DAIRY MARKET NEWS WEEK OF JULY 9-13, 2018

DAIRY MARKET NEWS WEEK OF JULY 9-13, 2018 VOLUME 85, REPORT 28 CME GROUP CASH MARKETS (7/13) BUTTER: Grade AA closed at $2.2250. The weekly average for Grade AA is $2.2125 (+.0119). CHEESE: Barrels closed at $1.4225 and 40# blocks at $1.5600. The weekly average for barrels is $1.3570 (+.0276) and blocks, $1.5505 (-.0039). NONFAT DRY MILK: Grade A closed at $.7550. The weekly average for Grade A is $.7640(+.0152). DRY WHEY: Extra grade dry whey closed at $.4175. The weekly average for dry whey is $.4095 (+.0114). BUTTER HIGHLIGHTS: In the U.S., butter supply is more than adequate to satisfy most buyers needs. Although milk butterfat levels are decreasing due to the impact of high temperatures on dairy cows, cream volumes remain available for churning in all regions. In fact, some processors are holding back on production, opting instead to sell cream whenever they can. Demands for butter varies throughout the country. For example, in the East, food service orders are steady at seasonal levels as interest remains good. Nationwide, wholesale exports looks are active around the competitive butter price. The CME Group cash price for Grade AA butter is $2.2250, up $0.0550 compared to last Friday s price, $2.1700. CHEESE HIGHLIGHTS: Milk production is down this week as warmer weather takes ahold of cow comfort. However, milk supplies remain adequate for processing needs. Spot milk prices can be seen $0.50 over to $3 under Class III, the first premium seen since March. Cheese production is steady nationwide, with some producers in the Northeast running at a full production schedule. Export demand is slow, as countries such as Mexico looks to European markets to avoid increasing U.S. import tariffs. Trade issues impacted the West the most compared to any other region, causing cheesemakers to switch production from barrel to block to hedge against the loss of some international market shares. Domestic cheese demand is steady. Retail demand is stable with the grilling season here. The demand for Italian cheeses is steady to decreasing this time of year. Western sellers report concerns about finding new outlets to prevent further increasing inventories. Cheese inventories nationwide are steady to increasing. 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 Dry Whey/WPC 34%/Lactose/Casein 6 DAIRY MARKET NEWS AT A GLANCE TABLE OF CONTENTS U.S. Dairy Cow Slaughter / Class Milk s 7 Organic Dairy Market News 8 May Milk Sales 9 June Consumer Index 10 July Supply and Demand Estimates 11 Dairy Graphs G1 CME GROUP CASH TRADING The cheese market undertone is generally unsettled. The CME Group closing price for barrels is $1.4225, compared to last Friday s closing price of $1.2450. The closing price for blocks is $1.5600, compared to last Friday s closing price of $1.5425. FLUID MILK: From the Atlantic through the Central region and into parts of the West, hotter temperatures have curbed milk production. Nonetheless, milk supplies in much of that area remain adequate for processing needs. In Idaho, Utah and New Mexico, milk output reports are steady to up. As some schools have begun preparations to open their doors in several weeks, bottlers are preparing for increases in production by plant updates and maintenance. Although a majority of Midwestern cheesemakers reported discounted spot milk offers this week, there were some above -Class III prices reported for the first time since March. Cream markets are strengthening following the holiday week. Northeastern butter makers are putting cream back on the market in lieu of churning. In the West, ice cream makers are at their peak cream buying time. F.O.B. cream multiples are 1.30-1.40 in the East, 1.26-1.34 in the Midwest, and 1.08-1.31 in the West. DRY PRODUCTS: Low/medium heat nonfat dry milk (NDM) spot prices are mostly lower on light to moderate trading. Interest is fair, although spot purchases are intermittent as prices trend lower and track a potential buyers market. High heat NDM prices shifted down. The NDM market tone is uncertain, and a number of byers are stepping back and awaiting the potentiality of heavier supplies remaining in the country. Dry buttermilk prices are steady to lower as prices are shadowing the downward trend of nonfat dry milk. Supply is currently above demand. The market undertone is hushed as buying interest is lighter. Dry whole milk prices are lower on the bottom of the range this week as spot sales are mixed. Spot trading has been slow and market conditions are mixed. Whey powder spot prices increased in the United States this week. The demand is fairly steady as market participants are buying regular loads, although there is concern about trades issues that might disrupt the dry whey market activities. The tone is steady to unsettled. Whey protein concentrate 34% prices are -CONTNUED ON PAGE 1A- National Retail Report Dairy Dairy Market News Contacts COMMMODITY MONDAY JUL 9 CHEESE BARRELS $1.2625 (+0.0175) 40 POUND BLOCKS $1.5425 (N.C.) NONFAT DRY MILK GRADE A $0.7725 (N.C.) BUTTER GRADE AA $2.2000 (+0.0300) DRY WHEY EXTRA GRADE $0.3975 (+0.0075) TUESDAY JUL 10 $1.3375 (+0.0750) $1.5425 (N.C.) WEDNESDAY JUL 11 $1.3500 (+0.0125) $1.5425 (N.C.) THURSDAY JUL 12 $1.4125 (+0.0625) $1.5650 (+0.0225) FRIDAY JUL 13 $1.4225 (+0.0100) $1.5600 (-0.0050) WEEKLY CHANGE (+0.1775) (+0.0175) WEEKLY AVERAGE $1.3570 (+0.0276) $1.5505 (-0.0039) $0.7725 (N.C.) $0.7575 (-0.0150) $0.7625 (+0.0050) $0.7550 (-0.0075) (-0.0175) $0.7640 (+0.0152) $2.2250 (+0.0250) $2.2000 (-0.0250) $2.2125 (+0.0125) $2.2250 (+0.0125) (+0.0550) $2.2125 (+0.0119) $0.4050 (+0.0075) $0.4100 (+0.0050) $0.4175 (+0.0075) $0.4175 (N.C.) (+0.0275) $0.4095 (+0.0114) s shown are in U.S. dollars per lb. in carlot quantities. Carlot unit weights: CHEESE, 40,000-44,000 lbs.; NONFAT DRY MILK, 41,000-45,000 lbs.; BUTTER, 40,000-43,000 lbs.;dry WHEY, 41,000-45,000 lbs. Weekly Change is the sum of Daily Changes. Weekly Average is the simple average of the Daily Cash Close prices for the calendar week. Weekly Average Change is the difference between current and previous Weekly Average. Computed by Dairy Market News for informational purposes. This data is available on the Internet at WWW.AMS.USDA.GOV/MARKET-

WEEK OF JULY 9-13, 2018 DAIRY MARKET NEWS VOLUME 85, REPORT 28 -CONTNUED FROM PAGE 1- DAIRY MARKET NEWS AT A GLANCE mixed on the range, but steady of the mostly series. The demand for certain brands with favorable characteristics is solid. However, the demand for WPC34% that is interchangeable has received limited interest from buyers. The market uncertainty has risen as much of the market tone is being steered by the lucubrations about trades issues with our largest trade partners. Lactose prices are steady to higher. While the market tone seems firm, a few processors are seeing some pushback on prices. Some manufacturers suggest the market has entered into a summertime lull, when end uses have their immediate needs covered. Casein rennet and acid prices are unchanged. Interest from some Asian buyers has increased Buyers are hoping for seasonal increases in casein production and volumes available for contracts. ORGANIC DAIRY MARKET NEWS: AMS reports total organic milk products sales for May were 219 million pounds, down 3.1 percent from May 2017, but up 0.1 percent January-May 2018 compared with the same period of 2017. Organic whole milk sales for May 2018, 88 million pounds, were down 0.1 percent compared with May of the previous year, but up 5.6 percent year-to-date 2018 compared with 2017. Countrywide, total organic retail advertisements increased 99 percent. Organic milk ads as a percentage of total organic ads by commodity registered 45 percent this survey period. Organic milk ads, all together, climbed 114 percent over the previous period. The organic price premium for advertised half gallon milk is $1.10, down $1.11 compared to the previous survey period. Organic yogurt ad numbers grew 35 percent as a percentage of total organic ads by commodity, accompanying a 281 percent spurt in total organic yogurt 4-6 ounce retail ad numbers. Organic ice cream retail ad numbers posted a 128 percentage change. No surveyed retail store advertised organic cheese or organic butter this period. Regionally, organic ad volumes increased in all survey areas, except for Alaska and Hawaii. The Southeast saw the highest volume of organic ads, a 105 percent rise in ad numbers. NATIONAL RETAIL REPORT (DMN): Conventional 1 pound butter ads increased 73 percent, with a U.S. weighted average advertised price of $3.15 this period, up 26 cents. The national weighted average advertised price of conventional 8 ounce block cheese is $2.32, up 15 cents from last week. Conventional milk ads increased 1 percent and organic milk ads more than doubled. There are over 1.4 times more ads for organic milk than for conventional milk. MAY MILK SALES: During May 2018, 3.9 billion pounds of packaged fluid milk products are estimated to have been sold in the United States. This was 3.2 percent lower than May 2017. Estimated sales of total conventional fluid milk products decreased 3.2 percent from May 2017 and estimated sales of total organic fluid milk products decreased 3.1 percent from a year earlier. JUNE COMSUMER PRICE INDEX (BLS): The June CPI for all food is 253.2, up 1.4 percent from 2017. The dairy products index is 216.1, up 0.4 percent from a year ago. The following are the June to June changes for selected products: fresh whole milk is -2.1 percent; cheese, +2.0 percent; and butter, +2.8 percent. JULY MILK SUPPLY AND DEMAND ESTIMATES (WAOB): Milk production forecasts for both 2018 and 2019 are lowered from last month on slower-than-anticipated growth in milk per cow and lower cow numbers. Although tempered by lower expected feed costs, lower milk prices will likely weaken producer margins, resulting in lower cow numbers and slower growth in milk per cow. USDA s Cattle report, to be released on July 20th, will provide a mid-year estimate of dairy cow and dairy replacement heifer inventories. For 2018, the fat basis import forecast is raised from the previous month on higher imports of butterfat products. Fat basis imports are unchanged for 2019. The 2018 fat basis export forecast is unchanged from the previous month but is raised for 2019 as the U.S. is expected to be price competitive and higher expected exports of butterfat products will more than offset expected declines in cheese exports. Skim-solids basis import forecasts for 2018 and 2019 are unchanged from the previous month. However, skim-solids basis exports for 2018 and 2019 are reduced from the previous month primarily on lower expected exports of skim milk powder and whey products as China s tariffs on certain U.S. dairy products hampers exports to some extent. The 2018 butter, cheese, nonfat dry milk (NDM), and whey price forecasts are reduced from the previous month. Forecasts are reduced for cheese, NDM, and whey prices for 2019 as cheese stocks will remain large and prices for NDM and whey will have to remain competitive with competing exporters. However, the 2019 butter price is raised as stocks are worked down. The 2018 and 2019 Class III price and Class IV price forecasts are lowered from last month. The 2018 all milk price is forecast at $15.95 to $16.25 and the price for 2019 is $16.25 to $17.25 per cwt. -1A-

DAIRY MARKET NEWS, JULY 9-13, 2018-2- VOLUME 86, REPORT 28 MONDAY, JULY 9, 2018 CHEESE -- SALES: 12 CARS BARRELS: 2 @ $1.2450, 2 @ $1.2475, 4 @ $1.2500, 4 @ $1.2625; UNFILLED BIDS: 22 CARS BARRELS: 10 @ $1.2000, 2 @ $1.2200, 2 @ $1.2250, 2 @ $1.2300, 2 @ $1.2350, 4 @ $1.2600; UNFILLED OFFERS: 2 CARS BARRELS: 2 @ $1.2625; 2 CARS 40 POUND BLOCKS: 2 @ $1.5900 NONFAT DRY MILK -- SALES: NONE; UNFILLED BIDS: 4 CARS GRADE A: 1 @ $0.7200, 1 @ $0.7500, 1 @ $0.7625, 1 @ $0.7675; UNFILLED OFFERS: 1 CAR GRADE A @ $0.8000 BUTTER -- SALES: 8 CARS GRADE AA: 1 @ $2.1900, 1 @ $2.1975, 5 @ $2.2000, 1 @ $2.2050; UNFILLED BIDS: 5 CARS GRADE AA: 1 @ $2.1500, 1 @ $2.1600, 1 @ $2.1800, 1 @ $2.1825, 1 @ $2.1975; UNFILLED OFFERS: 3 CARS GRADE AA: 1 @ $2.2050, 1 @ $2.2100, 1 @ $2.2200 DRY WHEY -- SALES: 2 CARS EXTRA GRADE: 1 @ $0.3900, 1 @ $0.3950; UNFILLED BIDS: 1 CAR EXTRA GRADE @ $0.3975; UNFILLED OFFERS: 2 CARS EXTRA GRADE @ $0.4000 TUESDAY, JULY 10, 2018 CHEESE -- SALES: 16 CARS BARRELS: 2 @ $1.2825, 6 @ $1.2925, 2 @ $1.2950, 2 @ $1.3000, 2 @ $1.3350, 2 @ $1.3375; UNFILLED BIDS: 20 CARS BARRELS: 2 @ $1.2000, 6 @ $1.2025, 2 @ $1.2925, 2 @ $1.3150, 2 @ $1.3200, 2 @ $1.3250, 2 @ $1.3275, 2 @ $1.3300; UNFILLED OFFERS: 16 CARS BARRELS: 2 @ $1.3400, 2 @ $1.3500, 2 @ $1.3600, 2 @ $1.3700, 2 @ $1.3800, 2 @ $1.3900, 2 @ $1.4000, 2 @ $1.4100; 2 CARS 40 POUND BLOCKS: 2 @ $1.5825 NONFAT DRY MILK -- SALES: NONE; UNFILLED BIDS: 3 CARS GRADE A: 1 @ $0.7600, 1 @ $0.7625, 1 @ $0.7675; UNFILLED OFFERS: 4 CARS GRADE A: 3 @ $0.7725, 1 @ $0.7750 BUTTER -- SALES: 3 CARS GRADE AA: 1 @ $2.2125, 1 @ $2.2225, 1 @ $2.2250; UNFILLED BIDS: 4 CARS GRADE AA: 1 @ $2.1700, 1 @ $2.1850, 1 @ $2.1900, 1 @ $2.2100; UNFILLED OFFERS: 1 CAR GRADE AA @ $2.2275 DRY WHEY -- SALES: 1 CAR EXTRA GRADE @ $0.4000; UNFILLED BIDS: 1 CAR EXTRA GRADE @ $0.4050; UNFILLED OFFERS: 1 CAR EXTRA GRADE @ $0.4100 WEDNESDAY, JULY 11, 2018 CHEESE -- SALES: 24 CARS BARRELS: 16 @ $1.3375, 2 @ $1.3400, 2 @ $1.3450, 4 @ $1.3500; UNFILLED BIDS: 2 CARS BARRELS: 2 @ $1.3300; UNFILLED OFFERS: 2 CARS 40 POUND BLOCKS: 2 @ $1.5825 NONFAT DRY MILK -- SALES: 2 CARS GRADE A: 1 @ $0.7575, 1 @ $0.7600; UNFILLED BIDS: 2 CARS GRADE A: 1 @ $0.6900, 1 @ $0.7525; UNFILLED OFFERS: 5 CARS GRADE A: 2 @ $0.7575, 1 @ $0.7650, 1 @ $0.7675, 1 @ $0.7800 BUTTER -- SALES: 3 CARS GRADE AA: 1 @ $2.1900, 1 @ $2.1925, 1 @ $2.2000; UNFILLED BIDS: 1 CAR GRADE AA @ $2.1925; UNFILLED OFFERS: 2 CARS GRADE AA: 1 @ $2.2200, 1 @ $2.2300 DRY WHEY -- SALES: 2 CARS EXTRA GRADE @ $0.4100; UNFILLED BIDS: 1 CAR EXTRA GRADE @ $0.4025; UNFILLED OFFERS: NONE THURSDAY, JULY 12, 2018 CHEESE -- SALES: 20 CARS BARRELS: 2 @ $1.3600, 8 @ $1.3700, 4 @ $1.4000, 2 @ $1.4025, 4 @ $1.4100; UNFILLED BIDS: 8 CARS BARRELS: 2 @ $1.3825, 2 @ $1.3900, 2 @ $1.4000, 2 @ $1.4125; 2 CARS 40 POUND BLOCKS: 2 @ $1.5650; UNFILLED OFFERS: 6 CARS BARRELS: 2 @ $1.4400, 2 @ $1.4500, 2 @ $1.4700; 2 CARS 40 POUND BLOCKS: 2 @ $1.5825 NONFAT DRY MILK -- SALES: 8 CARS GRADE A: 5 @ $0.7550, 2 @ $0.7575, 1 @ $0.7625; UNFILLED BIDS: 5 CARS GRADE A: 1 @ $0.7525, 2 @ $0.7550, 2 @ $0.7600; UNFILLED OFFERS: NONE BUTTER -- SALES: 6 CARS GRADE AA: 1 @ $2.2050, 1 @ $2.2100, 1 @ $2.2125, 2 @ $2.2150, 1 @ $2.2175; UNFILLED BIDS: NONE; UNFILLED OFFERS: 2 CARS GRADE AA: 1 @ $2.2200, 1 @ $2.2250 DRY WHEY -- SALES: NONE; UNFILLED BIDS: 1 CAR EXTRA GRADE @ $0.4175; UNFILLED OFFERS: 1 CAR EXTRA GRADE @ $0.4250 FRIDAY, JULY 13, 2018 CHEESE -- SALES: 26 CARS BARRELS: 2 @ $1.4075, 6 @ $1.4200, 4 @ $1.4300, 6 @ $1.4325, 4 @ $1.4350, 2 @ $1.4375, 2 @ $1.4400; 16 CARS 40 POUND BLOCKS: 4 @ $1.5550, 6 @ $1.5575, 6 @ $1.5600; UNFILLED BIDS: 2 CARS BARRELS: 2 @ $1.3825; 4 CARS 40 POUND BLOCKS: 2 @ $1.5550, 2 @ $1.5575; UNFILLED OFFERS: 6 CARS BARRELS: 2 @ $1.4225, 2 @ $1.4300, 2 @ $1.4500; 4 CARS 40 POUND BLOCKS: 2 @ $1.5700, 2 @ $1.5800 NONFAT DRY MILK -- SALES: 1 CAR GRADE A @ $0.7550; UNFILLED BIDS: 4 CARS GRADE A: 1 @ $0.7200, 1 @ $0.7450, 1 @ $0.7500, 1 @ $0.7550; UNFILLED OFFERS: 1 CAR GRADE A @ $0.7600 BUTTER -- SALES: 1 CAR GRADE AA @ $2.2225; UNFILLED BIDS: 6 CARS GRADE AA: 1 @ $2.1900, 1 @ $2.1925, 1 @ $2.2025, 1 @ $2.2200, 1 @ $2.2225, 1 @ $2.2250; UNFILLED OFFERS: 1 CAR GRADE AA @ $2.2500 DRY WHEY -- SALES: 2 CARS EXTRA GRADE: 1 @ $0.4175, 1 @ $0.4200; UNFILLED BIDS: 1 CAR EXTRA GRADE @ $0.4100; UNFILLED OFFERS: 1 CAR EXTRA GRADE @ $0.4200 BUTTER MARKETS NORTHEAST This week, area cream interest is feeling a slight pinch due to lower off-the-farm milk volumes and reductions in butterfat content from the summer heat surge. Subsequently, some butter plants have strayed from churning schedules as cream holdings are adequate only for contractual commitments. In general, butter stocks are mixed. Food service orders are steady at seasonal levels as interest remains good. Although reports indicate a relaxing of domestic post-holiday demand, at the retail level, wholesale exports are active around the competitive butter price. For some plants, this has led to sharp declines of unsalted butter that is available for exporting. The bulk butter prices for domestic sales are reported 5-8 cents over the market of the CME Group, with various time frames and averages used. s for: Eastern U.S., All First Sales, F.O.B., Grade AA, Conventional, and Edible Butter Bulk Basis Pricing - 80% Butterfat $/LB: +0.0500 - +0.0800 Secondary Sourced Information: At the CME, Grade AA butter closed Tuesday at $2.2250, up $0.0250 from a week ago. CENTRAL Retail butter reports are generally positive, beating summer expectations in some cases. Cream headed for the churns is becoming less available. Plans to continue or resume fall storage preparation have gone awry for some producers, as they are at or near their price limit on cream. Butter markets are questionable. Some propose as milk/cream supplies are showing signs of easing, butter supplies will follow suit and find more balance. Others are purporting a near term volatility in the markets. Undoubtedly, the markets have seen a continual slide since their 2018 highs in late May, when they hovered near the $2.40 mark. s for: Central U.S., All First Sales, F.O.B., Grade AA, Conventional, and Edible Butter Bulk Basis Pricing - 80% Butterfat $/LB: 0.0000 - +0.0700 Secondary Sourced Information: The NASS Dairy Products report noted U.S. butter production during May 2018 in the Central region totaled 68.6 million pounds, 3 percent lower than one year ago. Total U.S. butter production during May 2018 was 167.9 million pounds, 2.8 percent higher than last year. January through May 2018 U.S. butter production totaled 877.5. NATIONAL DAIRY PRODUCTS SALES REPORT U.S. AVERAGES AND TOTAL POUNDS CONTINUED ON PAGE 2A WEEK ENDING July 7, 2018 BUTTER CHEESE 40# BLOCKS CHEESE BARRELS 38% MOISTURE 2.2976 2,260,623 1.5950 11,955,688 1.3820 14,055,829 DRY WHEY 0.3364 4,083,980 NDM 0.7785 13,125,869 Further data and revisions may be found on the internet at: http://www.ams.usda.gov/rules-regulations/mmr/dmr

DAIRY MARKET NEWS, JULY 9-13, 2018-2A- VOLUME 86, REPORT 28 CONTINUED FROM PAGE 2 WEST Western butter makers say demand is changing as rapidly as the weather, one day solid and another day weak. Manufacturers suggest that while some customers have their near-term butter needs covered, there are others looking for deals. Shoppers are watching market prices closely and seem to be ready to jump on purchases when prices slide just a few pennies lower. Butter inventories are already adequate for most customer needs, and manufacturers do not want to see them grow much more. Processors are holding back on production, opting instead to sell cream whenever they can. There is still plenty of cream in parts of the West. s for: Western U.S., All First Sales, F.O.B., Grade AA, Conventional, and Edible Butter Bulk Basis Pricing - 80% Butterfat $/LB: -0.0200 - +0.0700 Secondary Sourced Information: The Grade AA butter price at the CME Group on Wednesday closed at $2.2000, compared to the weekly average of $2.2006 from last week. National Retail Report Dairy Butter Summary Advertised s at Major Retail Supermarket Outlets ending during the period of 7/6/2018 to 7/12/2018 Butter 1# Weighted Average National This Period Last Week Last Year Organic $5.10 $5.42 $4.99 Conventional $2.89 $3.45 $3.35 s This Period Regional (Conventional) Wtd. Ave. Low High ALASKA $3.93 $3.79 $3.99 HAWAII n.a. n.a. n.a. MIDWEST $2.66 $1.99 $3.00 NORTHEAST $3.24 $1.99 $3.99 NORTHWEST $2.18 $1.99 $2.50 SOUTH CENTRAL $1.99 $1.99 $1.99 SOUTHEAST $1.99 $1.99 $1.99 SOUTHWEST $3.50 $1.99 $3.99 2018 U.S. Butter and Milkfat Exports (USDA-FAS) 2018 Exports % Change From (Million Lb.) 1 Year Ago May 8.8 + 105 TOTAL, JAN - MAY 38.1 + 90 1 Canada 12.1 + 38 2 Mexico 10.3 + 244 3 Honduras 2.7 + 21712 4 Saudi Arabia 2.2 + 53 5 Denmark 1.2... 2018 U.S. Butter and Milkfat Imports (USDA-FAS) (Imports for Consumption) 2018 Imports % Change From (Million Lb.) 1 Year Ago May Imports Total Butter, Fats, Milk (H.S. Code 0405) 10.3 + 50 Butter Quota (H.S. Code 405101000) 2.0 + 374 Over Quota (H.S. Code 405102000) 2.6-41 AMF Quota (H.S. Code 405901020) 0.3-47 Over Quota (H.S. Code 405902020) 4.1 + 295 Other Milk Fat 1.3 + 252 2018 Imports % Change From (Million Lb.) 1 Year Ago TOTAL, JAN-MAY 38.1 + 21 1 Ireland 17.5 + 13 2 Mexico 9.1 + 77 3 India 4.5 + 669 4 France 2.2 + 48 5 New Zealand 2.0-52 Dairy Products Report Butter Summary Released July 5, 2018, by the National Agricultural Statistics Service (NASS), Agricultural Statistics Board, United States Department of Agriculture (USDA). Butter Production States and United States: May 2017 and 2018 Monthly Production (1000 pounds) Percent Change from May April May May April Region 2017 2018 2018 2017 2018 United States 163,397 175,297 167,911 2.8-4.2 Atlantic 18,883 19,059 18,448-2.3-3.2 Pennsylvania 8,990 8,582 8,602-4.3 0.2 Central 70,705 73,649 68,561-3.0-6.9 West 73,809 82,589 80,902 9.6-2.0 California 5,828 53,467 50,671 10.6-5.2 Butter Production Cumulative Production January - May Cumulative Production (1000 pounds) Percent Change from Report Month 2017 2018 2017 May 841,447 877,458 4.3

DAIRY MARKET NEWS, JULY 9-13, 2018-3- VOLUME 86, REPORT 28 NORTHEAST Milk production is dropping off on Northeastern farms as the hotter weather takes ahold of cow comfort. Although milk output is lower, supplies are adequate for processing needs in the area. Cheese plants are running full this week. Retail cheddar demand is fairly stable as the grilling season is here. Manufacturers report provolone orders are moderate currently as interest is fairly stable from sandwich shops. Mozzarella demand is slower for this time of year. Cheese inventories in the region are stable to growing. Cheddar cheese block and barrel spot market activities this week are mixed as sales are somewhat higher, yet prices vary based on various indices. Market conditions are steady with still much concern about domestic supplies and the interest for U.S. cheese in international markets. The wholesale prices for cheddar and Muenster increased $0.0625. Moreover, the process cheese price shifted up $0.0525. The Grade A Swiss price increased $0.0275 following the release of the June 2018 Announcement of Class and Component s. However, the Class III skim milk price for June 2018 saw a 13 cents decline. WHOLESALE SELLING PRICES: DELIVERED DOLLARS PER POUND(MIXED LOTS (1000-5000 POUNDS)) Cheddar 40 pound Block 2.0100-2.2950 Muenster 1.9950-2.3450 Process American 5 pound Sliced 1.4675-1.9475 Swiss 10-14 pound Cuts 3.0550-3.3775 Secondary Sourced Information: Dairy Products Report Total Cheese Summary Released July 5, 2018, by the National Agricultural Statistics Service (NASS), Agricultural Statistics Board, United States Department of Agriculture (USDA). Total Cheese Production States and United States: May 2017 and 2018 Monthly Production (1000 pounds) Percent Change from May April May May April Region 2017 2018 2018 2017 2018 United States 1,076,171 1,073,438 1,091,642 1.4 1.7 Atlantic 130,735 124,902 132,707 1.5 6.2 New Jersey 4,499 4,586 4,466-0.7-2.6 Pennsylvania 33,412 35,521 36,659 9.7 3.2 Vermont 12,266 12,328 12,368 0.8 0.3 Total Cheese Production Cumulative Production January - May CHEESE MARKETS WISCONSIN WHOLESALE SELLING PRICES: DELIVERED DOLLARS PER POUND(MIXED LOTS (1000-5000 POUNDS)) Blue 5 pounds 2.1850-3.1725 Brick 5 pounds 1.9175-2.3425 Cheddar 40 pound Block 1.6450-2.0400 Monterey Jack 10 pounds 1.8925-2.0975 Mozzarella 5-6 pounds 1.7175-2.6575 Muenster 5 pounds 1.9175-2.3425 Process American 5 pound Loaf 1.4225-1.7825 Swiss 6-9 pound Cuts 2.5725-2.6900 Secondary Sourced Information: Dairy Products (NASS) reports total U.S. cheese production, for May 2018, was 1.092 billion pounds, 1.4 percent above last year. Central total cheese production for May 2018 was 503.6 million pounds, 2 percent higher than April 2018. Dairy Products (NASS) reports total U.S. cheese production, for May 2018, was 1.092 billion pounds, 1.4 percent above last year. Central total cheese production for May 2018 was 503.6 million pounds, 2 percent higher than April 2018. For total cheese and various types of cheese, May 2018 U.S. and Central cheese production percentage changes compared to May 2017 were as follows: May Production 2018 vs 2017 U.S. Central Total + 1.4% + 1.1% American - 0.1% - 0.4% Cheddar - 3.0% - 2.0% Total Italian + 1.1% + 3.5% Mozzarella + 1.7% + 6.4% WESTERN Western cheese production is ongoing. However, export demand is somewhat slow. Some contacts report that Mexican buyers have started to look for alternative cheese providers in the European market as import tariffs on U.S. cheese have increased. To hedge against the loss of some international market shares, several western cheese manufacturers are adjusting their production schedules by switching from barrel to block production. Domestic sales are steady. The cheese market undertone is generally unsettled, and inventories are robust. Sellers are concerned as to finding additional sale outlets to prevent a further accrual of inventories. In the West, wholesale prices were up $.0525 for process and up $.0625 for cheddar block, cuts Cumulative Production Percent Change (1000 pounds) from Report Month 2017 2018 2017 May 5,227,720 5,355,958 2.5 MIDWEST Demand reports from Midwestern cheesemakers diverge from slow to very busy. Although Western cheesemakers are arguably the most impacted by the recent tariffs, there are some upper-midwestern producers who ship globally. They suggest that there are concerns, but they have yet to see what impact tariffs will have near term. Some cheesemakers have suggested they have only recently begun to break into Asian markets and have seen a lot of promise there. Milk supplies are lessening. Spot milk premiums were reported for the first time since March. This week s spot range falls between $.50 over to $3 under Class III. Cheese producers report large drops in component percentages, as heat and humidity keep cows well outside of their comfort zones. Midwestern wholesale prices are up $.0275 for WHOLESALE SELLING PRICES: DELIVERED DOLLARS PER POUND(MIXED LOTS (1000-5000 POUNDS)) Cheddar 10 pound Cuts 1.8575-2.0775 Cheddar 40 pound Block 1.6775-2.1225 Monterey Jack 10 pounds 1.8675-2.0275 Process American 5 pound Loaf 1.4100-1.6675 Swiss 6-9 pound Cuts 2.6525-3.0825 Secondary Sourced Information: In CME Group trading Wednesday, barrels closed at $1.3500, up $.1050 from last Friday, and blocks closed at $1.5425, unchanged from last Friday. Dairy Products (NASS) reports May 2018 U.S. total cheese production, 1.09 billion pounds, is 1.7 percent higher than April 2018, and 1.4 percent above May 2017. Total 2018 U.S. cheese production, year to date through May is 5.36 billion pounds, 2.5 percent above January through May 2017. In the West, total CONTINUED ON PAGE 3A

DAIRY MARKET NEWS, JULY 9-13, 2018-3A- VOLUME 86, REPORT 28 CONTINUED FROM PAGE 3 percent more than last month. For total cheese production and various types of cheese, May 2018 U.S. and West cheese production percent changes compared to May 2017 are as follows: May Production 2018 vs 2017 U.S. West Total Cheese + 1.4 + 1.7 American - 0.1 + 0.6 Cheddar - 3.0-4.2 Total Italian + 1.1 + 0.6 Mozzarella + 1.7 + 0.3 Swiss + 9.0... FOREIGN Cheese production in the European Union (EU) remains active. According to market participants, cheese was significantly more produced than other dairy products in early summer. However, cheese supplies are currently lower. Domestic and international demands are both increasing. With the recent trade issues in the U.S., more international buyers are looking for suppliers in the EU cheese market. Overall, the EU cheese market undertone is firm, and prices are higher. In the U.S., the prices for wholesale blue, gorgonzola, parmesan, and Romano augmented by $.0625, and Swiss prices increased by $.0275. All other prices remained steady compared to the previous week. WHOLESALE SELLING PRICES: FOB DISTRIBUTORS DOCK DOLLARS PER POUND (1000-5000 POUNDS, MIXED LOTS) : NEW YORK VARIETY : IMPORTED : DOMESTIC : : Blue : 2.6400-5.2300 : 2.0625-3.5500* Gorgonzola : 3.6900-5.7400 : 2.5700-3.2875* Parmesan : -0- : 3.4525-5.5425* Romano : -0- : 3.2525-5.4025* Sardo Romano (Argentina) : 2.8500-4.7800 : -0- Reggianito (Argentina) : 3.2900-4.7800 : -0- Jarlsberg : 2.9500-6.4500 : -0- Swiss : -0- : 3.0925-3.4150* Swiss (Finland) : 2.6700-2.9300 : -0- * = change. COLD STORAGE CHEESE MARKETS National Retail Report Dairy Cheese Summary Advertised s at Major Retail Supermarket Outlets ending during the period of 7/06/2018 to 7/13/2018 Weighted Average Cheese 8 oz. Blocks National This Period Last Week Last Year Organic n.a. n.a. $3.54 Conventional $2.17 $2.08 $2.20 Regional (Conventional) Wtd. Ave. Low High ALASKA $3.00 $3.00 $3.00 HAWAII $3.00 $3.00 $3.00 MIDWEST $1.92 $1.50 $2.49 NORTHEAST $2.34 $1.67 $3.00 NORTHWEST $2.64 $1.66 $3.00 SOUTH CENTRAL $2.16 $1.50 $2.99 SOUTHEAST $2.13 $1.66 $3.00 SOUTHWEST $2.14 $1.66 $3.00 Weighted Average Cheese 8 oz. Blocks National This Period Last Week Last Year Organic n.a. $3.49 $3.40 Conventional $2.18 $2.12 $2.27 Regional (Conventional) Wtd. Ave. Low High ALASKA $3.00 $3.00 $3.00 HAWAII $3.00 $3.00 $3.00 MIDWEST $2.05 $0.99 $2.50 NORTHEAST $2.20 $1.67 $2.99 NORTHWEST $2.30 $1.99 $2.79 SOUTH CENTRAL $2.34 $1.67 $2.99 SOUTHEAST $2.08 $1.67 $2.50 SOUTHWEST $2.36 $1.77 $3.00 2018 U.S. Cheese and Curd Imports (USDA-FAS) (Imports for Consumption) 2018 Imports % Change From (Million Lb.) 1 Year Ago May Imports TOTAL Cheese and Curd (H.S. Code 0406) 32.7-3 Cheese, Except Fresh (H.S. Code 040690) 27.9-5 Fresh Cheese (H.S. Code 040610) 2.7-7 Cheese, Processed (H.S. Code 040630) 1.0 + 16 Cheese, Blue-Veined (H.S. Code 040640) 0.8 + 42 WEEKLY COLD STORAGE HOLDINGS - SELECTED STORAGE CENTERS IN THOUSAND POUNDS - INCLUDING GOVERNMENT STOCKS BUTTER CHEESE 07/09/2018 2198 : 82618 07/01/2018 51405 : 81145 CHANGE 793 : 1473 % CHANGE 2 : 2 Volumes for Butter and Cheese: U.S., Edible, and Pounds 2018 Imports % Change From (Million Lb.) 1 Year Ago TOTAL, JAN - MAY 148.9-7 1 Italy 29.1... 2 France 17.3-1 3 Netherlands 10.6-12 4 Spain 10.1-1 5 Denmark 9.0 + 63 2018 U.S. Cheese and Curd Exports (USDA-FAS) 2018 Exports % Change From (Million Lb.) 1 Year Ago May 65.9-16 TOTAL, JAN - MAY 334.5 + 6 1 Mexico 92.3-6 2 South Korea 55.5 + 13 3 Japan 33.9 + 19 4 Australia 21.5-14 5 China 15.8 + 46

DAIRY MARKET NEWS, JULY 9-13, 2018-4- VOLUME 85, REPORT 28 FLUID MILK AND CREAM EAST Milk production in the Northeast is declining as the weather rose to hot temperatures, thus creating conflict with cow comfort currently. However, milk is available in the area and manufacturers are receiving adequate milk volumes. Class I sales are steady to higher this week coming off the holiday. Mid-Atlantic milk off the farms is steady to decreasing. Balancing operations are receiving heavy milk volumes, although there is still capacity available in some facilities for production needs. Southeast milk production is dropping off as the warmer weather affects cow comfort. Class I sales are steady as bottlers are receiving heavy milk loads for processing needs. Market participants report some manufacturing plants are not receiving any milk, as the majority of loads are clearing into Class I facilities. Florida s temperatures have been hot with thunderstorms in the afternoons. Milk output is decreasing week after week from the aftermath of the heat and humidity. Milk managers report Class I sales are fairly steady with no major fluctuations. Market conditions for cream are stable and strong coming off the holiday. Multiples range 1.30-1.40 with the majority of sales trading in the mid to high 1.30s. With solid cream demand some butter makers are selling cream instead of processing. There are reports that the demand from ice cream manufacturers is at active seasonal levels. Cream supplies are steady to limited as milk production and fat components are lower. Condensed skim is available, yet there are some reports of fewer condensed skim loads leaving the East, as milk supplies are lower and Class II demand is currently active. Northeastern U.S., F.O.B. Condensed Skim - Class II; $/LB Solids: 0.45-0.88 - Class III; $/LB Solids: 0.49-0.87 Northeastern U.S., F.O.B. Cream Multiples - All Classes: 1.3000-1.4000 - Class II; $/LB Butterfat: 2.8608-3.0808 Secondary Sourced Information: With last Wednesday s announcement of the Class and Component s, the Class III Skim Milk price decreased $0.13, compared to the previous month. Dairy Products Report Hard Ice Cream Summary Released July 5, 2018, by the National Agricultural Statistics Service (NASS), Agricultural Statistics Board, United States Department of Agriculture (USDA). Hard Ice Cream Production States and United States: May 2017 and 2018 Monthly Production (1000 gallons) Percent Change from May April May May April Region 2017 2018 2018 2017 2018 United States 72,167 63,601 65,702-9.0 3.3 Atlantic 15,684 14,956 16,495 5.2 10.3 Pennsylvania 3,772 3,327 3,806 0.9 14.4 Hard Ice Cream Production Cumulative Production January - May Cumulative Production Percent Change (1000 gallons) from Report Month 2017 2018 2017 May 331,534 303,820-8.4 MIDWEST Milk production reports from late last week and early this week have been in stark contrast to much of what has been received this year. Milk supplies are tapering due to region-wide heat and humidity, along with culling and auctioning cows, as small to mid-sized Midwestern farms are amidst an exodus from the industry. From time to time late last year and in 2018, farmers have relayed occasional drops in component percentages, but this week s declines were across the board. Spot milk loads bought over Class III were reported for the first time since March, and some butter makers opted out of the spot cream market due to increasing cream prices and limited availability. Ice cream production continues at near peak levels, as reported cream multiples increased from the holiday week. Warm, dry weather in the upper Midwest came at a great time for haying, and reports suggest that stocks will be plentiful. Midwestern U.S., F.O.B. Cream Multiples - All Classes: 1.2400-1.3400 - Class II; $/LB Butterfat: 2.7728-2.9488 Multiples - Class II: 1.2600-1.3400 Secondary Sourced Information: The NASS Dairy Products report noted May U.S. regular (hard) ice cream production totaled 65.7 million gallons, down 9 percent from last year. January-May U.S. production totals 303.8 million gallons, 8.4 percent below 2017 during the same period. May production in the Central region totaled 36.4 million gallons, 8.8 percent below a year ago. WEST In California, milk supplies are reported to be extremely tight in some areas, but steady in others. Recent heatwaves have created an uncomfortable environment for cows. Some buyers noted not being able to get the quantity of milk they need as spot loads of milk are limited in the market. Consequently, milk prices have somewhat increased. Class 1 sales remained steady throughout the week. A few plants are doing maintenance and repair works, but their daily processing schedules are not being affected. According to industry contacts, in recent weeks a number of dairies in California have closed while a few others have sold out to other dairies. Some domestic dairies are pushing for lower alfalfa hay prices. In addition, export buyers are bidding lower on alfalfa hay due to China s increase of alfalfa hay import tariff. Recent storms in Arizona have flooded many roads. As the result, milk transportation from the dairies has been difficult. Increased humidity in the area is also putting more stress on cows. Overall, milk production continues to drop week by week. However, milk supplies are enough to meet all processing needs. Class I milk intakes are lower, but they are expected to increase in coming weeks when the schools reopen. To help with manufacturing duties, some processors in Arizona are taking in milk from states with higher output levels. Several plant operators are also using the slowdown in activities to perform equipment repair and maintenance workloads. In New Mexico, farm milk output is steady to slightly up. Class I demand has decreased. AS ice cream and frozen desert manufacturers take on more loads of cream, Class II demand increased. Class III sales are mostly steady. Heat is building into the Pacific Northwest. Some temperatures inland are expected to reach into the triple digits over the next week. Industry contacts asseverate that cow comfort has been favorable through the first half of the year, however as the canicular season begins, contacts expect milk production and components to decrease. Current production levels are strong, and manufacturers have had no trouble getting the milk needed for processing runs. Furthermore, although cream volumes appear to be tightening, there is still sufficient supplies of cream available for butter and Class II manufacturing. Milk supplies in the mountain states of Idaho, Utah -CONTINUED ON PAGE 4A-

DAIRY MARKET NEWS, JULY 9-13, 2018-4A- VOLUME 85, REPORT 28 -CONTINUED FROM PAGE 4- has suppressed milk production, there is plenty of milk to meet most processing needs. In Idaho and Utah, milk production is still near its zenith for the year. The nimiety of milk is spilling over into surrounding states. In addition, there are a few suggestions that some milk was discarded within the last week, likely the result of the holiday, but quite possibly also due to temporary production hiccups at several processing facilities. In the West, condensed skim supplies are tight, and prices have increased. This could be due to lower milk output in some parts of the region and an increase in condensed skim demand for ice cream making. Cream demand has been strong in some areas, but steady in others. Cream requests for ice cream manufacturing are the strongest at the moment. Several butter makers are selling some of their cream in lieu of making more butter. As cream availability drops in some places, butter is being remelted for use in cheese manufacturing. Some contacts noted that some buyers are unwilling to pay the current higher prices for cream, so they are waiting to see in which direction the market will move. Cream multiples for all Classes are 1.08-1.31. Western U.S., F.O.B. Cream Multiples - All Classes: 1.0800-1.3100 Secondary Sourced Information: According to the NASS Dairy Products report, hard ice cream production in the West region for May 2018 is 12.8 million gallons, 8.1 percent higher than a month ago, but 22.6 percent below the previous year. According to the California Department of Food and Agriculture, the June 4a price (butter/powder) in California is $14.22, up $0.16 from the previous month, but down $1.69 from a year ago. This compares to the Federal Order Class IV price of $14.91 for June. The June 4b price (cheese) is $14.43, down $0.47 from the previous month, and $1.38 lower from a year ago. This compares to the Federal Order Class III price for June at $15.21. According to California Department of Food and Agriculture, August 2018 Class 1 prices in California are $16.14 in the North and $16.41 in the South. The statewide average Class 1 price based on production is $16.15. This price is down $0.73 from the previous month, and $2.19 lower than a year ago. National Retail Report Dairy Fluid Milk Summary Advertised s at Major Retail Supermarket Outlets ending during the period of 7/06/2018 to 7/13/2018 Half Gallon, All Fat Tests Weighted Average National This Period Last Week Last Year Organic $4.14 $4.19 $3.79 Conventional $1.93 $2.86 $2.29 Regional (Conventional) Wtd. Ave. Low High NORTHEAST $1.99 $1.99 $1.99 SOUTH CENTRAL $1.56 $0.99 $1.89 SOUTHEAST $2.15 $1.50 $2.50 Regional (Organic) Wtd. Ave. Low High SOUTH CENTRAL $4.02 $2.99 $4.29 SOUTHEAST $3.82 $3.50 $4.25 SOUTHWEST $4.55 $3.99 $4.99 FLUID MILK AND CREAM

DAIRY MARKET NEWS, JULY 9-13, 2018-5- VOLUME 85, REPORT 28 NONFAT DRY MILK, BUTTERMILK & WHOLE MILK s represent carlot/trucklot quantities for domestic and export sales packaged in 25 kg. or 50 lb. bags, or totes, spray process, dollars per pound. NONFAT DRY MILK - CENTRAL AND EAST CENTRAL: Low/medium heat nonfat dry milk (NDM) spot market activity saw a slight drop off from an active week 27. Trading in the Central U.S. has found a fairly tight comfort zone in the upper $.70s. Off-grade NDM trading activity also saw a bit of a bump, as end users are finding some spot loads at agreeable prices on the feed market. Low/medium heat inventories continue to grow, as some powder dryers in the Central region have recently converted to solely drying condensed skim near term. High heat NDM spot prices continue to decrease, but most high heat drying is focused on contractual requirements. The NDM market tone is uncertain, and a number of buyers are stepping back and awaiting the potentiality of heavier supplies remaining in the country. EAST: Eastern low/medium heat nonfat dry milk prices moved lower at the top of the range and bottom of the mostly series, with declines in f.o.b. cash market prices and indices adjusting lower. Spot purchases of NDM are intermittent as prices trend lower and track a potential buyers' market. Moderate declines in milk off-the-farm are having little to no impact on nonfat dry milk production rates. The majority of NDM is clearing through contracts from seasonal ice cream and committed cheese processors. The export market is unsettled, as market participants pay close attention to NDM markets south of the border that bear on domestic buying/selling. s for high heat nonfat dry milk are steady to lower. Supplies are light. Some high heat NDM manufacturers still find dryer time scarce due to the volume of condensed skim on hand. Interest is steady. s for: Eastern and Central U.S., All First Sales, F.O.B., Extra Grade & Grade A, Conventional, and Edible Nonfat Dry Milk - Low & Medium Heat; $/LB:.7525 -.8400 Mostly - Low & Medium Heat; $/LB:.7750 -.8175 s for: Eastern and Central U.S., All First Sales, F.O.B., Extra Grade & Grade A, Conventional, and Edible Nonfat Dry Milk - High Heat; $/LB:.9000-1.0350 Secondary Sourced Information: Wednesday at the CME Group Grade A NDM closed at $0.7575, dipping $0.0150 from the previous day. The NASS Dairy Products report noted U.S. human NDM production during May 2018 in the Central region totaled 27 million pounds, 18.4 percent lower than one year ago. Total U.S. human NDM production during May 2018 was 160.4 million pounds, 4.5 percent lower than last year. During January-May 2018 U.S. human NDM production totaled 821.1 million pounds, 2.8 percent more than the same time span in 2017. Total U.S. NDM, human, month ending stocks for May were 271.4 million pounds, 3.1 percent below a year ago. NONFAT DRY MILK - WEST Western free on board spot prices for low/medium heat nonfat dry milk (NDM) are mostly lower on light to moderate trading. The market tone is uncertain as new protectionist international trade policies emerge, especially in China and possibly in Mexico soon. That said, many NDM / SMP processors are developing managerial strategies to mitigate the possible impact of these new international tariff when exporting. Meanwhile, in the domestic market, the interest for NDM is fair/good, principally from cheese makers and the confectionary sector. According to some buyers/end users, this week, NDM cash values are more in line with the current large supply available in the market. In fact, although farm milk output is decreasing, NDM relatively large condensed skim volumes continue clearing into dryers. At this point, low/medium heat inventories are sufficient to meet both contractual and spot needs. In the meantime, high heat NDM prices shifted down, shadowing low/medium heat NDM downward pricing trends. High heat NDM production is limited, mostly driven by contractual requirements while inventories are mixed throughout the region. s for: Western U.S., All First Sales, F.O.B., Extra Grade & Grade A, Conventional, and Edible Nonfat Dry Milk - Low & Medium Heat; $/LB:.7000 -.8200 Mostly - Low & Medium Heat; $/LB:.7200 -.8000 s for: Western U.S., All First Sales, F.O.B., Extra Grade & Grade A, Conventional, and Edible Nonfat Dry Milk - High Heat; $/LB:.9000-1.0175 CALIFORNIA MANUFACTURING PLANTS - NONFAT DRY MILK WEEK ENDING PRICE TOTAL SALES July 6 $.7692 6,237,238 June 29 $.7782 7,608,083 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: Dry buttermilk prices held steady on another slow trading week. Fresh buttermilk powder is hard to locate, as drying time is nearly exclusively focused on condensed nonfat dry milk production. The resale market is a bit more active than the spot market, and condensed varieties are what active ice cream manufacturers are seeking. Hence, the dry buttermilk market tone is hushed. EAST: s for dry buttermilk are unchanged. In general, spot prices shadow downward trending nonfat dry milk. Buyers are making purchases in a hand-to-mouth fashion, as cash market seeing very little activity, on light buying interest. Limited regional cream supplies factor into the level of dry buttermilk production. Stocks are sufficient for committed customers, while growth is sluggish at some dry buttermilk operations. s for: Eastern and Central U.S., All First Sales, F.O.B., Conventional, and Edible Buttermilk ; $/LB:.7500 -.8000 Secondary Sourced Information: The NASS Dairy Products report noted U.S. dry buttermilk production during May 2018 totaled 10.9 million pounds, 16.2 percent higher than a year ago. Total U.S. dry buttermilk monthending stocks for May were 18.8 million pounds, 9.2 percent below last year. DRY BUTTERMILK - WEST Western f.o.b. prices for dry buttermilk are steady on the range, but slightly down on the mostly series. Unlike a few weeks ago, the western dry buttermilk market looks to be waning as supply is slightly -CONTINUED ON PAGE 5A-

DAIRY MARKET NEWS, JULY 9-13, 2018-5A- VOLUME 85, REPORT 28 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. -CONTINUED FROM PAGE 5- above current demand. For example, several ice cream makers are demanding less dry butter milk supplies as the ice cream production peak already past. Consequently, inventories are more accessible to dressing makers and bakers, but their interest is steady right now. Meanwhile, drying schedules for condensed buttermilk are sporadic as most dryers are at full production capacity clearing skim milk volumes. s for: Western U.S., All First Sales, F.O.B., Conventional, and Edible Buttermilk ; $/LB:.7000 -.8200 Mostly - ; $/LB:.7200 -.7500 DRY WHOLE MILK - NATIONAL Nationwide, f.o.b. spot prices for dry whole milk are mixed on a wide range as a few spot sales pulled down the bottom of the range. Unlike a few weeks ago, the market is mixed as some processors are reporting high stocks, while others have tight inventories. Spot trading activity has been very slow throughout the week. Dry whole milk production is sporadic as most dryers are busy converting condensed skim volumes into NDM/SMP. s for: U.S., All First Sales, F.O.B., Conventional, and Edible Dry Whole Milk - 26% Butterfat; $/LB: 1.4500-1.7500

DAIRY MARKET NEWS, JULY 9-13 2018-6- VOLUME 85, REPORT 28 WHEY, WPC 34%, LACTOSE & CASEIN s represent carlot/trucklot quantities for domestic and export sales packaged in 25 kg. or 50 lb. bags, or totes, spray process, dollars per pound. DRY WHEY - CENTRAL Dry whey prices remained steady on both ends of the range and the top of the mostly, while the bottom of the mostly increased. The dry whey market tone is unsettled despite increasing prices on the CME. The effects from international trade conflicts have become the new reality for market participants in the dry whey industry. Some contacts relayed that there are talks of sharp discounts with buyers from China in an effort to continue trade relations and maintain market shares. In general, buyers are very skittish on whey, with some holding off on acquiring more loads due to already fair inventories. However, dry whey supplies are reported to be tighter than would be expected with the market seeing little offers and spare loads. Animal feed prices remained steady this week. s for: Central U.S., All First Sales, F.O.B., Conventional, and Edible Dry Whey - Animal Feed; $/LB:.2000 -.2400 s for: Central U.S., All First Sales, F.O.B., Extra Grade & Grade A, Conventional, and Edible Dry Whey - Non-Hygroscopic; $/LB:.2500 -.4100 Mostly - Non-Hygroscopic; $/LB:.3150 -.3600 Secondary Sourced Information: NASS reports that May 2018 U.S. human dry whey production, 83.6 million pounds, is up 2.1 percent from a year ago, but down 0.4 percent from April 2018. The Western region produced 20.7 million pounds of human dry whey during May, up 23.2 percent from last year, and up 1.0 percent from last month. Month ending stocks for U.S. human dry whey, at 76.4 million pounds, are 8.8 percent lower than one year ago, but up 15.3 percent from April 2018. U.S. Dry Whey Exports. H.S. Code 0404104000(FAS) 2018 Exports % Change From (Million Lb.) 1 Year Ago May Total 48.7 + 26 TOTAL, JAN - MAY 223.6 + 23 1 China 84.1 --- 2 Philippines 17.2 + 41 3 Mexico 14.2 + 3 4 Japan 13.4 + 43 5 Vietnam 11.4 +166 Secondary Sourced Information: The NASS Dairy Products report noted U.S. total dry whey production for May 2018 was 85.6 million pounds, up 3.2 percent from a year ago. January through May 2018 U.S. total dry whey production totaled 441.3 million pounds, 6.5 percent above the same time span in 2017. The Central region produced 40.3 million pounds of U.S. human dry whey in May, 3.9 percent lower than a year ago. DRY WHEY - NORTHEAST Dry whey prices in the Northeast increased on the top of the range, as spot sales are trading in the mid to high $0.30s with some buyers purchasing at premiums for specific loads. The demand is stable and market participants are buying regular loads each week. Moreover, some are sourcing for extra spots from manufacturers to handle customers needs. Dry whey production is active and manufacturers report inventories are becoming a little more available. Market conditions are stable to uncertain, as the demand for U.S. dairy products, in some international markets, with new tariffs is concerning to many market participants. s for: Eastern U.S., All First Sales, F.O.B., Extra Grade & Grade A, Conventional, and Edible Dry Whey - Non-Hygroscopic; $/LB:.3200 -.4050 DRY WHEY - WEST Western dry whey prices increased at the bottom of the range and at both ends of the mostly price series. Demand is steady in the domestic market. Producers serving the export market reported good demand from their customers. However, they are still concerned about trade issues that might disrupt the dry whey market activities. Dry whey production is steady, and supplies continue to be tight. Some manufacturers indicate that their holdings are not enough to satisfy all spot requests. Overall, the market undertone is strong. s for: Western U.S., All First Sales, F.O.B., Extra Grade & Grade A, Conventional, and Edible Dry Whey - Non-Hygroscopic; $/LB:.3000 -.4200 Mostly - Non-Hygroscopic; $/LB:.3200 -.3700 WHEY PROTEIN CONCENTRATE Whey protein concentrate 34% prices expanded the range, but the mostly price series held steady. Certain brands of WPC 34% that meet infant formula requirements, heat stability or other favorable characteristics enjoy solid demand. However, WPC 34% that is interchangeable with other protein sources have received limited interest from buyers. Inventories are relatively tight. Some manufacturers are increasing production slightly to grow stocks into more comfortable levels. Much of the market tone is being steered by the lucubrations about trade issues with our largest trade partners. While contacts suggest that market uncertainty has risen, and the future of trade discussions are unclear, some manufacturers are working with customers to try to find workable solutions to keep WPC 34% moving. By sometimes offering discounts or sharing the tariff costs, processors hope that their benevolent strategies can help secure working relationships and maintain their market share. s for: Central and Western U.S., All First Sales, F.O.B., Extra Grade, Conventional, and Edible Whey Protein Concentrate - 34% Protein; $/LB:.7000 -.9725 Mostly - 34% Protein; $/LB:.7400 -.8725 U.S. WPC < 80% Exports, H.S. Code 0404100500(FAS) 2018 Exports % Change From (Million Lb.) 1 Year Ago May Total 33.5 + 52 TOTAL, JAN - MAY 174.3 + 38 1 China 84.6 + 36 2 Mexico 27.4 + 55 3 Canada 13.5 + 3 4 Philippines 7.4 + 15 5 Hong Kong 6.8 + 5,167 -CONTINUED ON PAGE 6A-

-6A- DAIRY MARKET NEWS, JULY 9-13 2018 VOLUME 85, REPORT 28 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. -CONTINUED FROM PAGE 6- LACTOSE As Q2 contracts are closing and Q3 contracts begin, lactose prices moved higher at the bottom of the range and the top of the mostly price series. Industry contacts say lactose is moving well through contracts, but spot sale activity is a little quiet. Some manufacturers suggest the market has entered into a summertime lull, when end users have their immediate needs covered and market participants find associates on vacation or working on other needs. While the market tone seems firm, a few processors are seeing some pushback on prices at the upper half of the mostly price series. Lactose is not currently included as part of the tariff list. Regardless of that fact, manufacturers cerebrate long and hard over the potential impacts any trade issue may create. Inventories are tight and some processors are trying to catch up on backlogged orders. Lactose production is steady, but summer humidity and temporary plant issues are slowing production at a few locations. s for: Central and Western U.S., Spot Sales And Up 3 Month Contracts, F.O.B., Conventional, and Edible Lactose - Non Pharmaceutical; $/LB:.2200 -.3900 Mostly - Non Pharmaceutical; $/LB:.2600 -.3450 U.S. Lactose Exports, H.S. Code 1702110000(FAS) 2018 Exports % Change From (Million Lb.) 1 Year Ago May Total 59.7 + 35 TOTAL, JAN - MAY 295.5 + 26 1 China 67.3 + 74 2 New Zealand 44.8 + 38 3 Mexico 41.0 + 12 4 Japan 28.8 + 51 5 Indonesia 14.0-12 CASEIN Rennet and acid casein prices are steady. Sellers note continuing increased interest from some Asian buyers, China, Japan, South Korea, and Thailand in particular. Buyers are hoping for seasonal increases in casein production and volumes available for contracts. s for: Spot Sales And Up 3 Month Contracts, Free on Board - Warehouse, Non-Restricted, All Mesh Sizes, Conventional, and Edible Casein Acid; - $/LB: 2.9100-3.2200 Rennet; - $/LB: 2.2500-2.5500 Secondary Sourced Information: U.S. casein imports January-May this year are down 7.5 percent from the same period last year according to Eucolait. The three top sources are New Zealand, Netherlands and Ireland.

DAIRY MARKET NEWS, JULY 9-13, 2018-7- VOLUME 85, REPORT 28 U.S. Dairy Cow Slaughter (1000 head) under Federal Inspection 2018 WEEKLY 2018 2017 WEEKLY 2017 WEEK ENDING DAIRY COWS CUMULATIVE DAIRY COWS DAIRY COWS CUMULATIVE DAIRY COWS 06/23/2018 53.2 1,511.3 53.4 1,444.6 WEBSITE: http://www.ams.usda.gov/mnreports/sj_ls714.txt 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 2013 18.14 17.25 16.93 17.59 18.52 18.02 17.38 17.91 18.14 18.22 18.83 18.95 2014 21.15 23.35 23.33 24.31 22.57 21.36 21.60 22.25 24.60 23.82 21.94 17.82 2015 16.18 15.46 15.56 15.81 16.19 16.72 16.33 16.27 15.82 15.46 15.30 14.44 2016 13.72 13.80 13.74 13.63 12.76 13.22 15.24 16.91 16.39 14.82 16.76 17.40 2017 16.77 16.88 15.81 15.22 15.57 16.44 15.45 16.57 16.36 16.69 16.88 15.44 CLASS IV MILK PRCES (3.5% Butterfat) YEAR JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 2013 17.63 17.75 17.75 18.10 18.89 18.88 18.90 19.07 19.43 20.17 20.52 21.54 2014 22.29 23.46 23.66 23.34 22.65 23.13 23.78 23.89 22.58 21.35 18.21 16.70 2015 13.23 13.82 13.80 13.51 13.91 13.90 13.15 12.90 15.08 16.43 16.89 15.52 2016 13.31 13.49 12.74 12.68 13.09 13.77 14.84 14.65 14.25 13.66 13.76 14.97 2017 16.19 15.59 14.32 14.01 14.49 15.89 16.60 16.61 15.86 14.85 13.99 13.51 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/ 15.44 14.25 13.36 14.10 14.44 15.25 15.36 II 14.11 13.44 13.88 14.03 14.47 15.48 III 14.00 13.40 14.22 14.47 15.18 15.21 IV 13.13 12.87 13.04 13.48 14.57 14.91 1/ Specific order differentials to be added to this base price can be found by going to: www.ams.usda.gov/dairymarketingstatistics; then select s ; and then select Principal Pricing Points. $18.00 Class I 2016 2017 2018 $18.00 Class II 2016 2017 2018 $17.00 $17.00 $16.00 $16.00 $15.00 $15.00 $14.00 $14.00 $13.00 $13.00 $12.00 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec $12.00 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec $18.00 Class III 2016 2017 2018 $17.00 Class IV 2016 2017 2018 $17.00 $16.00 $16.00 $15.00 $15.00 $14.00 $14.00 $13.00 $13.00 $12.00 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec $12.00 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

DAIRY MARKET NEWS, JULY 9-13, 2018-8- VOLUME 85, REPORT 28 ORGANIC DAIRY FLUID OVERVIEW Milk Product Sales. AMS reports total organic milk products sales for May were 219 million pounds, down 3.1 percent from May 2017, but up 0.1 percent January-May 2018 compared with the same period of 2017. Organic whole milk sales for May 2018, 88 million pounds, were down 0.1 percent compared with May of the previous year, but up 5.6 percent year-to-date 2018 compared with 2017. ESTIMATED TOTAL U.S. SALES OF FLUID MILK PRODUCTS, May 2018, WITH COMPARISONS 1/ Product Name Sales Change2/ May Y-T-D Prev Yr. Y-T-D Mil. Lbs. Percent ORGANIC PRODUCTION PRACTICE Whole Milk 88 440-0.1 5.6 Reduced Fat Milk (2%) 70 346-0.4 3.2 Low Fat Milk (1%) 34 161 0.2-4.1 Fat-Free Milk (Skim) 19 100-19.1-15.6 Flavored Fat-Reduced Milk 8 43-20.5-14.2 Other Fluid Milk Products 0 0-94.2-63.0 Total Fat-Reduced Milk 3/ 131 650-4.9-3.2 Tot. Organic Milk Products 219 1090-3.1 0.1 ORGANIC DAIRY MARKET NEWS Information gathered July 2-13, 2018 1/These figures are representative of the consumption of fluid milk products in Federal milk order marketing areas and California, which account for approximately 92 percent of total fluid milk sales in the United States. An estimate of total U.S. fluid milk sales is derived by interpolating the remaining 8 percent of sales from the Federal milk order and California data. 2/Percent changes, as well as sales volumes, unless otherwise noted, are shown on an unadjusted basis 3/Organic fat-reduced milk categories are total of reduced fat, low-fat, skim, and flavored fat reduced milk composition. Source: Graphs by Livestock, Poultry and Grain Market News Additional livestock and grain market news information is available at: www.ams.usda.gov/lsmarketnews ORGANIC DAIRY RETAIL OVERVIEW Countrywide, total organic retail advertisements increased 99 percent. Organic milk ads as a percentage of total organic ads by commodity registered 45 percent this survey period. Organic milk ads, all together, climbed 114 percent over the previous period. The organic price premium for advertised half gallon milk is $1.10, down $1.11 compared to the previous survey period. Organic yogurt ad numbers grew 35 percent as a percentage of total organic ads by commodity, accompanying a 281 percent spurt in total organic yogurt 4-6ounce retail ad numbers. Organic ice cream retail ad numbers posted a 128 percentage change. No surveyed retail store advertised organic cheese or organic butter this survey period. Regionally, organic ad volumes increased in all survey areas, except for Alaska and Hawaii. The Southeast saw the highest volume of organic ads, a 105 percent rise in ad numbers. Source: Graphs by Livestock, Poultry and Grain Market News ORGANIC GRAIN FEEDSTUFF OVERVIEW Organic Grain and Feed Markets. Activity and demand is good at feed grade corn and soybeans markets. Both feed grade corn and soybeans traded 4 cents lower than the previous report. Interest in feed grade wheat equates to moderate demand, with the bulk of transactions taking place around the soft red winter wheat variety. Buyers/seller are trading soybean meal at seasonal levels between, while there is a slight uptick in demand for soybean oil. Exchanges on all other organic grains are inactive. -CONTINUED ON PAGE 8A-

DAIRY MARKET NEWS, JULY 9-13, 2018-8A- VOLUME 85, REPORT 28 -CONTINUED FROM PAGE 8- Advertising information presented is compiled from nearly 23,000 surveyed newspaper supermarket ads. s are valid from June 13-July 19, 2018. Retail survey ads reflect advertised specials and not the range of non-advertised supermarket cooler prices. Use the following link to the PDF version of this report. https://www.ams.usda.gov/ mnreports/dybdairyorganic.pdf ORGANIC DAIRY MARKET NEWS Information gathered July 2-13, 2018 Product pricing information of selected organic dairy commodities, from the current weekly retail survey, is presented in the following table: NATIONAL RETAIL ORGANIC DAIRY WEIGHTED AVERAGE ADVERTISED PRICE (Dollars) Commodity This Last Last Week Week Year Butter n.a. 5.10 5.44 Milk Half Gal. 3.70 4.14 4.11 Gal. n.a. 6.99 5.52 8 oz..92 n.a..86 Ice Cream 5.99 5.74 5.99 Yogurt 4-6 oz. Greek 1.30 1.35 1.08 32 oz. Greek 5.54 7.19 n.a. 4-6 oz. Yogurt.95.89.75 32 oz. Yogurt 3.27 3.50 4.29 Data source: USDA/AMS/Weekly National Organic Summary Complete results of the National Retail Report-Dairy and Weekly National Organic Summary are accessible using the following links: 1/ https://www.ams.usda.gov/mnreports/dybretail.pdf 2/ https://www.ams.usda.gov/mnreports/lswnos.pdf

DAIRY MARKET NEWS, JULY 9-13, 2018-9- VOLUME 85, REPORT 28 May Milk Sales During May 2018, 3.9 billion pounds of packaged fluid milk products are estimated to have been sold in the United States. This was 3.2 percent lower than May 2017. Estimated sales of total conventional fluid milk products decreased 3.2 percent from May 2017 and estimated sales of total organic fluid milk products decreased 3.1 percent from a year earlier. Product Name Conventional Production Practice Estimated Total U.S. Sales of Fluid Milk Products, May 2018, with Comparisons 1 Sales 4 Change from: 2 May Year to Date Previous Year Year to Date (million pounds) (percent) Whole Milk 1,230 6,167 0.4 2.4 Flavored Whole Milk 62 286 6.8 5.6 Reduced Fat Milk (2%) 1,193 6,119-4.8-2.4 Low Fat Milk (1%) 517 2,601-5.3-4.6 Fat-Free Milk (Skim) 325 1,616-7.8-9.2 Flavored Fat-Reduced Milk 340 1,740-3.6-3.0 Buttermilk 41 204-4.0-2.7 Other Fluid Milk Products 3 16-33.5-36.1 Total Fat-Reduced Milk 3 2,375 12,076-5.1-3.9 Total Conventional Milk Products 3,713 18,748-3.2-1.8 Organic Production Practice Whole Milk 88 440-0.1 5.6 Reduced Fat Milk (2%) 70 346-0.4 3.2 Low Fat Milk (1%) 34 161 0.2-4.1 Fat-Free Milk (Skim) 19 100-19.1-15.6 Flavored Fat-Reduced Milk 8 43-20.5-14.2 Other Fluid Milk Products 0 0-94.2-63.0 Total Fat-Reduced Milk 3 131 650-4.9-3.2 Total Organic Milk Products 219 1,090-3.1 0.1 Total Fluid Milk Products 3,932 19,839-3.2-1.7 1 These figures are representative of the consumption of fluid milk products in Federal milk order marketing areas and California, which account for approximately 92 percent of total fluid milk sales in the United States. An estimate of total U.S. fluid milk sales is derived by interpolating the remaining 8 percent of sales from the Federal milk order and California data. 2 Percent changes, as well as sales volumes, unless otherwise noted, are shown on an unadjusted basis. 3 Both conventional and organic fat-reduced milk categories are the total of reduced fat, lowfat, skim and flavored fat-reduced milk. 4 Data may not add due to rounding. Report contact: Daniel Manzoni, Daniel.manzoni@ams.usda.gov or 202-720-2352. Marketing Area Packaged Sales of Total Fluid Milk Products in Federal Milk Orders and California, May 2018, with Comparisons 1 Order Number Sales 3 Change from: 2 May Year to Date Previous Year Year to Date (million pounds) (percent) Northeast 001 673 3,342-3.2-1.7 Appalachian 005 269 1,355 1.4 2.3 Florida 006 226 1,154-1.2-1.4 Southeast 007 355 1,823-3.1-1.9 Upper Midwest 030 293 1,481-5.0-2.2 Central 032 325 1,693-5.3-2.5 Mideast 033 430 2,181-3.7-2.1 Pacific Northwest 124 158 787-4.1-3.7 Southwest 126 368 1,850-2.4-1.1 Arizona 131 85 441-0.2 2.8 California --- 436 2,144-4.4-3.3 All Orders (Total) 3,181 16,108-3.0-1.5 All Areas (Total) 3,617 18,252-3.2-1.7 1 These figures are representative of the consumption of total fluid milk products in the respective area; see footnote 3 above for the products included. 2 Percent changes, as well as sales volumes, are shown on an unadjusted basis. 3 Data may not add due to rounding. Source: U.S. Department of Agriculture; California Department of Food and Agriculture.

DAIRY MARKET NEWS, JULY 9-13, 2018-10- VOLUME 85, REPORT 28 Consumer Index and Average Retail s for Selected Products, U.S. City Average 1 Month Consumer Index All Food Dairy Products Fresh Whole Milk Cheese Butter Meat, Poultry, Fish, and Eggs CPI 2 Pct. Chg 3 CPI 2 Pct. Chg 3 CPI 2 Pct. Chg 3 CPI 2 Pct. Chg 3 CPI 2 Pct. Chg 3 CPI 2 Pct. Chg 3 Apr 2018 253.2 1.4 216.9-0.4 194.9-3.2 230.2 0.9 244.1 4.4 251.9 3.5 May 2018 253.1 1.2 215.7-0.6 194.0-3.7 229.6 1.1 243.6 2.1 249.4 2.3 Jun 2018 253.2 1.4 216.1 0.4 194.4-2.1 231.0 2.0 242.9 2.8 248.6 1.2 Month U.S. City Average Retail s Whole Milk 4 Butter 5 Process Cheese 6 Natural Cheese 7 Ice Cream 8 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 (dollars) Apr 2.924 3.259 N/A N/A 4.034 4.352 5.030 4.794 4.709 4.659 May 2.919 3.242 N/A N/A 4.025 4.393 5.131 4.748 4.588 4.631 Jun 2.877 3.213 N/A N/A 3.956 4.306 5.234 4.797 4.656 4.629 N/A = Not available. 1 "CPI Detailed Report," "Consumer s: Energy and Food," BLS, U.S. Department of Labor. According to BLS, average prices are best used to measure the price level in a particular month. To measure price change over time, the CPI is more appropriate. 2 The standard reference base period for these indexes is 1982-1984 = 100. 3 Percent change over previous year. 4 Per gallon. 5 Per pound. Grade AA, salted, stick butter. 6 Per pound, any size and type of package. 7 Per pound, cheddar cheese in any size and type of package and variety (sharp, mild, smoked, etc. ). 8 Per 1/2 gallon prepackaged regular.

DAIRY MARKET NEWS, JULY 9-13, 2018-11- VOLUME 85, REPORT 28 July Supply and Demand Estimates Milk production forecasts for both 2018 and 2019 are lowered from last month on slower-than-anticipated growth in milk per cow and lower cow numbers. Although tempered by lower expected feed costs, lower milk prices will likely weaken producer margins, resulting in lower cow numbers and slower growth in milk per cow. USDA s Cattle report, to be released on July 20th, will provide a mid-year estimate of dairy cow and dairy replacement heifer inventories. For 2018, the fat basis import forecast is raised from the previous month on higher imports of butterfat products. Fat basis imports are unchanged for 2019. The 2018 fat basis export forecast is unchanged from the previous month but is raised for 2019 as the U.S. is expected to be price competitive and higher expected exports of butterfat products will more than offset expected declines in cheese exports. Skim-solids basis import forecasts for 2018 and 2019 are unchanged from the previous month. However, skim-solids basis exports for 2018 and 2019 are reduced from the previous month primarily on lower expected exports of skim milk powder and whey products as China s tariffs on certain U.S. dairy products hampers exports to some extent. The 2018 butter, cheese, nonfat dry milk (NDM), and whey price forecasts are reduced from the previous month. Forecasts are reduced for cheese, NDM, and whey prices for 2019 as cheese stocks will remain large and prices for NDM and whey will have to remain competitive with competing exporters. However, the 2019 butter price is raised as stocks are worked down. The 2018 and 2019 Class III price and Class IV price forecasts are lowered from last month. The 2018 all milk price is forecast at $15.95 to $16.25 and the price for 2019 is $16.25 to $17.25 per cwt. Milk Commodity 2017 U.S. Milk Supply and Use 2018 Projected 2019 Projected Jun Jul Jun Jul (billion pounds) Production 215.5 218.0 217.9 221.1 220.6 Farm Use 1.0 1.0 1.0 1.0 1.0 Fat Basis Supply Beginning Commercial Stocks 12.7 13.4 13.4 12.6 13.5 Marketings 214.5 217.1 216.9 220.1 219.6 Imports 6.0 5.8 5.9 5.6 5.6 Total Commercial Supply 233.2 236.3 236.2 238.3 238.7 Fat Basis Use Commercial Exports 9.2 10.2 10.2 9.8 9.9 Ending Commercial Stocks 13.4 12.6 13.5 11.8 12.5 CCC Donations 0.0 0.0 0.0 0.0 0.0 Domestic Commercial Use 210.5 213.5 212.5 216.7 216.3 Skim-Solid Basis Supply Beginning Commercial Stocks 9.5 11.8 11.8 10.4 10.5 Marketings 214.5 217.1 216.9 220.1 219.6 Imports 6.1 5.6 5.6 5.6 5.6 Total Commercial Supply 230.1 234.5 234.3 236.1 235.7 Skim-Solids Basis Use Commercial Exports 40.7 46.2 46.0 45.6 44.9 Ending Commercial Stocks 11.8 10.4 10.5 10.7 10.8 CCC Donations 0.0 0.0 0.0 0.0 0.0 Domestic Commercial Use 177.6 177.9 177.8 179.8 180.0 NOTE: Totals may not add due to rounding. Continued on page 12

DAIRY MARKET NEWS, JULY 9-13, 2017-12- VOLUME 85, REPORT 28 July Supply and Demand Estimates-cont d U.S. Dairy s Commodity 2017 2018 Projected 2019 Projected Jun Jul Jun Jul (dollars per pound) Product s 1 Cheese 1.6344 1.605-1.645 1.540-1.570 1.625-1.725 1.575-1.675 Butter 2.3303 2.295-2.365 2.245-2.305 2.210-2.340 2.220-2.350 Nonfat Dry Milk 0.8666 0.775-0.815 0.730-0.760 0.755-0.825 0.740-0.810 Dry Whey 0.4437 0.295-0.315 0.275-0.295 0.300-0.330 0.280-0.310 (dollars per cwt) Milk s 2 Class III 16.17 15.05-15.45 14.30-14.60 15.30-16.30 14.70-15.70 Class IV 15.16 14.30-14.80 13.65-14.05 13.70-14.80 13.65-14.75 All Milk 3 17.63 16.60-17.00 15.95-16.25 16.70-17.70 16.25-17.25 Quarterly 2018 II 2018 III 4 2018 IV 4 2019 I 4 2019 II 4 (billion pounds) Milk Production 55.8 53.9 53.8 55.0 56.6 (dollars per cwt) All Milk 2, 3 16.20-16.30 15.35-15.75 16.55-17.25 16.35-17.35 15.95-16.95 Class III 2 14.90-15.00 13.85-14.25 14.60-15.30 14.60-15.60 14.60-15.60 Class IV 2 14.20-14.40 13.65-14.15 13.85-14.65 13.40-14.50 13.70-14.80 N/A = not available 1 Simple average of monthly prices calculated from AMS weekly average dairy product prices for class price computations. Details may be found by going to http://www.ams.usda.gov/rules-regulations/mmr/dmr; scroll down to Publications, National Dairy Products Sales Reports, and select Current Release & Archives. 2 Annual and quarterly Class III and Class IV prices are the simple average of monthly minimum Federal order milk prices paid by regulated plants for milk used in the respective classes. All milk price is the simple average of monthly prices received by farmers for milk at average test. 3 Does not reflect any deductions from producers as authorized by legislation. 4 Projection. Source: U.S. Department of Agriculture. World Agricultural Outlook Board. World Agricultural Supply and Demand Estimates, WASDE-579, July 12, 2018. Approved by the Interagency Commodity Estimates Committee [members for Dairy are: Shayle Shagam, Chairperson, WAOB; Carolyn Liebrand, AMS; Paul Kiendl, FAS; Jerry Cessna, ERS; and Milton Madison, FSA].

DAIRY MARKET NEWS, JULY 9-13, 2018 -G1- VOLUME 85, REPORT 28 MILLION POUNDS 100 U.S. Cream and Neufchatel Production 95 90 85 80 75 70 65 60 55 50 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC DATA SOURCE, USDA, NASS; GRAPH, USDA, AMS, DMN 2014 2015 2016 2017 2018 MILLION GALLONS 80 U.S. Regular Hard Ice Cream Production 76 72 68 64 60 56 52 48 44 40 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC DATA SOURCE, USDA, NASS; GRAPH, USDA, AMS, DMN 2014 2015 2016 2017 2018 MILLION POUNDS U.S. Yogurt Production, Plain and Flavored 470 460 450 440 430 420 410 400 390 380 370 360 350 340 330 320 310 300 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC DATA SOURCE, USDA, NASS; GRAPH, USDA, AMS, DMN 2014 2015 2016 2017 2018

DAIRY MARKET NEWS, JULY 9-13, 2018 -G2- VOLUME 85, REPORT 28 MILLION POUNDS 140 135 130 125 120 115 110 105 100 95 90 85 80 75 70 65 U.S. Sour Cream Production JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC DATA SOURCE, USDA, NASS; GRAPH, USDA, AMS, DMN 2014 2015 2016 2017 2018 MILLION POUNDS 28.0 U.S. Dry Whole Milk Production 23.0 18.0 13.0 8.0 3.0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC DATA SOURCE, USDA, NASS: GRAPH, USDA, AMS, DMN 2014 2015 2016 2017 2018 MILLION POUNDS 65 Skim Milk Powder Production 60 55 50 45 40 35 30 25 20 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC DATA SOURCE, USDA, NASS, GRAPH, USDA, AMS, DMN 2014 2015 2016 2017 2018

Dairy Market News Branch Agricultural Marketing Service National Retail Report-Dairy Websites: http://www.marketnews.usda.gov/mnp/da-home and http://www.ams.usda.gov/mnreports/dybretail.pdf Volume 85- Number 28 Issued Weekly Friday, July 13, 2018 Advertised s for Dairy Products at Major Retail Supermarket Outlets ending during the period of 07/13/2018 to 07/19/2018 Retail advertisements are 8 percent lower for conventional dairy items, but nearly double the number last week for organic dairy items. Conventional 1 pound butter ads increased 73 percent, with a U.S. weighted average advertised price of $3.15 this period, up 26 cents. There are no ads for organic butter. Conventional ice cream 48-64 oz. ads fell 22 percent, with an average price of $3.17. Organic ice cream ad numbers are up 128 percent, with an average price of $5.99. This results in an organic premium of $2.82 for ice cream. Conventional cheese ad numbers for retail stores surveyed decreased 20 percent. No ads are noted for organic cheese. The national weighted average advertised price of conventional 8 ounce block cheese is $2.32, up 15 cents from last week. Conventional 8 ounce shred cheese prices moved up 7 cents from last week, to $2.25. Conventional retail yogurt ads increased 25 percent and organic yogurt ads increased 86 percent. The weighted average price of conventional 4-6 ounce Greek yogurt is $0.94 and regular 4-6 ounce yogurt is $0.52. Organic Greek yogurt,4-6 ounce, is $1.30 and regular organic yogurt, 4-6 ounce containers, are priced at $0.95, resulting in organic premiums of 36 cents and 43 cents, respectively. Conventional milk ads increased 1 percent and organic milk ads more than doubled. There are over 1.4 times more ads for organic milk than for conventional milk. The conventional-organic milk half gallon price spread is $1.10. The spread is the difference between the conventional milk half gallon average advertised price, $2.60, and the organic milk half-gallon price, $3.70. Top 5 Commodities Featured This Week 30K 07/13/2018 07/06/2018 06/29/2018 25K with Ads 20K 15K 10K 5K 0K Cheese Yogurt Ice cream Sour cream Milk 1 -- Dairy Market News surveys nearly 150 retailers, comprising over 23,000 individual stores, with online weekly advertised features.

National Retail Report - Dairy Vol 85 - No. 28 Friday, July 13, 2018 - Page 2 Percentage of Total Conventional Ads by Commodity Butter, 4% Yogurt, 21% Cheese, 27% Sour cream, 11% Milk, 2% Cottage cheese, 4% Ice cream, 15% Cream cheese, 5% Flavored milk, 3% Percentage of Total Organic Ads by Commodity Cottage cheese, 9% Flavored milk, 3% Ice cream, 5% Yogurt, 35% Sour cream, 4% Milk, 45% - Simple weighted average

National Retail Report - Dairy Vol 85 - No. 28 Friday, July 13, 2018 - Page 3 NATIONAL -- CONVENTIONAL DAIRY PRODUCTS THIS PERIOD LAST WEEK LAST YEAR Commodity Type Pack Size With Ads With Ads With Ads Butter 1 # 3422 3.15 1975 2.89 3454 2.91 Cheese Natural Varieties 8 oz block 5688 2.32 8869 2.17 6708 2.14 Cheese Natural Varieties 1 # block 1484 4.34 1905 3.93 1356 3.17 Cheese Natural Varieties 2 # block 1510 6.44 356 7.19 1204 5.77 Cheese Natural Varieties 8 oz shred 9664 2.25 12217 2.18 9349 2.19 Cheese Natural Varieties 1 # shred 2227 4.28 2314 4.01 2913 3.68 Cottage cheese 16 oz 3265 1.95 3828 1.82 5748 1.91 Cream cheese 8 oz 3859 1.72 4902 1.78 3583 1.93 Flavored milk All fat tests half gallon 1602 2.51 321 2.72 1741 2.36 Flavored milk All fat tests gallon 657 3.53 474 3.71 501 2.70 Ice cream 48-64oz 11583 3.17 14756 3.29 16974 3.02 Milk All fat tests half gallon 873 2.60 676 1.93 1599 2.16 Milk All fat tests gallon 1034 3.06 1207 2.65 1504 2.26 Sour cream 16 oz 8746 1.78 11087 1.72 6064 1.71 Yogurt Greek 4-6 oz 6361.94 5903.97 12289.96 Yogurt Greek 32 oz 1020 4.61 1158 4.82 835 4.14 Yogurt Yogurt 4-6 oz 7707.52 4474.54 5781.50 Yogurt Yogurt 32 oz 808 2.21 1178 2.44 918 2.10 REGIONAL -- CONVENTIONAL DAIRY PRODUCTS NORTHEAST U.S. SOUTHEAST U.S. MIDWEST U.S. Commodity Type Pack Size with Ads Wtd Avg with Ads Wtd Avg with Ads Butter 1 # 2.99-4.99 800 3.91 2.99-3.00 1504 2.99 1.99-3.50 650 2.64 Cheese Natural Varieties 8 oz block 0.99-3.00 1189 2.16 1.67-2.50 1767 2.19 1.50-2.99 1092 2.30 Cheese Natural Varieties 1 # block 3.50-3.99 290 3.79 3.50-4.99 788 4.89 3.00-3.99 292 3.76 Cheese Natural Varieties 2 # block 4.99 247 4.99 Cheese Natural Varieties 8 oz shred 0.99-3.29 1441 2.30 1.67-3.00 3636 2.17 1.50-2.99 1705 2.21 Cheese Natural Varieties 1 # shred 3.99 100 3.99 3.50-4.99 1790 4.39 3.99 223 3.99 Cottage cheese 16 oz 1.00-2.50 1920 2.02 1.50-2.50 1072 1.93 1.25-1.26 225 1.26 Cream cheese 8 oz 1.50-2.00 1256 1.74 2.00-2.50 850 2.03 0.99-1.99 652 1.48 Flavored milk All fat tests half gallon 2.00 100 2.00 2.50-2.99 1011 2.60 2.00-2.19 223 2.09 Flavored milk All fat tests gallon 3.59-3.99 267 3.91 3.88 180 3.88 Ice cream 48-64oz 1.00-3.99 2607 2.77 0.99-5.49 3590 3.32 0.99-3.99 1707 3.21 Milk All fat tests half gallon 2.00-3.69 261 3.04 2.50 214 2.50 1.99-2.00 169 2.00 Milk All fat tests gallon 3.99 137 3.99 2.99-3.99 267 3.79 1.99 110 1.99 Sour cream 16 oz 1.39-2.29 1744 1.86 1.29-2.00 3277 1.78 0.89-1.98 1692 1.67 Yogurt Greek 4-6 oz 0.79-1.25 1801 1.00 0.88-1.25 918 1.02 0.60-1.00 1071.86 Yogurt Greek 32 oz 3.99-4.99 337 4.17 3.99-4.99 296 4.60 - Simple weighted average

National Retail Report - Dairy Vol 85 - No. 28 Friday, July 13, 2018 - Page 4 NORTHEAST U.S. SOUTHEAST U.S. MIDWEST U.S. Commodity Type Pack Size with Ads Wtd Avg with Ads Wtd Avg with Ads Yogurt Yogurt 4-6 oz 0.49-0.69 1645.53 0.40-0.60 3432.52 0.40-0.66 818.59 Yogurt Yogurt 32 oz 2.49 64 2.49 2.00-2.50 302 2.41 SOUTH CENTRAL U.S. SOUTHWEST U.S. NORTHWEST U.S. Commodity Type Pack Size with Ads with Ads Wtd Avg with Ads Butter 1 # 2.99 176 2.99 2.50-2.79 226 2.66 Cheese Natural Varieties 8 oz block 1.49-2.99 761 2.54 1.99-3.49 691 2.65 1.69-3.49 130 2.53 Cheese Natural Varieties 1 # block 3.49 114 3.49 Cheese Natural Varieties 2 # block 4.99 78 4.99 4.66-9.99 1113 6.82 6.99 61 6.99 Cheese Natural Varieties 8 oz shred 1.49-2.99 2037 2.30 1.99-2.99 509 2.64 1.69-2.99 251 2.25 Cheese Natural Varieties 1 # shred 3.49 114 3.49 Cream cheese 8 oz 1.25-1.99 223 1.61 1.75 244 1.75 1.50 578 1.50 Flavored milk All fat tests half gallon 2.50 244 2.50 Flavored milk All fat tests gallon 2.50-2.99 210 2.75 Ice cream 48-64oz 0.99-4.99 1579 3.50 2.49-4.99 1602 3.16 2.49-2.99 401 2.70 Milk All fat tests half gallon 1.89-3.50 205 2.46 Milk All fat tests gallon 2.99 178 2.99 1.99-2.99 331 2.47 Sour cream 16 oz 1.25-2.59 1377 1.97 1.50 356 1.50 1.50 289 1.50 Yogurt Greek 4-6 oz 0.50-1.00 540.92 0.68-1.00 1465.91 0.83-1.00 532.90 Yogurt Greek 32 oz 4.99 114 4.99 5.00 246 5.00 Yogurt Yogurt 4-6 oz 0.25-0.61 902.43 0.40-0.50 575.48 0.40-0.50 235.46 Yogurt Yogurt 32 oz 2.79 133 2.79 1.50-1.99 240 1.63 2.00 69 2.00 ALASKA U.S. HAWAII U.S. Commodity Type Pack Size with Ads with Ads Wtd Avg Butter 1 # 3.79-5.79 39 5.23 3.49 27 3.49 Cheese Natural Varieties 8 oz block 2.25-2.50 58 2.35 Cheese Natural Varieties 2 # block 8.79 11 8.79 Cheese Natural Varieties 8 oz shred 2.25-3.00 85 2.56 Cottage cheese 16 oz 2.50-3.00 48 2.75 Cream cheese 8 oz 1.99-2.00 32 2.00 2.00 24 2.00 Flavored milk All fat tests half gallon 4.69 24 4.69 Ice cream 48-64oz 1.49-6.99 39 5.44 3.50-4.00 58 3.71 Milk All fat tests half gallon 3.99 24 3.99 Milk All fat tests gallon 3.79 11 3.79 Sour cream 16 oz 2.49 11 2.49 Yogurt Greek 4-6 oz 1.33 34 1.33 Yogurt Greek 32 oz 5.00 27 5.00 Yogurt Yogurt 4-6 oz 0.70-0.80 49.76 0.60-0.99 51.81 - Simple weighted average

National Retail Report - Dairy Vol 85 - No. 28 Friday, July 13, 2018 - Page 5 NATIONAL -- ORGANIC DAIRY PRODUCTS THIS PERIOD LAST WEEK LAST YEAR Commodity Type Pack Size With Ads With Ads With Ads Butter 1 # 297 5.10 355 5.44 Cheese Natural Varieties 8 oz shred 243 3.57 Cottage cheese 16 oz 543 3.50 1082 3.38 Cream cheese 8 oz 986 2.04 Flavored milk All fat tests half gallon 178 4.49 Ice cream 48-64oz 283 5.99 124 5.74 383 5.99 Milk All fat tests half gallon 2630 3.70 1218 4.14 4267 4.11 Milk All fat tests gallon 61 6.99 434 5.52 Milk All fat tests 8 oz UHT 110.92 678.86 Sour cream 16 oz 214 2.50 214 2.50 780 3.04 Yogurt Greek 4-6 oz 470 1.30 246 1.35 974 1.08 Yogurt Greek 32 oz 422 5.54 147 7.19 Yogurt Yogurt 4-6 oz 742.95 195.89 519.75 Yogurt Yogurt 32 oz 478 3.27 549 3.50 169 4.29 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 Cottage cheese 16 oz 2.99-4.29 328 3.84 2.99 137 2.99 Milk All fat tests half gallon 3.50-4.99 314 4.20 2.99-3.99 1063 3.40 2.50-4.29 427 3.41 Milk All fat tests 8 oz UHT 0.92 110.92 Sour cream 16 oz 2.50 214 2.50 Yogurt Greek 4-6 oz 1.50 147 1.50 1.35 120 1.35 1.00 137 1.00 Yogurt Greek 32 oz 7.19 147 7.19 3.99-6.99 275 4.66 Yogurt Yogurt 4-6 oz 1.00 108 1.00 1.00 114 1.00 1.00 110 1.00 Yogurt Yogurt 32 oz 3.49-3.50 368 3.49 2.50 110 2.50 - Simple weighted average

National Retail Report - Dairy Vol 85 - No. 28 Friday, July 13, 2018 - Page 6 SOUTH CENTRAL U.S. SOUTHWEST U.S. NORTHWEST U.S. Commodity Type Pack Size with Ads with Ads Wtd Avg with Ads Cottage cheese 16 oz 2.99 78 2.99 Flavored milk All fat tests half gallon 4.49 178 4.49 Ice cream 48-64oz 5.99 178 5.99 5.99 105 5.99 Milk All fat tests half gallon 4.50 210 4.50 2.99-4.49 477 3.99 2.50 105 2.50 Yogurt Greek 4-6 oz 1.40 66 1.40 Yogurt Yogurt 4-6 oz 1.00 121 1.00 0.88 289.88 ALASKA U.S. HAWAII U.S. Commodity Type Pack Size with Ads with Ads Wtd Avg Milk All fat tests half gallon 7.19 34 7.19 As used in this report, regions include the following states: REGIONAL DEFINITIONS NORTHEAST U.S. SOUTHEAST U.S. MIDWEST U.S. SOUTH CENTRAL U.S. SOUTHWEST U.S. NORTHWEST U.S. ALASKA HAWAII NATIONAL Connecticut, Delaware, Massachusetts, Maryland, Maine, New Hampshire, New jersey, New York, Pennsylvania, Rhode Island and Vermont Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina, Tennessee, Virginia and West Virginia Iowa, Illinois, Indiana, Kentucky, Michigan, Minnesota, North Dakota, Nebraska, Ohio, South Dakota and Wisconsin Arkansas, Colorado, Kansas, Louisiana, Missouri, New Mexico, Oklahoma, and Texas Arizona, California, Nevada and Utah Idaho, Montana, Oregon, Washington, and Wyoming Alaska Hawaii Continental United States - Simple weighted average

Dairy Market News United States Department of Agriculture Agricultural Marketing Service Dairy Programs Market Information Branch Volume 85, Report 28 July 13, 2018 GENERAL NUMBER (608) 422-8587 Elizabeth Frederick (608) 422-8587 Elizabeth.Frederick@AMS.USDA.GOV INTERN Al Yang (608) 422-8598 Al.Yang@AMS.USDA.GOV ORGANIC/ EAST Daniel Johnson (608) 422-8605 Daniel.Johnson@AMS.USDA.GOV EAST Jessica Mueller (608) 422-8589 Jessica.Mueller@AMS.USDA.GOV CENTRAL Israel Weber (608) 422-8601 Israel.Weber@AMS.USDA.GOV SOUTHWEST/SOUTH AMERICA AJ (Angel José) Terán (608) 422-8593 Angel.Terán@AMS.USDA.GOV SOUTHWEST Florence Kone-Gonzalez (608) 422-8594 Florence.KoneGonzalez@AMS.USDA.GOV NORTHWEST/MOUNTAIN Mike Bandli (608) 422-8592 Mike.Bandli@AMS.USDA.GOV EUROPE & OCEANIA/ ORGANIC Eric Graf (608) 422-8590 Eric.Graf@AMS.USDA.GOV NATIONAL SUPERVISOR Janet Linder (608) 422-8588 Janet.Linder@AMS.USDA.GOV BRANCH CHIEF Butch Speth (608) 422-8586 Butch.Speth@AMS.USDA.GOV INTERNET ADDRESS www.ams.usda.gov/market-news/dairy MARKET NEWS PORTAL www.marketnews.usda.gov/mnp/da-home RECORDED INFORMATION SYSTEM (608) 422-8602 FAX (608) 240-6689 USDA, Dairy Market News 4600 American Parkway, STE 106 Madison, WI 53718-8334 USDA is an equal opportunity provider and employer