1.28 billion pounds, up 2 percent from November 2017 holdings, and up 7 percent from December American stocks were up 3 percent, Swiss stocks were up 9 percent, and other natural stocks were up 13 percent compared to last year. In the Mountain Region, American cheese stocks were 3 percent more than one year earlier, but 2 percent less than one month ago. Pacific Region American cheese stocks were 20 percent more than one year earlier, and 4 percent more than the previous month. Also in the Pacific Region, other natural cheese stocks were 22 percent above a year ago, and 2 percent more than a month ago. According to the California Department of Food and Agriculture, December 2017 cheese production was million pounds, up 0.1 percent from a year ago. California year-to-date cheese production through December is billion pounds, down 0.1 percent from 2016 cheese production through December. In CME Group trading Wednesday, barrels closed at $1.3200, down $.0400 from a week ago and blocks closed at $1.4625, 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 Ample milk availability in the European Union is triggering more cheese production. Cheese supplies continue to be readily available to buyers. Demand is active, but has yet to absorb the abundant stocks. Nonetheless, in Germany, the market for cheese is strengthening. Processors are sold out for the upcoming weeks, and they report not having enough stocks to fulfill additional cheese requests. The German spot prices for cheese are also rising. In the United States, the prices for wholesale blue, gorgonzola, parmesan Italy, and Romano are down $.0125 while all other prices are flat compared to the previous week. : 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 : 01/29/18 12,466 : 90,416 01/01/18 8,950 : 96,245 CHANGE 3,516 : -5,829 % CHANGE 39 : -6 CHEESE MARKETS

8 DAIRY MARKET NEWS, JANUARY 29 FEBRUARY 2, VOLUME 85, REPORT 5 EAST Northeast milk production is steady to lower as many market participants report there has been stressful weather conditions, and lower feed quality has taken a toll on production. Some manufacturers report milk volumes clearing into intakes have been lower the last couple of weeks. Cheese makers communicate production is at steady levels, however they are receiving just enough milk loads for production needs. Southeast milk production is fairly flat and market participants report milk availability is steady to somewhat limited. Milk is being pulled from other regions to support production demands. However, some Southeastern bottling facilities are closed this week due to updating production equipment, allowing some milk to clear into balancing operations. Cream multiples are flat to 1.20 in the East. Cream is available, although market participants report spot load demand is steady to lackluster. Condensed skim market conditions are stable as supplies are adequate for immediate demands. According to FMMA Order #1, the Northeast December 2017 uniform price in Suffolk County, Massachusetts (Boston) was $16.71 per hundredweight for milk at 3.5 percent butterfat, a $0.43 drop compared to last month. According to FMMA Order #7, the December 2017 uniform price in Fulton County, Georgia was $19.04 per hundredweight for milk at 3.5 percent butterfat, a $0.03 drop compared to last month. Class I utilization was percent during December 2017, a decrease of 4.6 percent from last month. According to FMMA Order #6, Florida s December 2017 uniform milk price in Hillsborough County was $20.92 per hundredweight for milk at 3.5 percent butterfat, a $0.26 increase compared to last month. Class I utilization was percent during December 2017, a decrease of 2.53 percent from last month. According to the DMN National Retail Report-Dairy, for the period of January 26-February 1, 2018, the U.S. weighted average advertised price for the half gallon pack size milk was $1.72, down 20 cents compared to last week and 57 cents lower from last year. In the Northeast, the weighted average price for the gallon pack size was $2.59, down 23 cents from the U.S. average this week. MILK PRODUCTION: According to NASS, milk production in the 23 major states during December 2017 totaled 17.0 billion pounds, up 1.2 percent from one year ago. Eastern states milk production and changes from 1 year ago are as follows: December 2017 Milk Production, (USDA-NASS) (Million Lb.) % Change From 1 Year Ago Florida New York 1, Pennsylvania Vermont Virginia 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 MIDWEST As some trusted industry forecasts for milk prices through 2018 have adjusted lower, there is a sense that there will be an uptick in regional FLUID MILK AND CREAM dairy farm closures in the near term. Some plant managers have recently reported farm closures in the upper Midwest, following a regularly occurring trend in other regions, particularly the West. However, there is some uncertainty as to whether the closing farms are culling their herds or selling out to neighboring or nearby dairy operations. Thus, a decline in milk production, at least due to dairy farm closures, may be a premature appraisal at this point. Currently, milk yields are plentiful in the Midwest, as weather has been ideal for cow comfort. Bottling needs have remained steady. Cheesemakers continue to find deals on spot milk, as a number of cheese contacts relay their internal milk supplies are sufficient. Spot milk prices into Class III operations ranged from $3 under to $1 over. Cream, although plentiful, has not seen a decline in price recently. Class II and III processors are showing more interest in the upper Midwest, but south Central suppliers suggest the spring demand push has yet to gain steam. Class II cream multiples ranged from 1.12 to 1.20 f.o.b. The DMN National Retail Report-Dairy for January 26-February 1 noted the national weighted average advertised price for one gallon of milk was $2.82, up $.43 from last week and $.27 above one year ago. The weighted average regional prices in the Midwest and South Central were $2.54 and $3.06, respectively. WEST California milk output continues its seasonal increase. Milk supplies are bountiful, and processors are managing accordingly any excess loads. Reports suggest that milk yield has increased above forecasted volumes. Several manufacturers continue to move some loads of condensed skim out-of-state as a way to deal with maintenance/repair downtimes. However, they have a difficult time finding the required transportation needed for milk hauling. In addition, a number of plants that would normally take condensed skim are full. Various dairy farmers also say that they are having a hard time finding the labor they need. Arizona milk output is up this week. Milk loads available for processing are also on the rise. As so, manufacturing plants are working at full capacity, but seem to not have enough processing capacity to clear all the farm milk. Some of them are anxious about how they will manage the milk during the flush season which is getting close. Class I intakes are steady, but Class IV production is increasing. New Mexico milk production is well balanced. Class I, II, and III intakes are trending higher. Due to minor repair/maintenance projects, milk is moving accordingly between facilities as needed. Pacific Northwest milk is meeting expectations. After a dismal winter in parts of the region last year, industry contacts say milk production per cow is stronger this season. So far, this winter has been mild and conducive to cow comfort. Intakes are starting to climb slightly. Manufacturers report milk supplies are in balance with processing needs. Bottling demand is steady. In the mountain states of Colorado, Utah and Idaho, milk production is steady. Industry contacts report that added capacity in the southern part of the region and a little stronger draw from some Class II manufacturers has helped balance supplies with demand, at least for the near term. There are some concerns, however, that as milk production increases through the spring and early summer, the deluge of milk may likely place added pressure on farms and processors, especially in the northern parts of the region. The western condensed skim market is lackluster. In order to reduce the milk at some facilities, loads of condensed skim are moving at discounted prices. Condensed skim is also being actively dried. Cream sales in the West are steady to lower. Butter production has increased because -CONTINUED ON PAGE 4A-

9 DAIRY MARKET NEWS, JANUARY 29 FEBRUARY 2, A- VOLUME 85, REPORT 5 -CONTINUED FROM PAGE 4- some manufacturers are clearing more cream to the churns. A couple of producers report having to turn down helping other plants process their cream due to the lack of processing capacities. Cream multiples for all usages are lower at According to the DMN National Retail Report-Dairy for the week of January 26- February 1, the national weighted average advertised price for one gallon of milk is $2.82, up $0.43 from last week, and up $0.27 from a year ago. The weighted average regional price in the Southwest is $2.96, with a price range of $1.89-$3.99. No advertised prices were reported in the Northwest this week. FLUID MILK AND CREAM

10 DAIRY MARKET NEWS, JANUARY 29 - FEBRUARY 2, VOLUME 85, REPORT 5 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 fell on top of the range and dipped on the bottom of the mostly price series. Low/medium heat NDM spot market activity remains heavy. As prices shifted up last week, a number of brokers and suppliers suggested buyers questioned the cogency of the bullish uptick, as supplies of NDM/SMP are globally substantial. However, some suppliers have suggested Southeast Asian interests have grown recently, as New Zealand s prices are above U.S. domestic offers. Low/medium heat NDM drying remains consistent, as winter milk supplies are far from light. High heat NDM prices moved up on the bottom of the range, although overall trading remained fairly quiet. Central region high heat NDM inventories are available. The near term NDM market tone is uneasy and impossible to forecast, as nuanced factors ranging from regional milk abundance to global SMP trends impact the market. EAST: Low/medium heat nonfat dry milk (NDM) prices took a step back at the bottom of the mostly series and on the top of the range, prompted by f.o.b. spot trades and pricing indices. Demand varies. Some markets are quiet, but a fair amount of interest at lower NDM price levels is moving a few loads. Meanwhile, some market participants anticipate stagnation and a rather slow recovery. NDM production rates are steady. Stocks are plentiful. High heat prices are steady to higher. Production is intermittent. Sales are primarily through contracts. Inventories are in balance for current demand. The NDM market tone is unsettled. Wednesday at the CME Group, Grade A NDM closed at $0.7050, down $ from last Wednesday. 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 January 26 $ ,094,866 January 19 $ ,198,829 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 both ends of the range. The Central dry buttermilk spot market continued another week of fairly active spot trading. Again, producers reported some larger volume bulk sales are keeping the bottom of the price range lower, but low $.70 prices seem to be on par with most regularly traded spots this week. Many of the higher prices are based on regional supply variations and brand specific purchases. Dry buttermilk production remains secondary to nonfat dry milk drying, and more condensed buttermilk trades are taking place. Dry buttermilk stocks vary, but some producers are reporting that there will be an uptick in production ahead of the spring season. The dry buttermilk market tone is mixed. EAST: Dry buttermilk f.o.b. spot market prices softened this week as values lowered at the top and bottom of the dry buttermilk price range. As spot markets experience a level of uninspired demand, inventories are growing. For now, some market participants look to remain lean with their holdings, while attentive to the futures market and dry buttermilk price spreads. Dry buttermilk is steadily moving through contractual customer networks. Production is steady. Dryer runs are scheduled around nonfat dry milk. The dry buttermilk undertone indicates unsettledness. F.O.B. CENTRAL/EAST: NONFAT DRY MILK - WEST In the West, f.o.b. prices for low/medium heat nonfat dry milk are lower at the bottom of the range and steady on the mostly price series. Although a slight uptick in the market has been noted in the past couple of weeks, market participants do not anticipate any future big price movement. The market seems to be stabilizing according to some sellers. Demand for low/medium heat nonfat dry milk is steady to slightly increasing, aided by the requests from bakers. A number of processors plan to export more low/medium heat nonfat dry milk in the coming weeks. Supplies remain abundant throughout the western region. Production is very active as more condensed skim finds its way to the dryers. Most processors in the West cannot afford downtime at the moment because of their limited drying capacities. High heat nonfat dry milk market undertone is steady compared to last week. F.O.B. spot prices in the West remain stable. Output is irregular in that production priority is given to low/medium heat nonfat dry milk. However, processors manage to run high heat nonfat dry milk as needed to fulfill contractual obligations. Supplies are somewhat firm in the spot market. F.O.B. WEST: Includes EXTRA GRADE and GRADE A LOW/MEDIUM HEAT: MOSTLY: HIGH HEAT: DRY BUTTERMILK - WEST Western f.o.b. prices for dry buttermilk are higher at the top of the range, but steady on the mostly price series. With the current baking season, dry buttermilk interest is slightly higher. Production is steady to declining due to limited dryers' availability for condensed buttermilk processing. Certain manufacturers are looking to move condensed buttermilk to plants with more drying capacity. Inventories of dry buttermilk are easing, but they are still ample to fulfill current industry needs. The market undertone is steady. F.O.B. WEST: MOSTLY: DRY WHOLE MILK - NATIONAL The national dry whole milk spot market is mostly in balance in each region of the country, according to some industry contacts. In this way, free on board cash prices are steady, in line with current WMP international prices. Spot trading activity is light as the bulk of sales is dictated by contractual obligations between parties. The demand from chocolatiers is fair/good. National dry whole milk production is steady, but some processors anticipate to increase production as the spring baking season is getting close. At this point, inventories of national dry whole milk are slightly short in the spot market with expectation to increase in the near term. F.O.B. PRODUCING PLANT:

11 -6- DAIRY MARKET NEWS, JANUARY 29 - FEBRUARY 2, 2018 VOLUME 85, REPORT 5 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 slid on the bottom of the mostly price series, while the range remained steady. Dry whey spot activity picked up from a slower previous week, as 2018 is proving to be a fairly busy year for whey buyers and sellers. Exports are continuing to be reported as a big provider of storage relief for dry whey producers. Whey production is variant. However, overall whey drying remains active, as discounted spot and contract milk loads flow into Central region cheese vats. Animal feed whey inventories are available, as animal feed whey prices slipped on the top of the range. Animal feed whey sellers report that buyers are turning away offers in the mid $.20 range, as edible product is being offered out, in some cases, below that price. Dry whey market undertones are bearish. There is some sentiment from contacts that recent price points are at a relatively comfortable place for both sellers and end users. F.O.B. CENTRAL: MOSTLY: F.O.B. CENTRAL: ANIMAL FEED MILK REPLACER: DRY WHEY - NORTHEAST Northeast whey powder prices are steady on the price series. Market conditions are steady to dismal as market participants report they have not heard of any purchases under the market this week. However, with the current lower production of higher-valued whey concentrates, operations are adding more whey streams into the market. Dry whey inventories are at fairly steady levels. Many buyers have added to their regular contracts, yet some manufacturers inventories are somewhat limited, requiring their customers to take fewer loads. F.O.B. NORTHEAST: EXTRA GRADE AND GRADE A: DRY WHEY - WEST Western whey prices stepped lower at the top of the range and both ends of the mostly price series. While some brands have a little more sway with buyers, industry contacts say consistent demand is hard to achieve. In general, demand is somewhat lackluster and buyers are cautious. However, whey continues to move through current contracts and processors are trying to control inventories. A western whey manufacturer completed a large tender late last week. Some market participants are apprehensive that weakness in the whole whey protein complex will entice manufacturers to make more sweet whey powder in lieu of higher whey protein concentrates. Without an increase in demand, the amplified production of sweet whey powder could strain inventories further. LACTOSE - CENTRAL AND WEST Lactose prices moved higher on the bottom of the range and mostly price series, but are otherwise unchanged. Industry contacts report that the lower spot sales have ended. While some buyers continue to look for low cost lactose, it has become harder to find. Some processors say they simply refuse to accept the low bids right now. Manufacturers indicate inventories are more comfortable or committed in the near term. Demand is steady and lactose is moving well through current contracts. Some manufacturers are working on Q2 agreements. Production is steady. Including spot sales and up to 3 month contracts. F.O.B. EDIBLE, NON PHARMACEUTICAL MOSTLY: CASEIN - NATIONAL s for acid and rennet casein are steady this week. Buyers and sellers are expecting some strengthening in coming weeks. A primary factor expected to influence prices is unusually dry conditions in New Zealand. That said, a pending cyclone, which may lead to flooding, could be too much rain too quickly. While the New Zealand drought is frequently mentioned as a factor weighing on milk production volumes, frequency of hearing may dull the significance for some who have come to hear this as old news. Nevertheless, the drought is real and is apparently spreading into more territory of New Zealand. Most observers expect New Zealand seasonal milk production to be below earlier projections for this season, as well as below last season s volumes. The unanswered and unknown factor is, by how much? The GDT skipped this week in terms of the typical two week cycle. Next week s event will be closely watched in terms of pricing signals reflecting conditions in the three weeks since the last GDT event. 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: NONHYGROSCOPIC: MOSTLY: WHEY PROTEIN CONCENTRATE 34% - CENTRAL AND WEST Whey protein concentrate 34% prices are unchanged on the range, but narrowed on the mostly price series. Industry contacts report a number of spot sales congregated within the mostly price series and a few preternatural sales to establish the full price range. Brand matters with many of these sales. Some manufacturers report committed inventories. Industrywide, WPC34% stocks are mixed and directly related to how interchangeable the processor s WPC34% is with other protein sources. Manufacturers report domestic buyers are mostly operating hand to mouth for their WPC34% needs. However, some export buyers have been making regular inquiries and seem more willing to make additional purchases to assure coverage. F.O.B. EXTRA GRADE 34% PROTEIN: MOSTLY:

12 DAIRY MARKET NEWS, JANUARY 29 FEBRUARY 2, VOLUME 85, REPORT 5 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 01/13/ 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 / 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 Class I $19.00 Class II $19.00 $18.00 $18.00 $17.00 $16.00 $15.00 $14.00 $17.00 $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 Class III $18.00 Class IV $18.00 $17.00 $17.00 $16.00 $15.00 $16.00 $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, JANUARY 29 - FEBRUARY 2, VOLUME 85, REPORT 5 INTERNATIONAL DAIRY MARKET NEWS - EUROPE Information gathered January 22 - February 2, 2018 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: Milk production in the EU January- November 2017 was 1.6 percent higher than the same period of 2016, according to CLAL. Among the top five milk producing countries, The EC Milk Market Observatory reports that November 2017 production was strongly up from November 2016: Germany, +6.4 percent; France, +5.4 percent; United Kingdom, +7.8 percent; Netherlands, +2.9 percent; and Italy, +5.3 percent. On average, 5.5 percent more milk was delivered in the EU-28 in November 2017 than November 2016, according to Dairy World MarktSpiegel Milch. Country by country production appears in the following graph. Country by country production appears in the following graph. Data: EC Milk Market Observatory. Graph: Dairy Market News. A large Netherlands based dairy cooperative is paying farmers to graze cows on pasture as demand for grass-fed milk products increases. Numbers of dairy producer members grazing is increasing. A premium is paid for the milk. The coop s goal is to have at least 80 percent of members grazing at least some of the time by Milk from pasture grazed cows is supplying an expanding line of Dutch Gouda cheese made from pasture milk. BUTTER/BUTTEROIL: Butter pr ices in Wester n Eur ope increased. Butteroil prices declined. The butter price increase was driven in part by the euro gaining strength against the U.S. dollar. Lower increases were noted among European butter producers when viewing pricing in euros. There was a bit of euro based pricing increase in Italy, and Netherlands, but less so in Germany. Supply and demand factors are viewed as stable in Germany. Demand is slightly higher in Netherlands and Italy. negotiations have yet to finalize for some expected coming month sales in Western Europe. January-November 2017 butter production in EU-28 countries is 0.9 percent lower than year earlier according to the EU Milk Market Observatory. Among top producing countries, production was down 4.5 percent in Germany; down 5.8 percent in France; up 11.6 percent in Ireland; and up 4.5 percent in Poland. Data: EC Milk Market Observatory. Graph: Dairy Market News. 82% BUTTERFAT: 4,975-5,225 99% BUTTERFAT: 6,325-7,400 SKIM MILK POWDER (SMP): European skim milk powder prices slightly firmed. While demand is slower than recent weeks, sales interest for the internal market as well as export continues. This is maintaining some price pressure for new production. SMP production January-November in the EU-28 decreased 3.3 percent according to the EC Milk Market Observatory. Among top producing countries, production in Germany decreased 1.9 percent; France decreased 8.5 percent; and Belgium decreased 6.9 percent. Country by country production appears in the following graph. Data: EC Milk Market Observatory. Graph: Dairy Market News. CONTINUED ON PAGE 8A

14 DAIRY MARKET NEWS, JANUARY 29 - FEBRUARY 2, A- VOLUME 85, REPORT 5 INTERNATIONAL DAIRY MARKET NEWS - EUROPE Information gathered January 22 - February 2, 2018 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 The European Council has changed the way the intervention program for SMP functions. A factor motivating the change was that public intervention stocks of SMP in the EU rose to almost 400,000 MT in Concern was increasing that the stocks would negatively impact dairy prices. As a result, the new procedure has ended government buying SMP at a fixed price. The safety net will be allowing a tendering process for acquiring SMP, decided on a case by case basis how much to buy and at what price level. 1.25% BUTTERFAT: 1,675-1,775 SWEET WHEY POWDER: Sweet whey prices in Western Europe firmed slightly at the bottom of the price range, but remain unchanged at the top. Not much has really changed as to stocks and demand. The slight firming is more related to currency valuations U.S. dollar versus euro than conditions in Western Europe. NONHYGROSCOPIC: WHOLE MILK POWDER (WMP): European whole milk powder prices firmed. Livelier buying interest has helped create upward pricing. Buyers are securing WMP for both internal EU use, as well as for export. EU-28 WMP production January-November 2017increased 2.2 percent according to the EC Milk Market Observatory. Among top producers, production increased 14.1 percent in Netherlands; increased 4.8 percent in Germany; and increased 1.8 percent in France. Country by country production appears in the following graph. Data: EC Milk Market Observatory. Graph: Dairy Market News. 26% BUTTERFAT: 3,050-3,250 EASTERN OVERVIEW: A number of Eastern European countries also show November 2017 milk production increases over November Among them, Poland, +5.4 percent; Czech Republic, +4.4 percent; Finland, +1.2 percent; and Lithuania, +2.1 percent.

15 DAIRY MARKET NEWS, JANUARY 29 - FEBRUARY 2, B- VOLUME 85, REPORT 5 INTERNATIONAL DAIRY MARKET NEWS - OCEANIA Information gathered January 22 - February 2, 2018 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: Dairy processing plant expansion in Australia this fiscal year has been announced by a large dairy cooperative. Added capacity in Victoria and Tasmania will result when plans are implemented. A goal of the expansion plans is to be able to handle increased milk volumes more efficiently. Part of the plans will be added capacity while site improvements for existing capacity are also planned. NEW ZEALAND: December 2017 New Zealand milk production was 2.6 million MT, down from one year ago December 2016 milk production, 2.7 million MT according to DCANZ. December 2017 milk solids, million kg, are down from December 2016, million kg. New Zealand has been very dry and hot over the past week. Some measure of recovery had started with more consistent rain. However, recently that reversed with returning quite dry conditions. Many areas have been hitting record high temperatures for January. For example, at least 93 degrees Fahrenheit in Manawatu which is not usually above 85 degrees Fahrenheit as a summer high. A tropical cyclone (Fehi) is forecast to hit the country over the next couple of days. Concerns are that this could lead to flooding because soil is so dry again. The New Zealand government declared that a medium-scale adverse event classification for the drought in parts of the country would be extended to the whole of Southland plus Otago s Queenstown Lakes, Central Otago and Clutha districts. An impact of weather conditions is that many farmers have been unable to grow sufficient feed for winter, and have been using stored feed and buying supplements for stock, as well as selling off animals. The National Institute of Water and Atmospheric Research s New Zealand drought system map shows how various areas have been impacted. BUTTER: Butter prices in Oceania increased slightly at the bottom of the price range, but remained steady at the top. Continuing awareness of dry conditions in New Zealand lead some buyers and most manufacturers to expect that prices may strengthen. However, nervousness as to the timing of possible price strengthening left a number of buyers cautious in this three week GDT event gap period. Some sellers have been pressing for more aggressive pricing than many buyers are comfortable with, somewhat reducing the impetus to conclude deals. Australia exports of butter January-November 2017, 14,000 MT, are 49.2 percent lower than the same period of 2016 according to CLAL. New Zealand butter production January-December 2017, 535,000 MT, is 5.1 percent lower than the same period of 2016 according to CLAL. Imports of butter by China January-December, 2017, 92,000 MT, increased 11.8 percent from the year before. 82% BUTTERFAT: 4,550-5,025 SKIM MILK POWDER (SMP): Skim milk powder prices in Oceania are steady. During this three week gap between GDT events, coupled with some uncertainty as to whether the recent strength in GDT events following late 2017 weakness represents a trend or not, markets are cautious. An additional factor in pricing is that current Oceania pricing already exceeds pricing in Western Europe. While some buyers in South East Asia generally prefer only New Zealand sourced SMP, the varied factors mentioned above all contribute to price steadiness this week. New Zealand SMP production January-December 2017, 375,000 MT, is 9.4 percent lower than the same period of 2016 according to CLAL. Australia exports of SMP January-November 2017, 144,000 MT, are 1.4 percent lower than the same period of 2016 according to CLAL. Imports of SMP by China January-December, 2017, 247,000 MT, increased 34.1 percent from the year before. 1.25% BUTTERFAT: 1,775-1,850 CHEDDAR CHEESE: Cheddar prices in Oceania are steady to higher. Buyers who want cheese are paying slightly more. They mostly don t feel that much will be gained by holding back. Pricing is at the low end of pricing during much of In abstraction, all buyers always want to pay less. Observers believe that pricing levels now prevailing are deemed pretty reasonable and are also likely to nudge upward. This leaves some buyers willing to conclude buying what they need, even with some price firming. It is unlikely that prices will decline in coming weeks and based on 2017 prices, there is some up potential, which, if reached again, would make current prices a good deal. Australia exports of cheese January-November 2017, 154,000 MT, are 2.2 percent higher than the same period of 2016 according to CLAL. New Zealand cheese production January-December 2017, 380,000 MT, is 5.6 percent higher than the same period of 2016 according to CLAL. Imports of cheese by China January-December, 2017, 108,000 MT, increased 11.2 percent from the year before. 39% MAXIMUM MOISTURE: 3,375-3,550 WHOLE MILK POWDER (WMP): Whole milk powder prices in Oceania are steady. While that may be preferable to being weaker, manufacturers are very interested in prices moving up for this most important dairy product in the region. Many observers expect pricing to strengthen in coming weeks. In fact, the derivatives market currently points toward an increase next week at the next GDT, although derivate indicators do not always actualize. Nevertheless, many buyers are slow to commit during periods when the GDT stretches into three week timing. Current pricing remains below the greater number of weeks of This gives buyers some comfort, even in the face of possible future strength. s at this level are not too jarring in the context of recent history. Australia exports of WMP January-November 2017, 49,000 MT, are 23.6 percent lower than the same period of 2016 according to CLAL. New Zealand WMP production January-December 2017, 1,380,000 MT, is 3.8 percent higher than the same period of 2016 according to CLAL. Imports of WMP by China January-December, 2017, 470,000 MT, increased 12.0 percent from the year before. 26% BUTTERFAT: 2,925-3,025

16 DAIRY MARKET NEWS, JANUARY 29 FEBRUARY 2, C- VOLUME 85, REPORT 5 INTERNATIONAL DAIRY MARKET NEWS - SOUTH AMERICA Information gathered January 22 February 2, 2018 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: Southeast Brazil and the rest of the Southern Cone of South America, consisting of Paraguay, Uruguay, Argentina, and Chile, are experiencing the effect of La Niña with mixed climate conditions. Because of this, the milk production at the farm level has been affected in different ways throughout the region. For example, in the main dairy states of Brazil, specifically in Minas Gerais and Goiás, milk production continues improving. On the contrary, high temperatures and dry conditions in several dairy basins of Argentina such as Buenos Aires, Córdoba, and Entre Rios continue hampering farm milk yields on most dairy farms. In general, farm milk intakes in Argentina and Uruguay are tending lower, but are above last year s levels. Nevertheless, with most schools closed, requests from bottlers are down, thus, manufacturing milk volumes are more than sufficient to cover other main dairy product processing needs such as cheese and yogurt. Meanwhile, due to seasonality, cream supplies are becoming less available as their demand strengthens among the cream-based dairy market. Butter production is still active, especially in Uruguay, with good demand from the domestic market, as well as from Russia. As reported by the government, in December 2017, Argentina milk production dropped 5 percent from the previous month, but increased 3 percent from a year ago. During December 2017, nominal prices paid to producers increased 22 percent from December Meanwhile, in Brazil, as mentioned before, milk production is higher. Fluid or bottled milk requests from several retail outlets are improving as some educational institutions are reopening during this week. In fact, UHT milk sales are up as buyers interest is ramping up. In general, the volumes of manufacturing milk are more than adequate. Hence, cheese production remains active while its demand from wholesalers and food service is fair to good. Nevertheless, the inventories of cheese, especially Mozzarella remain high in numerous processing plants. SKIM MILK POWDER (SMP): The free on board (f.o.b.) export pricing range for skim milk powder (SMP) in the Southern Cone of South America shifted lower on the bottom, but higher on the top for a wider range. The current prices are reflecting light export transactions within and outside the Mercosur bloc. In general, SMP inventories are becoming tight in the region, especially in Argentina and Uruguay where higher summer temperatures have reduced farm milk intakes. Meanwhile, in Brazil, SMP drying schedules are active and supplies are in balance with buyers demands. Consequently, the steadiness in the Brazilian SMP market is putting some pressure on SMP import prices from nearby countries. According to the Brazilian government, SMP imports from January to December 2017 totaled 30.6 million tons, down 14 percent from the same period in From this total, imports from Argentina, Uruguay, and the United States represented 46, 35, and 12 percent, respectively. 1.25% BUTTERFAT: 2,450-2,650 WHOLE MILK POWDER (WMP): In the Southern Cone of South America, free on board (f.o.b.) export pricing for whole milk powder (WMP) adjusted up on the bottom of the range, but down on the top for a narrower range. Trading activity has been moderate to robust as WMP inventories are becoming more accessible in the continent. However, in Argentina/Uruguay, WMP processing is down due to lower manufacturing milk volumes triggered by lower farm milk outputs. On the other hand, drying schedules for WMP are very active in Brazil as WMP processors try to satisfy the fair/good domestic demand within the country. Therefore, the strong domestic WMP production in Brazil is reducing the need to import from nearby countries. According to the Brazilian government, WMP imports from January to December 2017 totaled 72.8 million tons, down 42 percent from the same period in From this total, imports from Uruguay, Argentina, and Chile represented 59, 37, and 4 percent, respectively. 26% BUTTERFAT: 2,900-3,350

17 DAIRY MARKET NEWS, JANUARY 29 FEBRUARY 2, VOLUME 85, REPORT 5 CME GROUP, INC FUTURES Selected settling prices Month 1/19 1/22 1/23 1/24 1/25 1/26 1/29 1/30 1/31 2/01 III MILK FUTURES (Pit-Traded) ($/cwt) JAN FEB MAR APR MAY JUN JUL AUG SEP OCT CLASS IV MILK FUTURES (Pit-Traded) ($/cwt) JAN FEB MAR APR CASH SETTLED BUTTER FUTURES (Electronic-Traded) ( /lb) JAN FEB MAR APR NONFAT DRY MILK FUTURES (Pit-Traded) ( /lb) JAN FEB MAR APR WHEY (Electronic-Traded) ( /lb) JAN FEB MAR APR CHEESE CSC (Electronic-Traded) ($/lb) JAN FEB MAR APR MAY Source:

18 DAIRY MARKET NEWS, JANUARY 29 - FEBRUARY 2, VOLUME 85, REPORT 5 DAIRY MARKET NEWS DOMESTIC MONTHLY SUMMARY AND AVERAGES FOR JANUARY (UNLESS OTHERWISE NOTED, PRICES ARE DOLLARS PER POUND, CL/TL) ::REPORT NUMBER 1 ::REPORT NUMBER 2 ::REPORT NUMBER 3 ::REPORT NUMBER 4 ::REPORT NUMBER 5 :: 2018 : 2017 COMMODITY :: :: :: :: :: :: Monthly : Monthly :: JAN 1-5 :: JAN 8 12 :: JAN :: JAN :: JAN :: Average : Average CHEESE WISCONSIN (WSP, Delivered, LTL) -- Process American 5# Loaf :: :: :: :: :: :: : Brick And/Or Muenster 5# :: :: :: :: :: :: : Cheddar 40# Block :: :: :: :: :: :: : Monterey Jack 10# :: :: :: :: :: :: : Blue 5# :: :: :: :: :: :: : Mozzarella 5-6# :: :: :: :: :: :: : Grade A Swiss Cuts 6-9# :: :: :: :: :: :: : NORTHEAST (WSP, Delivered, LTL) -- Cheddar 40# Block :: :: :: :: :: :: : Process 5# Sliced :: :: :: :: :: :: : Muenster :: :: :: :: :: :: : Grade A Swiss Cuts 10-14# :: :: :: :: :: :: : WEST COAST (WSP, Delivered, LTL) -- Process 5# Loaf :: :: :: :: :: :: : Cheddar 40# Block :: :: :: :: :: :: : Cheddar 10# Cuts :: :: :: :: :: :: : Monterey Jack 10# :: :: :: :: :: :: : Grade A Swiss Cuts 6-9# :: :: :: :: :: :: : FLUID PRODUCTS SPOT PRICES OF CLASS II CREAM ($ per lb. butterfat) -- Northeast - f.o.b :: :: :: :: :: :: : Upper Midwest - f.o.b :: :: :: :: :: :: : PRICES OF CONDENSED SKIM - NORTHEAST ($ per lb. wet solids) - f.o.b. -- Class II :: :: :: :: :: :: : Class III :: :: :: :: :: :: :

19 DAIRY MARKET NEWS, JANUARY 29-FEBRUARY 2, VOLUME 85, REPORT 5 DAIRY MARKET NEWS DOMESTIC MONTHLY SUMMARY AND AVERAGES FOR JANUARY (UNLESS OTHERWISE NOTED, PRICES ARE DOLLARS PER POUND, CL/TL) ::REPORT NUMBER 1 ::REPORT NUMBER 2 ::REPORT NUMBER 3 ::REPORT NUMBER 4 ::REPORT NUMBER 5 :: 2018 : 2017 COMMODITY :: :: :: :: :: :: Monthly : Monthly :: JAN 1-5 :: JAN 8-12 :: JAN :: JAN :: JAN :: Average : Average DRY PRODUCTS NONFAT DRY MILK -- Central And East (f.o.b.) -- Low/Medium Heat :: :: :: :: :: :: : Mostly :: :: :: :: :: :: : High Heat :: :: :: :: :: :: : West (f.o.b) -- Low/Medium Heat :: :: :: :: :: :: : Mostly :: :: :: :: :: :: : High Heat :: :: :: :: :: :: : WHEY POWDER (Nonhygroscopic) -- Central (f.o.b.) :: :: :: :: :: :: : Mostly :: :: :: :: :: :: : West (f.o.b.) :: :: :: :: :: :: : Mostly :: :: :: :: :: :: : Northeast (f.o.b.) :: :: :: :: :: :: : WHEY PROTEIN CONCENTRATE -- Central And West (f.o.b.) -- Extra Grade 34% Protein :: :: :: :: :: :: : Mostly :: :: :: :: :: :: : ANIMAL FEED - WHEY -- Central (f.o.b.) -- Milk Replacer :: :: :: :: :: :: : BUTTERMILK (Min. 30% protein) -- Central And East (f.o.b.) :: :: :: :: :: :: : West (f.o.b.) :: :: :: :: :: :: : Mostly :: :: :: :: :: :: : DRY WHOLE MILK -- National (f.o.b.) :: :: :: :: :: :: : LACTOSE -- Central And West (f.o.b.) :: :: :: :: :: :: : Mostly :: :: :: :: :: :: : CASEIN - Edible - National (f.o.b.) -- Nonrestricted - Rennet :: :: :: :: :: :: : Nonrestricted - Acid :: :: :: :: :: :: : s for all products are issued once a week and represent a value for the entire week. Monthly averages are based on weekly prices and are time-weighted according to the number of workdays in the month - Saturdays, Sundays and National Holidays excluded. No monthly average is computed if one or more weekly prices are missing.

20 DAIRY MARKET NEWS, JANUARY 29 - FEBRUARY 2, VOLUME 85, REPORT 5 DAIRY MARKET NEWS INTERNATIONAL MONTHLY SUMMARY AND AVERAGES FOR JANUARY (UNLESS OTHERWISE NOTED, PRICES ARE U.S.DOLLARS/METRIC TON, F.O.B. PORT) ::REPORT NUMBER 1 ::REPORT NUMBER 3 ::REPORT NUMBER 5 :: 2018 * : 2017 * COMMODITY :: :: :: :: Monthly : Monthly :: JAN 1 5 :: JAN 8-19 :: JAN :: Average : Average BUTTER (82% BUTTERFAT) -- OCEANIA :: :: :: :: 4768 : WESTERN EUROPE :: :: :: :: 5035 : 4519 BUTTEROIL (99% BUTTERFAT) -- WESTERN EUROPE :: :: :: :: 7077 : 4812 CHEDDAR CHEESE (39% MAXIMUM MOISTURE) -- OCEANIA :: :: :: :: 3435 : 3766 SKIM MILK POWDER (1.25% BUTTERFAT) -- OCEANIA :: :: :: :: 1804 : SOUTH AMERICA :: :: :: :: 2545 : WESTERN EUROPE :: :: :: :: 1682 : 2236 WHEY POWDER (NONHYGROSCOPIC) -- WESTERN EUROPE :: :: :: :: 827 : 979 WHOLE MILK POWDER (26% BUTTERFAT) -- OCEANIA :: :: :: :: 2959 : SOUTH AMERICA :: :: :: :: 3147 : WESTERN EUROPE :: :: :: :: 3082 : s for all products are issued biweekly and represent a value for the entire biweekly period. Monthly averages are based on biweekly prices and are time-weighted according to the number of workdays in the month - Saturdays and Sundays excluded. No monthly average is computed if one or more biweekly prices are missing.

21 DAIRY MARKET NEWS, JANUARY 29-FEBRUARY 2, VOLUME 85, REPORT 5 CME GROUP AVERAGES FOR JANUARY ::REPORT NUMBER 1 ::REPORT NUMBER 2 ::REPORT NUMBER 3 ::REPORT NUMBER 4 ::REPORT NUMBER 5 :: 2018 * : 2017 * COMMODITY :: :: :: :: :: :: Monthly : Monthly :: JAN 2-5 :: JAN 8-12 :: JAN :: JAN :: JAN :: Average : Average BUTTER* -- GRADE AA --Monday :: 1 :: :: 2 :: :: :: : --Tuesday :: :: :: :: :: :: : --Wednesday :: :: :: :: :: :: : --Thursday :: :: :: :: :: :: : --Friday :: :: :: :: :: :: : Weekly Average** :: :: :: :: :: CHEESE* -- BARRELS --Monday :: 1 :: :: 2 :: :: :: : --Tuesday :: :: :: :: :: :: : --Wednesday :: :: :: :: :: :: : --Thursday :: :: :: :: :: :: : --Friday :: :: :: :: :: :: : Weekly Average** :: :: :: :: :: -- 40# BLOCKS --Monday :: 1 :: :: 2 :: :: :: : --Tuesday :: :: :: :: :: :: : --Wednesday :: :: :: :: :: :: : --Thursday :: :: :: :: :: :: : --Friday :: :: :: :: :: :: : Weekly Average** :: :: :: :: :: NONFAT DRY MILK* -- GRADE A --Monday :: 1 :: :: 2 :: :: :: : --Tuesday :: :: :: :: :: :: : --Wednesday :: :: :: :: :: :: : --Thursday :: :: :: :: :: :: : --Friday :: :: :: :: :: :: : Weekly Average** :: :: :: :: :: * Monthly averages are a simple average of all the closes during the month. Weekly and monthly averages are independent calculations. ** Weekly averages are simple averages of the closes during the calendar week and are for information purposes. Should the week be split between two months, the weekly average will appear in the monthly report in which the Friday close is reported. 1/ CME closed for New Year holiday on January 1, / CME closed for Martin Luther King Jr. holiday on January 15, 2018.

22 DAIRY MARKET NEWS, JANUARY 29 FEBRUARY 2, VOLUME 85, REPORT 5 December Agricultural s Highlights The All Milk price received by farmers was $17.20 in December, down $1.70 from December The alfalfa hay price was $ in December, up $21.00 from December The corn price was $3.23 in December, down $0.09 from December The soybean price was $9.30 in December, down $0.34 from December The milk-feed price ratio was 2.38 in December, down 0.35 from December The index of prices received by farmers for dairy products during the month of December 2017 was down 4.4 to Compared to Decemeber 2016, the index was down 8.4 points (8.9 percent). The index of prices paid by farmers for commodities and services, interest, taxes, and wage rates in December 2017 was up 0.3 points to Compared with December 2016, the index was up 4.2 points (4.0 percent). Selected Milk s, Milk Cows, and Feed s, Selected States and U.S., December 2017 with Comparisons All-Milk price 1, 2 Alfalfa hay, baled Corn for Grain Soybeans State December December December December (dollars per cwt) (dollars per ton) (dollars per bushel) (dollars per bushel) AZ CA CO ID IN IA MI MN NM NY OH PA TX WA WI U.S s are shown at reported butterfat test. 2 Before deduction for hauling. Includes quality, quantity, and other premiums. Excludes hauling subsidies. Milk-Feed Ratio, Selected States and U.S., December 2017 with Comparisons Milk-feed: pounds of 16% mixed dairy feed equal in value to 1 pound of whole milk 1 State 2 December 2016 November 2017 December 2017 IA MI MN OH WI U.S The price of commercial prepared dairy feed is based on current United States prices received for corn, soybeans, and alfalfa. The modeled feed uses 51 percent corn, 8 percent soybeans, and 41 percent alfalfa hay. 2 Available states that provided all necessary data to compute milk-feed price ratios. General Measures, U.S., December 2017 with Comparisons Item December November December Index Numbers ( =100): s received by farmers for dairy production s paid by farmers for commodities and services, interest taxes, and wage rates Source: U.S. Department of Agriculture. National Agricultural Statistics Service. Agricultural Statistics Board. Agricultural s, January 2018.

23 DAIRY MARKET NEWS, JANUARY 29 FEBRUARY 2, VOLUME 85, REPORT 5 December 2017 Dairy Products Highlights Butter production was 170 million pounds, 4.2 percent above December 2016, and 15.5 percent above November American type cheese production totaled 433 million pounds, 2.9 percent above December 2016, and 7.5 percent above November Total cheese output (excluding cottage cheese) was 1.09 billion pounds, 2.6 percent above December 2016, and 3.0 percent above November Nonfat dry milk production, for human food, totaled 163 million pounds, 5.4 percent above December 2016, and 14.7 percent above November Dry whey production, for human food, was 81 million pounds, 6.2 percent above December 2016, and 2.1 percent above November Ice cream, regular hard production totaled 49.6 million gallons, -0.2 percent below December 2016, and -1.5 percent below November Production of Dairy Products Change from Change from Product Dec 2017 Dec 2016 Nov 2017 Year to Date 1 Product Dec 2017 Dec 2016 Nov 2017 (1,000 lbs) (percent) (1,000 lbs) (percent) Butter 170, Yogurt (plain and flavored) 353, Cheese Dry whey, human food 81, American types 2 432, Dry whey, animal feed 1, Cheddar 317, Dry whey, total 8 83, Other American 115, Reduced lactose & minerals Brick & Muenster 14, Human food 1, Cream & Neufchatel 86, Animal feed 2, Hispanic 22, Lactose, human food & animal feed 95, Total Italian types 466, Whey protein concentrate Mozzarella 363, Human food 9 41, Other Italian 103, Animal feed Swiss 27, Total 9 41, All other types 38, percent 10 14, Total 1,088, percent 10 26, Cottage cheese, curd 3 29, Whey protein isolates 11 9, Cottage cheese, cream 4 26, Cottage cheese, lowfat 5 25, (1,000 gal) (percent) Dry buttermilk 11, Frozen products Dry whole milk 11, Ice cream, regular hard 49, Milk protein conc. (MPC), total 6 17, Ice cream, lowfat, hard 12, Nonfat dry milk (NDM), human 163, Ice cream, lowfat, soft 13, Skim milk powders (SMP) 7 49, Ice cream, lowfat, total 26, Sour cream 122, Sherbet, hard 2, Frozen yogurt, total 4, Manufacturers' Stocks, End of Month 12 Product Dec Dec Nov Dec Dec Nov Product (1,000 lbs) (percent) (1,000 lbs) (percent) Whey protein concentrate Dry whey, human food 96, Human food 9 83, Dry whey, animal feed 1, Animal feed Reduced lactose & minerals human & animal 13 5, Total 9 84, Lactose, human food & animal feed 136, percent 10 24, Dry buttermilk 23, percent 10 59, Nonfat dry milk, human food 330, Whey protein isolates 11 28, cumulative as percent change of 2016 cumulative. 2 Includes Cheddar, Colby, Monterey and Jack. 3 Mostly used for processing into cream or lowfat cottage cheese. 4 Fat content 4 percent or more. 5 Fat content less than 4 percent. 6 Dry milk protein concentrate, percent. 7 Includes protein standardized and blends. 8 Excludes all modified dry whey products. 9 Whey protein concentrate, 25.0 to 89.9 percent. 10 Whey protein concentrate, human and animal. 11 Whey protein isolates, 90.0 percent or greater. 12 Stocks held by manufacturers at all points and in transit. 13 Reduced lactose and minerals stocks combined to avoid disclosure of individual operations. Source: U.S. Department of Agriculture. National Agricultural Statistics Service. Agricultural Statistics Board. Dairy Products, (February 2018). Year to Date 1

24 DAIRY MARKET NEWS, JANUARY 29 FEBRUARY 2, VOLUME 85, REPORT 5 January 2018 Highlights Class s: The following are the January 2018 class prices under the Federal milk order pricing system and changes from the previous month: Class II: $14.11 (-$0.38), Class III: $14.00 (-$1.44), and Class IV: $13.13 (-$0.38) Component Information: Under the Federal milk order pricing system, the butterfat price for January 2018 is $ per pound. Thus, the Class II butterfat price is $ per pound. The protein and other solids prices for January 2018 are $ and $ per pound, respectively. These component prices set the Class III skim milk price at $5.61 per cwt. The January 2018 Class IV skim milk price is $4.71, which is derived from the nonfat solids price of $ per pound. Product Averages: The product price averages for January 2018 are: butter: $2.1972, nonfat dry milk: $0.6966, cheese: $ and dry whey: $ Final Class s for January 2018 Federal Milk Order Minimum Class s for Milk of 3.5 Percent Butterfat 1, 2 Federal Milk Order Marketing Area 3 Order Number Jan 2018 Feb 2018 Class I Class II Class III Class IV Class I (dollars per cwt) 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

25 DAIRY MARKET NEWS, JANUARY 29 FEBURARY 2, VOLUME 85, REPORT 5 January 1 Milk Cow Inventory Summary The number of milk cows in the United States as of January 1, 2018, totaled 9.40 million head, up 1 percent from the previous year. Milk cow replacement heifers totaled 4.78 million head, up 1 percent from the previous year. The percentage of milk cow replacement heifers per 1,000 milk cows on January 1, 2018 was 50.9, unchanged from the previous year. Milk cow replacement heifers expected to calve during the year totaled 3.03 million head, down 1 percent from the previous year. State Milk cows that have calved Heifers for milk cow replacement State Milk cows that have calved Heifers for milk cow replacement (1,000 head) (1,000 head) AL NE AK NV AZ NH AR NJ CA 1, , NM CO NY CT NC DE ND FL OH GA OK HI OR ID PA IL RI IN SC IA SD KS TN KY TX LA UT ME VT MD VA MA WA MI WV MN WI 1, , MS WY MO MT U.S. 9, , , ,781.3 Source: U.S. Department of Agriculture. National Agricultural Statistics Service. Agricultural Statistics Board. Cattle (January 2018).

26 DAIRY MARKET NEWS, JANUARY 29 FEBRUARY 2, G1- VOLUME 85, REPORT 5 PER CWT $25.00 $24.00 $23.00 $22.00 $21.00 $20.00 $19.00 $18.00 $17.00 $16.00 $15.00 $14.00 $13.00 $12.00 Class III Milk at 3.5%Test Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec SOURCE, USDA, AMS, MIB; GRAPH, USDA, AMS, DMN Milk-Feed Ratio Based on the Pounds of 16% Mixed Dairy Feed Equal in Value to 1 Pound of Whole Milk Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec DATA SOURCE, USDA, ERS; GRAPH, USDA, AMS, DMN

27 DAIRY MARKET NEWS, JANUARY 29 FEBRUARY 2, G2- VOLUME 85, REPORT 5 MILLION POUNDS Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec DATA SOURCE, USDA, NASS; GRAPH, USDA, AMS, DMN U.S. Butter Production MILLION POUNDS U.S. Total American Cheese Production Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec DATA SOURCE USDA, NASS; GRAPH, USDA, AMS, DMN MILLION POUNDS U.S. Total Italian-Type Cheese Production Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec DATA SOURCE, USDA, NASS; GRAPH, USDA, AMS, DMN

28 DAIRY MARKET NEWS, JANUARY 29 FEBRUARY 2, G3- VOLUME 85, REPORT 5 MILLION POUNDS U.S. Nonfat Dry Milk (NDM) Production, Human Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec DATA SOURCE, USDA, NASS; GRAPH, USDA, AMS, DMN U.S. Total Dry Whey Production MILLION POUNDS Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec DATA SOURCE, USDA, NASS; GRAPH, USDA, AMS, DMN MILLION POUNDS 50 U.S. Whey Protein Concentrate Production, Human ( % Protein) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec DATA SOURCE, USDA, NASS; GRAPH, USDA, AMS, DMN

29 Dairy Market News Branch Agricultural Marketing Service National Retail Report-Dairy Websites: and Volume 85- Number 5 Issued Weekly Friday, February 2, 2018 Advertised s for Dairy Products at Major Retail Supermarket Outlets ending during the period of 02/02/2018 to 02/08/2018 A number of featured retail advertisements centered on football themes and dairy cases were well-represented, targeting shoppers who are likely to take part in Super Bowl festivities. Ad volume, in general, rose 3 percent for conventional dairy items, but declined 8 percent for organic dairy items this period. The national weighted average advertised conventional milk price for half gallons this period, $1.27, decreased 45 cents from a week ago. Milk gallons averaged $2.88, up 6 cents. Organic half-gallon prices averaged $3.96, up 38 cents from one week ago. The resulting organic-conventional half-gallon price spread is $2.69, as the organic premium rose 83 cents from the previous report. Cream cheese ads in the conventional category were nearly threefold the rate of one week ago, while conventional sour cream ads increased 24 percent. Conventional ice cream ads were 2 percent higher. As well, total conventional cheese ads increased 7 percent higher. U.S. average conventional butter prices for one-pound packs were $3.79 this period, down 1 cent from a week ago. Cheese shreds in 8 oz. packs averaged $2.18, down 9 cents. Cream cheese in 8 oz. packs were $1.65, down 15 cents. Ice cream in oz. packs was $3.03, down 15 cents. Sour cream in 16 oz. packs was $1.75, up 8 cents. In 4-6 oz. packs, Greek yogurt averaged 97 cents, up 2 cents; while regular yogurt 4-6 oz. packs were 52 cents, unchanged from one week ago. Top 5 Commodities Featured This Week 30K 02/02/ /26/ /19/ K with Ads 20K 15K 10K 5K 0K Cheese Yogurt Cream cheese Ice cream Sour cream 1 -- Dairy Market News surveys nearly 150 retailers, comprising over 23,000 individual stores, with online weekly advertised features.

30 National Retail Report - Dairy Vol 85 - No. 5 Friday, February 2, Page 2 Percentage of Total Conventional Ads by Commodity Butter, 4% Yogurt, 20% Cheese, 27% Sour cream, 11% Milk, 2% Cottage cheese, 4% Ice cream, 11% Flavored milk, 2% Cream cheese, 12% Percentage of Total Organic Ads by Commodity Yogurt, 19% Butter, 26% Cheese, 9% Milk, 46% Wtd Avg - Simple weighted average

31 National Retail Report - Dairy Vol 85 - No. 5 Friday, February 2, 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 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 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

32 National Retail Report - Dairy Vol 85 - No. 5 Friday, February 2, Page 4 SOUTH CENTRAL U.S. SOUTHWEST U.S. NORTHWEST U.S. 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 ALASKA U.S. HAWAII U.S. Commodity Type Pack Size with Ads Wtd Avg 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 Flavored milk All fat tests gallon Ice cream 48-64oz Sour cream 16 oz Yogurt Greek 4-6 oz Yogurt Greek 32 oz Yogurt Yogurt 4-6 oz Yogurt Yogurt 32 oz NATIONAL -- ORGANIC DAIRY PRODUCTS Wtd Avg - Simple weighted average

33 National Retail Report - Dairy Vol 85 - No. 5 Friday, February 2, Page 5 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 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 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 with Ads Wtd Avg with Ads Wtd Avg with Ads Wtd Avg Butter 1 # Cheese Natural Varieties 8 oz shred Milk All fat tests half gallon Yogurt Greek 4-6 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 Wtd Avg with Ads Wtd Avg with Ads Wtd Avg Butter 1 # Cheese Natural Varieties 8 oz shred Milk All fat tests half gallon Milk All fat tests 8 oz UHT Wtd Avg - Simple weighted average

34 National Retail Report - Dairy Vol 85 - No. 5 Friday, February 2, Page 6 SOUTH CENTRAL U.S. SOUTHWEST U.S. NORTHWEST U.S. Commodity Type Pack Size with Ads Wtd Avg with Ads Wtd Avg with Ads Wtd Avg Yogurt Greek 32 oz Yogurt Yogurt 4-6 oz ALASKA U.S. HAWAII U.S. Commodity Type Pack Size with Ads Wtd Avg with Ads Wtd Avg Milk All fat tests half gallon Yogurt Yogurt 4-6 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 Wtd Avg - Simple weighted average

35 Dairy Market News United States Department of Agriculture Agricultural Marketing Service Dairy Programs Market Information Branch Volume 85, Report 5 February 2, 2018 GENERAL NUMBER (608) Elizabeth Frederick (608) Elizabeth.Frederick@AMS.USDA.GOV INTERNS Al Yang (608) Al.Yang@AMS.USDA.GOV Jennifer Hernandez (608) JenniferA.Hernandez@AMS.USDA.GOV EAST/ ORGANIC Daniel Johnson (608) Daniel.Johnson@AMS.USDA.GOV EAST Jessica Mueller (608) Jessica.Mueller@AMS.USDA.GOV CENTRAL Israel Weber (608) Israel.Weber@AMS.USDA.GOV SOUTHWEST/SOUTH AMERICA AJ (Angel José) Terán (608) Angel.Terán@AMS.USDA.GOV SOUTHWEST Florence Kone-Gonzalez (608) Florence.KoneGonzalez@AMS.USDA.GOV NORTHWEST/MOUNTAIN Mike Bandli (608) Mike.Bandli@AMS.USDA.GOV ORGANIC/EUROPE & OCEANIA Eric Graf (608) Eric.Graf@AMS.USDA.GOV NATIONAL SUPERVISOR Janet Linder (608) Janet.Linder@AMS.USDA.GOV BRANCH CHIEF Butch Speth (608) Butch.Speth@AMS.USDA.GOV 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