Is Protein a Fad, and Is Cheese Still King?

Is Protein a Fad, and Is Cheese Still King?

Right now, high-protein diets are hot and cheese is still the biggest user of U.S. dairy. But will it last? In this episode of The Milk Check, we pull out our crystal balls and try to see into the future of U.S. dairy. * Why GLP-1 may be a catalyst, not the whole protein story * How health and wellness trends are reshaping dairy demand * How exports could change the future of cheese demand The consensus? Find out in The Milk Check episode 100: Is Protein a Fad, and Is Cheese Still King? GOT QUESTIONS? We’d love to hear them. Submit below, and we might answer it on the show. Ask The Milk Check [https://forms.office.com/Pages/ResponsePage.aspx?id=eRDVZfxajkWh7K5qOl4X3WIbMEBcVqdIgPXZ5NPFsw1URFhBTzg0QjM5VzdVTldSRDVHMTg3MlIyMC4u] [https://www.jacoby.com/wp-content/uploads/2026/05/Screenshot-2026-05-22-at-2.03.42-PM.png] Transcript: Ted Jacoby III: [00:00:00] Coming up on the Milk Check. The debate is: have GLP-1s changed dairy forever? Our second debate is will cheese remain king? Welcome to the Milk Check from T.C. Jacoby & Co., your complete guide to dairy markets, from the milking parlor to the supermarket shelf. I’m Ted Jacoby. Let’s dive in. Ted Jacoby III: Excited for our topic today. We are going to have a debate. The debate is: have GLP-1s changed dairy forever? The demand for protein right now is clearly extremely strong. It’s really a question of whether we think this demand for protein is a fad, or we think it’s a fundamental shift in demand that’s gonna be with us for a long time. And so I’m gonna actually put Mike Brown on the spot first. Mike, has GLP-1s changed dairy forever? Mike Brown: It certainly changed me forever. And I’m a big eater dairy for a long time. I’ve had good success with GLP’s getting my weight to where it needs to be, and one thing you do discover is that you do need to really watch your protein intake. You need to make sure you’re getting adequate amounts because you will lose muscle. I think diets in general, we’re becoming less carb-focused. We’re becoming more protein-focused. So, I don’t see it going away. Does that mean we’ll have the record-high prices we have now forever? Probably not the markets will stay strong, and I think it’s a shift in consumer demand . You just need to go into any Costco or Sam’s Club, and the amount of protein beverages they offer now versus three years ago, they’ve tripled in some cases. So, it’s definitely a market of strength. And despite the high price of proteins, people still seem to be buying it. I’ll see limits when there’s sales in different stores, which tells you that demand is still extremely strong. Ted Jacoby III: Josh, I’ll ask you next. Are we changing demand forever, or is this a fad? Josh White: I don’t know that GLP-1s are necessarily what’s changing demand forever, but they definitely are a catalyst and a disruptor right now. We were listening to a HighGround Monthly Update earlier today. I’ll echo something that was said during that update: A health and wellness trend [00:02:00] is absolutely happening, is global. They noted and cited in that, that over the last two years, gym memberships have been up in the U.S. If you go to other parts of the world that we export products to that GLP-1s haven’t yet reached, we’re seeing incredible health and wellness movements and protein consumption uptake. So, what I think the GLP-1 aspect of it is doing is that it served as a bit of a catalyst and ignited this market and forced us all to recognize this shift that we’re seeing from just calories taken in to quality of calories taken in, and that is driving a lot of incremental protein demand that the dairy space is a benefactor of to date. So, I don’t know if I really answered it, Ted. I think GLP-1 is a catalyst in forcing us to recognize a bigger trend that we’re seeing, not only in the U.S., but globally. Jacob Menge: I do think it’s pretty important to talk about the time horizon that we’re discussing because there’s a really big difference in both availability and dietary preference of protein sources globally, right? Like India, Sub-Saharan Africa, even China up until very recently was very plant protein-based. And so, even though protein consumption as a whole has certainly been growing where you are looking at depends on how much that’s actually impacting animal proteins. And so, I think that time horizon is important, right? Because we know where population growth is occurring worldwide. Population growth worldwide is actually in areas that are plant protein consumers not animal protein consumers . And you’re getting some animal protein consumers actually trending lower on population, right? You look at the population outlook for a lot of Europe. Korea was in the middle. I think they’re, like, 50/50, if I recall, on plant versus animal proteins. But I think that time horizon is a pretty important piece of the discussion. Ted Jacoby III: So Jake, I’ll ask you the [00:04:00] question. So, five years from now, are we gonna be looking back on 2025 and 2026 and talk about the whey protein fad, or do we think that we will have seen a fundamental shift in where people have invested their investment dollars in terms of what kind of dairy production facilities, processing facilities have been built in the U.S. and around the world? Jacob Menge: Five years is way too short of a timeline to see what I would call a freight train changing its course. And so, I think that’s pretty clear. We know what’s gonna be happening with U.S. exports, right? We are just set up to be the export powerhouse in the short term, and I would call five years short term for trends like this. Even though this has happened very fast, knowing again what is happening with the U.S. export picture, I don’t think there’s any way we see a material change in what’s happening in the protein space in a five-year period. Mike Brown: I think there’s one point of difference in milk proteins versus whey proteins. I think we see, because of cost difference, I think, more interest in finding, how can I use milk proteins in a product versus whey? I noticed this weekend, again, looking at a sports beverage that 30 gram protein, number one ingredient’s milk, and it’s not a fairlife(R) product. It’s an amalgamated product. Jacob Menge: Couldn’t agree more. I was certainly one level higher in just saying any dairy protein or animal protein for that matter. But yeah, when you drill down, do I think there could be shifts within that makeup? Absolutely. Mike Brown: The other thing is with whey proteins is that you gotta sell the cheese or you gotta sell the casein. And as we look at that spread in price, what’s that value of that whey protein worth versus what you get for the remaining part of the product? As we know, right now, Class IV, which is even dry milk powders and fat are worth way, way more than milk for cheese, even when you adjust for the higher protein revenues. We have a $5 spread right now between Class III and Class IV. And that always takes care of itself, but exactly how it will, I think we all know there’s interest in do I add casein-producing capacity so I [00:06:00] can get to my whey proteins rather than just cheese? If I make those caseins, where’s the market for those products? Where am I gonna be able to use them? So I think there’s lots of questions that we don’t know yet. ‘Cause if I’m a processor, one very high-value product, whether if it’s a half a pound or three-quarter of a pound yield per 100 pounds of milk, it’s not gonna drive all your decisions. It’s gonna be a factor. Ted Jacoby III: Gus, I’m gonna ask you the question: Has GLP-1 changed dairy forever? Or do you think it’s a trend? Gus Jacoby: I’m of the impression that we are certainly following the trends within Western culture to evaluate more and more the health benefits of eating better nutrition. And certainly, as time moves on, the protein component in your meal is going to be more and more important. So, I’m not going to take away from that. I think that will continue to evolve, but I also think that as we continue to evolve in that setting, other pieces of that nutrition will come to light and become the fad for a period of time. At the moment, protein is hot, and I don’t think we can get away from that. For me, just looking at U.S. milk production and how much of that milk production goes into cheese ,the ever-increasing demand in cheese, I don’t see that going away either. I think that’s an entrenched part of our society, and I think cheese is a pretty important part of the daily food consumption here in our culture as well.  I think there’s a place for both of them, and it’s hard for me to distinguish one from the other as being where we go as an industry. Mike Brown: One thing we may see is more of these protein-based dairy beverages that aren’t Class I milk take more and more of that consumer stomach. And so, we’re gonna see more of those UF-based products, which aren’t necessarily what we think of traditionally as fluid milk. And that’s where a lot of the growth has been: in the high-protein milks. Is that where the substitution will take place as much as in some other ways? Gus Jacoby: I don’t think there’s any doubt, Mike, but I would also argue that we’re probably going to eat into that Class I consumption a bit by more of this dairy protein shake, which tends to be in the [00:08:00] Class II area. Mike Brown: Yeah, that’s, and that’s what I, that’s what I meant. Yeah. Okay. If you’re gonna drink it as a Class II product, it all gets down to how regulation basically makes those products more competitive- Yeah … because of the regulated minimum price. Gus Jacoby: That would be a very Interesting discussion probably for another day relative to- what we wanna cover in our debate today. Mike Brown: Yeah. It’s a bit of a nerd fest, But we look at consumption trends, it isn’t hurting the high-protein products because they are priced differently. Gus Jacoby: Yep. Ted Jacoby III: Diego, what are your thoughts? This demand for protein: fad or a long-term trend? Diego Carvallo: I think the trend is clear, and it still has a lot of room to grow. So, I think in a five-year period, it’s very easy to say that they’re gonna continue to grow. Ted Jacoby III: You see the international space a lot more clearly than most of the rest of us. What’s happening here in the U.S., is it happening internationally as well? Diego Carvallo: Yes, and that’s why I said that there’s gonna be growth ’cause I still see areas of Latin America where that trend is just getting started . You still do not see any of the products that you’re seeing in the U.S. at the supermarket showcasing and showing marketing that much the protein content on the end product. So I think that growth is still getting started. Ted Jacoby III: Joe, last but not least, fad, long-term trend? Joe Maixner: I think that the consumer shift is a long-term trend. I don’t know if necessarily the GLP-1 is the long-term trend because technology will continue to advance, and there’ll be something that comes out at some point that makes this old news. I think that the health and wellness trend is certainly here for the foreseeable future. estimating 40 million people within the next five years are going to be on GLP-1s. That’s a big number. The one thing we’ve seen the effect on selfishly for my market is the amount of cream and fat that it’s spun off because of all the demand for the protein. We did not expect to have this fundamental shift in the fat market domestically this quickly. Unless the farmers decide that they’re gonna change how they feed their cows and produce less fat, we’re gonna see that for a while too, and we’re gonna be surplus fat. And that [00:10:00] product is also affected by this GLP-1 because people tend to eat less sweets and snacks and fat-heavy products, so consumption’s been down on that side as well. Ted Jacoby III: It’s gonna be interesting. And I’ll just give my two cents. I do think the demand for protein is a long-term trend. I think it’s a trend both within certain segments of the population and I think it’s a trend in that I think, just comparing my generation and how I ate and drank in my 20s compared to how my children eat and drink in their 20s, they sure do live a healthier life than I did when I was that age. I think I’m speaking for a good portion of that generation and not just my kids. So, we’ll see. It sounds to me that the consensus is pretty clear on this one. Whether it’s GLP-1s or not, this protein trend is a long-term trend, and it is fundamentally changing the dairy industry. And we’re all curious to see how it’ll play out. All right, now I’m gonna switch to our second debate. This debate is will cheese remain king? So in my lifetime, milk production, when I was born, milk production was roughly 20% of milk was made into cheese. Today, it’s 55%. It is very clear that the driver in dairy consumption in the United States is a per capita increase in cheese that is part of a long-term trend. My question for everybody today is: Have we started to reach the point where that trend is starting to plateau? Is cheese still king? Will it continue to be the driver of increases in per capita dairy consumption, or have we reached a point where we’re not going to see cheese driving the bus anymore? It’s 55% of milk production goes into cheese today. Is it gonna be 65% in 10 years, or is it still gonna be in the 50s? Gus, I’m gonna throw you out there first. What are your thoughts? Gus Jacoby: I think it’s hard to say that it isn’t still king considering the large amount of milk in U.S. milk production that goes into cheese. And even with respect to the protein segment that we just talked about, you can’t make whey [00:12:00] without making cheese, so you’re not gonna get whey protein without cheese. I don’t think the American consumer is going to lose their appetite for cheese anytime soon. I understand that certainly with the GLP-1s we’re gonna eat a bit healthier. But I find it hard to believe that while maybe the growth might become less than it has been over the last number of years I do believe that cheese is gonna be with us as the majority taker of milk at least for the foreseeable future. Ted Jacoby III: Do you think the trend is strong enough that 15 years from now 65% or 70% of all milk goes into cheese? Or do you think maybe we’re gonna plateau right around here at 55%? Gus Jacoby: I think it still has room to go a little bit higher. I think there’s a possibility of plateauing, though maybe at some point north of 60. But at the end of the day I just don’t see how it can be removed from the diet. If people wanna start playing with what type of cheeses are in their diet for better health benefits, I guess that may happen. Ted Jacoby III: All right. Gus Jacoby: Not in the near term. Ted Jacoby III: Jake, what are your thoughts? Jacob Menge: I would imagine that the percent of milk that is turned into cheese goes lower. That’s my gut feel. We’re gonna be export-dominated. We maybe can capture some markets that we haven’t historically gotten into before with more shelf-stable products. We’re just gonna have to export a lot of product. And cheese is exportable obviously, but it just feels, with the new markets we’re gonna be moving into, the amount of product as a percent that we’re gonna be exporting, dietary shifts, it all points to me that, as a percent, it’s hard for me to make the case that cheese goes higher. And so by default , I’ll argue it goes lower. Ted Jacoby III: Joe, what are your thoughts? Joe Maixner: I think that what happens with cheese moving forward depends on how well the dairy industry markets cheese moving forward. If we do a better job of [00:14:00] marketing the protein benefits, the fact that it’s the cheapest protein per gram and playing into those strengths that would help keep it as king and increase consumption. If we continue to sit on our laurels and not really do any additional marketing, I think that we have a chance to lose capacity. Jacob Menge: So what’s your gut? Do we do a good job marketing it or not? Joe Maixner: Okay. I don’t think we do. But we could. The potential is there. We just, we’re not doing it. Ted Jacoby III: I think dairy has struggled for a long time just to market itself as how healthy it is, and some of that I think is because we sit in a position of strength in the marketplace, and so everybody’s always coming after dairy to say they’re better than dairy and dairy’s got issues. So all the plant guys can grow their plant-based products. All of those food products that don’t come from dairy tend to attack dairy in order to grow their own market share. And I think that’s why dairy struggles. I think your point about how the value of a gram of protein in cheese is a lot less than the same cost of that protein, let’s say, in whey powder or in other things. I’m curious to see how that plays out, because I think it’s a really good point. Mike Brown: I’d make a point on the competition. Where we’ve seen shrinkage in the refrigerator dairy case is the non-dairy beverages. They are losing market share. Milks are doing better, particularly the protein milks, are doing so much better. I think there’s still potential, so we can’t assume that. I also think there’s two questions on cheese to me: market share and total market. I think total market still has a little room to grow. I think market share will not grow, maybe decline modestly, and that’s more because of the Class II demand for proteins now with yogurt, Greek yogurts, and cottage cheese, and all the Class II-based liquid beverages. So, it’s more of an issue perhaps of market share, and that takes time to build capacity. We all know that. But the demand is there. Cheese is gonna continue. We [00:16:00] look at the supermarket sales data, it’s still growing modestly, as is butter, and that’s just total sales. I think the other factor we gotta think about here is population growth because our growth’s gonna be much slower. With current immigration policies, I don’t see a quick turnaround in growth of population like we’ve experienced in the past. A lot of that from folks who are big users of dairy in their diet. In the benefit of cheese, as we get older, we drink less, and we eat more milk proteins, and that’s part of our growth, of course, with cheese. The other one is food service. It’s huge, particularly the mozzarella side of the business, and it’s looking pretty tepid right now. That tends to go with health of the economy. I expect it’ll rebound again when people have more money to spend. I think that’s part of it, too. So, cheese is gonna remain strong. Jake made a very good point, though, as did Joe. It’s kinda sold itself, and we’ve had no trouble selling it. We are now the export market, kinda like we did with non-fat dry milk, what, 20 years ago, Josh? We’re, and we’re dependent on that export market. So, it makes us more vulnerable to world price, term, but it also means it’s a chance to grow if our industry adapts to meet those demands. And as we see, everything from powders to butter to cheese, the industry is working on that. But it’s a slow process, ’cause it’s always been that market when we have a little extra it was an opportunistic market, now it’s becoming part of sales strategy, and that’s a very different way to look at your business. Ted Jacoby III: Yeah. It means It’s really matured. Mike Brown: Yes, a lot. Ted Jacoby III: Diego, what are your thoughts? I know you’re not the cheese guy, you’re more of the ingredient guy, but internationally, cheese is definitely growing. Cheese gonna remain king? Or is the other protein sources gonna take over and pull milk away from cheese? Diego Carvallo: So I have contradicting thoughts here. I think that everybody here agrees that the demand for WPCs and WPIs is gonna continue growing, and that’s definitely been making cheese plants very profitable . But at the same time, I’m seeing that many cheese plants being built in the past few years that I think that [00:18:00] the competition is gonna get fierce in that aspect. I would say in the coming years, I see more probabilities of people who build, and companies who build dryers, for example, for non-fat and skim , to have an advantage and definitely a good incentive. Ted Jacoby III: So my two cents is this: I think we are underestimating how much the export demand for cheese is gonna keep driving it. There’s a lot of proof that cheese consumption in developing countries tends to follow a generation or two after milk powder consumption. It starts with infant formula, then tends to stay in the diet as they get older, and eventually manifests itself in cheese, mostly as an ingredient in something like pizzas or burgers, et cetera. And so, I do think cheese demand for cheese out of the U.S. will continue to grow. I do think the curve will flatten a little bit. I also think that you are going to get a continued pressure to build more cheese plants just so you have access to the whey protein, because I think the whey protein is gonna maintain its value. But I’m a little bit like Diego, ’cause on the other side, one of my thoughts is I hear a lot of conversations lately about instead of making cheese, what if we make micellar casein and we pull the native whey, and then we dry the native whey separately? So, I can also see technology continuing to evolve where maybe you don’t actually need to make cheese in order to have access to the whey proteins, and I think we have to keep our eye on that. But I do think cheese is the dominant use for milk in the United States. I don’t see that changing anytime soon, but I do think the trend is probably gonna start to slow down a bit. Josh? What are your thoughts? Josh White: I’m gonna step back a bit and start with one belief, and that belief is that United States dairy economies of scale have now reached a point where we’re gonna grow in our market share for the global dairy consumption. We’re gonna continue to grow in our participation in that business, and we will capture more market share. And if you believe that, at its core, cheese is maybe one of the… If not, it’s the most calorie-dense product that we have. [00:20:00] And there’s an argument that it goes into products as both ingredients and as the primary food service or retail product, which accesses a lot of different demand potential. If you think about the cheese factory, maybe not how they’re run today, but if you think about it, I’ve made the mistake multiple times of saying that we’re gonna start balancing to cheese, and there’s been a big argument about that, internally. And I can understand why there’s an argument on the surface level. But in the bigger picture, it’s what may be the most versatile way to process milk and balance out whether we have extra protein, extra fat, or we’re short of either of those product or whatnot. You can spin off more cream. You can bring in more solids. You really optimize that recipe, and I feel like that makes it foundational. And if it’s foundational, you’re gonna continue to see investment in these large cheese plants. If whey protein’s hot, great, whey protein benefits, and cream prices are poor it’s offsetting . If cheese demand globally is growing or fat demand’s growing, great we’ll maneuver our recipe a bit to take advantage of that. It feels very… Optimized maybe is not the right word. Someone help me with a word for it. But it feels like it’s a natural hedge, and it just seems if we’re gonna continue to grow in the commodity foundation of dairy products and then optimize all the ingredients and all the special opportunities around it, the cheese processing facility is maybe going to be the best to build around. And so with that in mind, I don’t know if that necessarily takes a greater market share, but it’s gonna be the foundation for our growing volume of milk solids out of the U.S. over the next several years. Ted Jacoby III: Josh it’s funny, you mentioned, are we gonna start balancing into cheese versus balancing into a powder plant? And my initial reaction when you first mentioned it a year or so ago was to say, “A cheese plant is just way too expensive.” It’s two, three times the cost to build a cheese plant as it is to build a plant that [00:22:00] dries non-fat. But the more I thought about it, the more I started to realize this: Already today we’ve seen a fundamental shift, and it will continue. I think cheese will always get enough milk to run the plant, but the competition for that marginal next pound of milk that could go to any of those plants, I think the competition for that last pound of milk has been ratcheted up a notch or two, and I don’t think cheese is gonna win that battle at all costs, like it historically has. And so I think there are times when your UF milk plants, when your ESL plants, and even when your non-fat butter plants are gonna win that competition from time to time. And so, the balancing function for a milk supply is gonna start getting spread over the course of multiple plants rather than the way we’ve been over the last 50 years, where everything was balanced in and out of a milk drying plant. All right. So have we decided? Have we come to a conclusion? Is cheese king? Let’s just go around. Is cheese gonna stay king? Mike, is cheese gonna stay king? Mike Brown: Cheese will stay king, but the strength of its kingdom will be a little weaker, ’cause it’s gonna have some strong competition from other proteins. Ted Jacoby III: Perfect. Jake? Jacob Menge: Couldn’t have said it better. Agree completely. Yep. Ted Jacoby III: Gus? Gus Jacoby: I would agree with how Mike said it. Yeah. Ted Jacoby III: Awesome. Joe? Joe Maixner: Yeah. No, no argument here. Ted Jacoby III: Diego? Diego Carvallo: I’ll have to say no. It’s because of the high competition and the amount of plants that are being built right now. Joe Maixner: Yeah. Ted Jacoby III: So are you saying you agree or disagree? Diego Carvallo: I disagree. Mike Brown: It’s the degree that cheese is ahead; it’s gonna take a lot of time for that to shift. Ted Jacoby III: A little bit like the Roman Empire in the year 200 AD, it’s still got 250 years to go, but it’s no longer gonna be the powerhouse it was 50 years previous. Josh, what do you think? Josh White: Yeah cheese is the king, and we’re gonna build a bigger kingdom around it. Ted Jacoby III: All right. And I agree with the general consensus that the cheese stays king, but the trend of an ever-increasing percentage of the supply is starting to slow down a bit. All right, everybody. Hey, this was a great [00:24:00] conversation. Thanks for joining us today. To all of our very valued listeners, we thank you for taking the time to listen to us. And if anybody ever has any questions about some of the topics we talk about, don’t ever be afraid to reach out and contact T.C. Jacoby & Company. We’re always happy to help. Take care, everybody.

Volatilidad, leche y mercados globales

En este episodio de The Milk Check en Español, Diego, Yara y Miguel analizan uno de los mercados lácteos más inciertos de los últimos años. El equipo conversa sobre la limitada disponibilidad de leche en algunas regiones de Estados Unidos, la fuerte demanda de leche ultrafiltrada, el sólido mercado de exportación de quesos y por qué el mercado de leche descremada en polvo sigue desconectado de los fundamentos tradicionales. También hablan sobre el incremento en los costos de flete, la creciente necesidad de SMP en México, el cambio en el comportamiento de compra de los clientes al construir inventarios de seguridad y cómo las tensiones geopolíticas, negociaciones comerciales y la volatilidad global están impactando los mercados lácteos alrededor del mundo. Desde NFDM y quesos hasta fletes, futuros y comercio internacional, este episodio cubre los factores más importantes que están definiendo el mercado lácteo actual. ¿TIENES PREGUNTAS? Nos encantaría escucharlas. Envíalas abajo y podríamos responderlas en el pódcast. Pregúntale a The Milk Check [https://forms.office.com/Pages/ResponsePage.aspx?id=eRDVZfxajkWh7K5qOl4X3WIbMEBcVqdIgPXZ5NPFsw1URFhBTzg0QjM5VzdVTldSRDVHMTg3MlIyMC4u] [https://www.jacoby.com/wp-content/uploads/2026/05/Screenshot-2026-05-15-at-5.18.50-PM.png] Diego Carvallo: Buenas tardes a todos nuestros queridos clientes y, proveedores. Los saludamos desde la ciudad de San Luis, donde estamos Miguel, yo, y Yara esta semana reuniéndonos con el equipo para reuniones de estrategia y análisis de mercado. Y bueno, bienvenidos al pódcast de esta semana. Estamos a mediados del mes de mayo con muchísima incertidumbre, muchísimas, eh, comentarios y preguntas sobre el mercado. Yara Morales: Sí, saludos a todos. Miguel Aragón: Así es, sí nos estamos reuniendo aquí en nuestra reunión trimestral, viendo, tratando de, ver la bola de cristal, pero no, no, no, no, está, está- no aparece, no aparece. Yara Morales: Sí, yo creo que las mismas preguntas que nosotros tenemos las tienen todos los clientes y los proveedores también. La verdad, es una incertidumbre todo lo que está pasando con el mercado. Es un año de verdad muy a-atípico, muy diferente a todos los años. O sea, ya, ya muchos clientes hasta nos dicen: «Pues ya no me sirven las referencias que tenemos de todos los estadísticas que teníamos anteriormente». La verdad, ya no, no. Ha sido un año muy difícil para todos. Así es. Diego Carvallo: Si quieren, podemos comenzar hablando un poquito de, de la parte de fluidos y después pasar a, a los productos. Eh, así entendemos un poquito cómo, cómo se sienten los fundamentos. Em, bueno, hemos tenido varias reuniones con el equipo de fluidos y, eh, a pesar de que el número de producción de, de leche de Estados Unidos sigue estando bastante bien, eh, seguimos teniendo un crecimiento bastante sano en la producción de leche, em, estamos viendo, eh, que para el medio del spring flush, que estamos actualmente, no pareciera haber sobrantes de leche, eh, a descuentos tan significativos como lo que había en los años anteriores. Y, eh, eh, la verdad es que ha creado algo de, eh, dudas, algo de preocupación, sobre todo para el equipo de fluidos, porque en estos momentos usualmente estamos viendo la, las cargas de leche descontadas a, a unos descuentos muy importantes y este año no ha sido el caso. Entonces, eh, hay mucha discusión y mucha, eh, como conversaciones sobre la demanda, sobre todo la demanda de lo que son, eh, las cargas ultrafiltradas, que está muy, muy fuerte esa demanda y pareciera que las plantas todavía tienen más capacidad para absorber leche. Em, por el otro lado, la parte de la crema sí está bastante larga, hay bastante producto disponible, pero lo que es la ultrafiltrada y la leche líquida, pareciera que con toda la capacidad nueva que agregamos este año, em… Hay suficiente planta para absorber ese crecimiento. Miguel Aragón: Así es, así es. Eh, un comentario importante que nos hacían los-nuestros compañeros es el de que en estos tiempos las– usualmente las cargas se compran o se mueven a descuento y este año no, se están moviendo a la par, lo cual está causando una incertidumbre bastante alta en el mercado. Diego Carvallo: Si, si ese es el caso ahora en el pleno flush, pues el mercado debería sentirse muy ajustado una vez salgamos del flush. Exacto. Y entremos en periodos de baja producción. Miguel Aragón: Exactamente. Eso lo, lo estamos empezando a ver en, en, en el mercado de futuros, eh, por lo pronto en el lado de lo queso. No sabemos qué tanto se ajuste, pero nos da algo de, de, de pausa ahí de- Sí. Yara Morales: Porque si siguen, este, mandando la leche para la clase uno, que es para toda la leche fortificada, para lo que es el, el, el yogur griego y, y lo que es el cottage, pues la verdad es que mucha leche se va a ir para allá. Eh, va a estar todavía muy escasa. Clase uno y clase tres. Diego Carvallo: Clase tres. Mhm. Exactamente. Clase uno y clase tres. Es importante aclarar también que e-e-ese panorama que estábamos describiendo es sobre todo lo que es, eh, al este de las montañas, de los Rockies. Todo lo que es California y la costa oeste, sí tengo entendido que hay bastante leche. Hay bastante leche. Que la leche sigue bien larga. Sí, así es. De hecho, uno, ayer coment– eh, estaba en plática con un-uno de nuestros proveedores y nos decían que tienen suficiente leche para las plantas de queso, en, por lo menos en California. Eh, y lo que comentabas, Diego, definitivamente esto se está viendo para el lado este y para el, el, de hecho, plantas en el centro del suroes– en el sureste. Sí, sí. El caso de la costa este ha estado muy ajustado de hace muchos años. Bueno, este año, eh, ese nivel, ese tightness, esa falta de leche, se ve aún más, eh, pronunciada. Em, bueno, con eso podemos entonces hacer como un, un cambio y empezar a hablar un poquito más de los, de los subproductos. Eh, Miguel, ¿quieres hablar un poquito de la parte de quesos antes de entrar en, en los polvos? Sí, sí. De hecho, ah, es, el– aunque el mercado doméstico sigue teniendo suficiente producto para la demanda que tenemos, el mercado de exportación es completamente otro tema. Eh, más que u– esta semana estamos viendo algo de movimiento en los mercados de Asia y, este, y Oceanía, con la, una demanda que se está incrementando. Miguel Aragón: Ojo, cuando eso es, esos mercados se llevan bastante producto. Habían estado algo dormidos, eh, las últimas Seis semanas, ocho semanas. Pero estamos viendo que ahora al parecer la están ya buscando producto otra vez. Eso tal vez nos va a poner algo de, de restricciones de producto para México, Centroamérica, Suramérica, porque al parecer lo pagan mejor, eh- Estados Unidos es el país más competitivo en este momento para lo que son quesos, ¿no? Sigue siendo el más competitivo. Así es, así es. Aunque hay algo de, de sobre todo mozzarella, de, de, de– hubo algo de producción en Europa, pero no, seguimos siendo los más competitivos, Diego Carvallo: sobre todo en los cheddar. Ya, ya, ya. Okey, interesante. ¿Y si están viendo, eh, en lo que va de año un aumento en todo lo que son exportaciones a esas regiones? Sí, todo, Miguel Aragón: sí, los, los mercados a los que hemos exportado siguen creciendo, sigue creciendo la demanda. Eh, aún no podemos ver, eh, cómo, se desparrama la demanda o cómo, cómo se– cuándo es más demanda y menos demanda, porque ha sig– ha seguido creciendo constantemente. ¿Y Diego Carvallo: cuál es, eh, tu outlook para el resto del año? ¿Estás– tú sientes que el mercado ha conseguido un soporte bastante claro y que la demanda puede mantener los precios actuales o, o sientes más bien que en algún momento podemos volver a caer? No, la, creo que Miguel Aragón: estamos en un, en un, tenemos un piso. Ya. Y aunque hemos creído que vamos a estar en un rango, al contrario, creemos que tal vez, eh, el mercado empiece a tratar de, de, de, de subir un poco, de apuntar para arriba- De romper esa resistencia. De romper esa resistencia hacia arriba. Pero, ah, todo depende cómo, cómo siga la demanda doméstica, porque eso es lo que nos va, nos va a marcar Diego Carvallo: la pauta. ¿Y el tema de la guerra en Irán está afectando en algo la demanda de los clientes de ustedes en el sureste asiático? Miguel Aragón: Definitivamente, definitivamente. De hecho, tuvimos algo de cargas nosotros que, que anduvieron dando vueltas. Hasta en la India teníamos cargas que, que iban a, a Arabia Saudita, eh, y nos, nos afecta a nosotros, pero está afectando a todos los productores también. Eh, y es un mercado por varias cosas. U-una, porque no podemos entrar, pero otra, la más importante, es porque las aseguradoras no nos están asegurando las cargas que van para ese mercado. Nadie las asegura y si no las aseguran El mercado claro no puede, no puede tomarlo, no puede tomar ese producto Es demasiado riesgo. Ya, Diego Carvallo: ya, ya. Miguel Aragón: Imagínate Yara Morales: el transporte, cómo se está incrementando también Diego Carvallo: con todo eso. Eso es lo siguiente, eso es lo siguiente. Es un tema que vamos a hablar también, que está afectando sobre todo a los productos más económicos, porque representan un porcentaje más alto del, del costo del producto. Sé que ahorita todo el mundo quiere hablar mucho de nonfat, así que si quieren pasamos un poquito a hablar ese tema- Nos dedicamos al nonfat. Que es el más complicado en este momento. Eh, mira, en pocas palabras, yo diría, en este momento estamos viendo un mercado que está de cierta manera desconectado entre lo que es lo, lo que estamos viendo en los fundamentos con lo que estamos viendo en la realidad del mercado físico. Los fundamentos, eh, apuntan y todos los reportes del USDA apuntan a que hay un crecimiento en la producción de nonfat, hay un crecimiento en la producción de SMP y hay inventarios relativamente sanos. Sin embargo, lo que estamos viendo en el mercado spot, en el mercado actual, es algo bastante distinto. Y puede ser por algunos factores como los de los recalls que tuvimos, eh, ¿cómo se dice un recall en español? La- Reclamos. Un reclamo de producción que tuvimos durante los últimos meses que ajustaron el mercado, pero la realidad es que el mercado spot, el mercado físico actualmente sigue estando sumamente ajustado. Hay muy poco producto, la mayoría de las plantas siguen completamente sobrevendidas. Eh, los traders y revendedores tienen muy poco inventario en mano. Y también vemos ese mismo patrón desde el punto de vista de los clientes. La mayoría de los clientes siguen todavía bastante cortos de producto y necesitan may-mayor, mayor volumen para saciar sus inventarios de seguridad y su producción. Entonces, eh, yo diría, en el corto plazo todavía vemos un mercado bastante bien sostenido, pero creemos que una vez pase el spring flush, después de estos dos próximos dos meses, deberíamos ver una mejor correlación entre lo que es el mercado físico o el CME Cash y el mercado de futuros. Y creemos que principalmente el CME Cash debería hacer gran parte de ese trabajo para llegar a un nivel más cercano a donde están los futuros. Es decir, creemos que debería haber cierta, eh, corrección y consolidación en un nivel posiblemente cercano a, a los cuatro mil quinientos, cuatro mil seiscientos, para de ahí poder buscar, eh, opciones de moverse para más arriba o mantenerse firme el resto del año. Sí somos, eh, creyentes de que el resto del año el polo va a seguir bastante ajustado, pero no creemos que nos podamos mantener en los precios que estamos actualmente, que son dos dólares treinta por libra, que es un precio en el que ya empezamos a ver que la demanda se frena un poco Okey. Em, todo lo que son MPC, eh, MPC setenta y MPC ochenta han seguido mucho ese patrón en el que el mercado está muy ajustado, no hay suficiente producto y hay mucha demanda que ha venido de sports nutrition, de otras aplicaciones a buscar, eh, sustitutos en el mercado del MPC. Em, Yarita, cuéntanos un poquito cómo has visto tú la demanda, cómo has visto a tus clientes en México, eh, ¿cuál es la expectativa de mercado desde el punto de vista del cliente mexicano? Yara Morales: Bueno, la, la verdad es que con toda la escasez que hubo en los primeros meses y que no podíamos surtirles la leche, porque todos los proveedores nos agarraron sin inventario y a México lo agarraron sin inventario. Afortunadamente, ya a partir de marzo, abril, ya empezaron a recibir producto. Entonces, ahorita los clientes en México tengo entendido que ya tienen un poquito más de inventario. Aparte, pues están cerrando contratos, eh, se está comprando SMP de, de Europa, los que tienen cupo y el producto va a empezar a llegar ya en mayo y son precios más competitivos. Los precios tan altos, los, eh, clientes finales, pues obviamente tienen una resistencia ya a pagar estos precios tan altos y empezaron a utilizar la leche fresca, que había bastante, ¿verdad? Este, podían encontrar hasta de cuatro pesos por litro. Ahorita ya no hay, se está escaseando. Todo el norte de México, ya la leche fresca está escaseando demasiado. Ahorita hay un poco más en el centro, que es donde también hay bastante producción de leche fresca, pero va a llegar el momento, como ya a finales de junio, julio, que empieza a escasear la leche fresca. Entonces, definitivamente va a haber una necesidad de leche descremada. Aparte de las formulaciones, pues ya las tienen con la leche descremada. Y la verdad es que todavía sigue habiendo, este, demanda. Ya no igual como en un principio que estaba todo mundo desesperado tratando de conseguir y recibir algo, pero de cualquier manera sigue la demanda, sigue todavía los clientes tratando de conseguir producto. Diego Carvallo: Y es difícil que no vengan a comprar a Estados Unidos. Por eso, por eso yo soy de la creencia que el mercado se va a mantener bastante firme por el resto del año, porque las importaciones de Europa sabemos que va a ser un volumen limitado, menos de diez mil toneladas, posiblemente para todo el año. Eh, si hay poca leche bronca en México, no van a tener otra opción que o, o consumir menos o, o venir a comprar a Estados Unidos, en pocas palabras. Entonces, eh, sí, yo creo que eso debería dar soporte. Debería marcar al menos un piso en los precios de, del nonfat. Quería Miguel Aragón: a-adherir un poco una reseña. En el– ahora que estuvimos en Chicago atendiendo el ADPI, estuvimos juntas con algunos, ah, productores de, de, de comida aquí en Estados Unidos y nos comentaban algo que tal, tal vez quisiera ver ustedes qué opinan. Eh, muchos Yo era de la creencia que nada más en México compraban al día, por decirlo así, y, y no había contratos largos. Resulta que en Estados Unidos era la misma situación y con varias de las empresas que nos juntamos nos dijeron: es que ahora estamos tratando de decidir si contratamos toda la segunda mitad del año, eh, a estos precios o nos esperamos. Es la gran cuestión ahí con las empresas que estuvimos platicando dentro de Estados Unidos. Y eso era nonfat Diego Carvallo: también o queso también. Nonfat. Ajá. Principalmente. Nosotros hemos visto exactamente ese mismo patrón. Los clientes en Estados Unidos tenían inventario al día, tenían una carga de, que tenían que utilizar esta semana y a la semana siguiente les llegaba otra carga y no tenían inventario. Ahora la tendencia es comenzar a construir inventario de seguridad, proteger para al menos dos o tres meses para protegerse de que una carga esté demorada o que no haya producto. Así es, exactamente. Miguel Aragón: Creo que Diego Carvallo: es una reseña muy Miguel Aragón: interesante Diego Carvallo: que, no la había Miguel Aragón: visto yo Diego Carvallo: y se ve ahora. Y eso resulta en demanda adicional, porque eso a la final, cuando todos los clientes de Estados Unidos, muchos, tratan de crear inventario de seguridad a la misma vez, cuando el mercado está muy ajustado, crea un crecimiento en la demanda que no es artif– no es orgánico, pero sí crea una subida en la Miguel Aragón: demanda. Así es. Y creo que alarga esta, esta cuestión que estamos viendo ahora. Está ajustado. Sí, Yara Morales: y lo hemos estado viendo con los clientes de México, los queseros, los que tienen plantas de queso, que han querido cuando menos tener la seguridad de que van a tener el producto, por eso pagan los precios. Entonces, han estado comprando con precios hasta meses adelantados. Y es, y era algo que no se veía. ¿Por qué? Pues porque estamos tan cerca que pueden llevarse el producto, pues en una semana o dos semanas y ya tienen la leche. Pero ahorita con esta escasez, pues la verdad que prefieren cerrar contratos largos, aunque sean meses más adelantados. Diego Carvallo: Correcto, correcto. Un punto también importante mencionar es el costo, cómo está afectando el mercado los altos costos de combustible y de flete, sobre todo para productos económicos. Hace poco estuvimos cotizando algunas cargas de permeato a México y a diferentes partes de Asia, y el costo del flete ha subido muchísimo. Eh, es algo que también está afectando a muchos clientes y viene dado a raíz del conflicto en Asia. Eh, ¿cómo está afectando eso a, a su, a la demanda de queso? Miguel Aragón: Definitivamente nos está afectando porque en, en, como saben, manejamos, eh, tres líneas de queso nosotros. Manejamos el queso de primera, eh, que tal vez es el que no, no refleja tanto, eh, el, el incremento en flete, pero lo refleja, pero lo puede absorber un poco más. Pero en el producto, ah, grado B que decimos nosotros, que se supone que era un poco más barato, eh, sí le afecta porque es un producto más barato. Y ahora el producto, eh, que manejamos para reproceso, que es el producto barato, es el producto para extender la proteína en el queso, eh, para hacer más queso, sobre todo queso análogo, ahí sí se sintió fuerte el i-el impacto del flete, porque a veces son– o sea, ha subido cuatro o cinco centavos por libra de diferentes lugares. Depende de, depende de la geografía de Estados Unidos, de donde estemos mandando el queso y es donde más nos ha afectado. Totalmente. En el Diego Carvallo: producto más barato. Igual que- Y, y no solo es en fletes marítimos, sino en fletes terrestres. La parte del transporte en camión en Estados Unidos ha subido mucho. Nosotros solíamos pagar cuatro o cinco centavos para mover una carga de California a El Paso. Hoy en día ese precio está cercano a los seis, o sea, ha subido un cerca de un 20 % En, en la– cuando movemos Miguel Aragón: produ– movemos queso de, de, de Washington a, a El Paso, estábamos pagando trece centavos la libra. Hoy día diecisiete centavos, a veces dieciocho centavos. Y de-dependiendo también si, si se empieza a mover algo como de, digamos, de, del sur, de, de, del suroeste, cuando empieza a moverse mucho melón o cosas así, o cuando viene la temporada de árboles de Navidad, depende de la temporada, esto va, va a incrementarse aún más. Sí. Yara Morales: Igual que el refrigerado. El refrigerado se estaban pagando doce centavos y ahorita ya están cerca de dieciocho centavos. Entonces sí ha Miguel Aragón: subido bastante. Sí, sí, sí, nos está afectando en el queso, en la, en el movimiento del queso y en el movimiento de la mantequilla, definitivamente. Yara Morales: También. El Diego Carvallo: último tema que nos ha preguntado mucho la gente. Cuéntenos un poquito sobre el tratado de libre comercio y qué expectativas hay ahora que se vuelve a negociar entre Estados Unidos y México Bueno, Yara, tú ya has escuchado porque- La verdad, Yara Morales: hay mucha incertidumbre, hay muchas preguntas. Eh, ahora en junio que viene la revisión, pues, mmm, son varios, varios factores, ¿no? Se viene el, la revisión del Tratado de Libre Comercio y se viene el Mundial de fútbol en los tres países. Entonces todo el mundo anda como que muy alterado con todo eso, porque no saben, no sabemos qué es lo que vaya a pasar, no sabemos cómo se vaya a, a mover ese Tratado de Libre Comercio, si se va a renegociar, qué porcentajes pudieran darse o si vamos a quedar en cero, que es lo que todo mundo pretende, porque pues es la economía de México. La economía de México realmente necesita ese Tratado de Libre Comercio. Y, este, y yo creo que todos, porque para todos es un beneficio, ¿no? Inclusive para Estados Unidos. Entonces hay mucha incertidumbre, ¿no? La verdad, mmm, yo pregunto y ando investigando y todos mis clientes pues no saben qué es lo que vaya a pasar. Miguel Aragón: Así es. Y nos está… esta incertidumbre nos afecta día a día, eh, sobre todo con México por la cuestión del tipo de cambio, porque sale un encabezado y se dispara el dólar, eh, sale otro encabezado y se fortalece el peso. Es cuestión de todos los días, todos los días, este, y las, la cuestión política nos, nos, sí nos está afectando bastante. No, Diego Carvallo: no hay certidumbre. Miguel Aragón: Claro. Eh, pero una cosa superimportante que, que, que creo que está, eh, afectando algo lo del tratado y muchas otras cosas es que se nos vienen las elecciones primarias en, en, aquí en noviembre- Estados Unidos. Estados Unidos. Y a eso tú sabes que- Es muy importante. Es muy importante, porque hay que mover el, el, el, el, el, el, lo que piensa el público. Claro, hay que ganar los votos. Y hay que ganar los votos y aquí vamos a ver si se va a hacer cosas para, para tratar de tener algún efecto sobre eso. Y muchas veces no tiene nada que ver con México, Diego Carvallo: obviamente, también las de Irán, pero el mercado, básicamente, yo creo que va a mantener mucha volatilidad, va, va a haber mucha incertidumbre y, eh, las, las monedas van a tener, obviamente, como resultado una variación bastante violenta. Los bancos nos afectan. Exactamente. Yara Morales: Sí. ¿ Diego Carvallo: Qué otro punto importante? Definitivo, Yara Morales: definitivo. Ay, pues yo creo que todo esto es bien interesante. Vamos a ver qué sucede. Este, no sé qué otra cosa podemos Diego Carvallo: manejar. Voy a estar, yo voy a estar en Antad la próxima semana. Eh, lastimosamente, esta vez no me van a poder acompañar Yara y Miguel Pero yo voy a estar en Antalas, así que con mucho gusto, eh, me, me encantaría conocer y encontrarme con algunos de nuestros clientes estando allá. Así que no duden en, en contactarnos. Así es, así es. Desafortunadamente, Miguel Aragón: yo Diego Carvallo: no Miguel Aragón: voy. Sí. Ah, pero yo voy a estar en, en, en Alimentec, en Bogotá, creo que es. Entonces, si alguien nos está viendo en Colombia o que vaya a estar en Alimentec, por ahí estamos. Excelente, excelente. Que Yara Morales: por cierto también va a haber elecciones en Colombia. Miguel Aragón: También. Así es. Sí, Yara Morales: también va a haber elecciones en Colombia. Hay que ver cómo, cómo se- Más volatilidad. Se ve todo. Más volatilidad todavía. Más Diego Carvallo: gasolina al fuego, sí. Bueno, mil gracias a todos. Gracias, Miguel y Yara. Gracias. Gracias, gusto en Yara Morales: saludarlos a todos. Bye

A Market on Borrowed Time

Nonfat is sitting north of $2.25 on the CME spot market. But the bigger question is how long it can hold. In the latest episode of The Milk Check, the Jacoby team breaks down a dairy market that feels tight, fragile and increasingly dependent on timing. Here’s what they’re watching: * Why nonfat prices surged, and what could break them * How protein demand is pulling milk away from dryers * Why MPC and MPI are outpacing nonfat * What the inverted futures curve suggests for the second half of the year * How depooling and Class III–IV dynamics are shifting milk flows * Why butter feels weaker, even in the middle of flush Plus, the team talks through what happens if the nonfat market doesn’t break soon. There’s still a lot of milk moving. Just not where it used to go. Let the Jacoby team help you get up to speed on the new dairy market dynamics. Click below and listen to The Milk Check episode 98: A Market on Borrowed Time. GOT QUESTIONS? We’d love to hear them. Submit below, and we might answer it on the show. Ask The Milk Check [https://forms.office.com/Pages/ResponsePage.aspx?id=eRDVZfxajkWh7K5qOl4X3WIbMEBcVqdIgPXZ5NPFsw1URFhBTzg0QjM5VzdVTldSRDVHMTg3MlIyMC4u] [https://www.jacoby.com/wp-content/uploads/2026/05/The-milk-check-098.png] Ted Jacoby III: Coming up on the Milk Check. Jacob Menge: if this doesn’t start falling soon, I think there’s gonna be people that are trying to make money on the short side of this thing because they didn’t make money on the long side. Ted Jacoby III: Welcome to the Milk Check from T.C. Jacoby & Co., Your complete guide to dairy markets, from the milking parlor to the supermarket shelf. I’m Ted Jacoby. Let’s dive in. Today is May 1st. It’s a couple of days after the ADPI and a couple of weeks after the Cheese Expo, and it’s usually after those two meetings a really good time to talk markets. So, we’ll go ahead and start with the market that everybody was talking about at the ADPI. Josh, Jake, Joe, what’s going on with our nonfat market? We’re at $2.26 today, I believe. Are we gonna stay up here for a while? Josh White: It’s a more challenging question than just the absolute price today. I think that if I were to summarize the show, there was a recognition across the entire dairy industry that there might be some legitimate reasons for nonfat to be tighter than they have been over the last several years. It feels like a lot of different things have resulted in the current spot price that we’ve seen today. Over the last five years, we globally have made more skim milk powder and nonfat. We’ve consumed more skim milk powder and nonfat, but the real story is in the fact that we’ve also made a whole lot more milk, and that milk doesn’t seem to have found its way to the dryer. Seems to have found its way to a variety of different products. And equally as important during the ADPI was the talk about the protein market, which I think we can likely get to later. But things like RDT products, beverages, protein consumption, cheese consumption, a lot of things have consumed incremental milk growth, particularly in the U.S., and that happened after many years where buyers had very little concerns over access to supply. And as a result, I think in the background we watched global inventories decline, and that all seems to have come to a head here in the early part of 2026. And now as we’re getting into the northern hemisphere flush, and particularly in middle America, yeah, then we have ADPI. And so, what’s interesting about your question is throughout most of the conference people were pretty convinced, “Yeah, we’re in a tighter nonfat market. We’re all buying into that.” Yet, the days following ADPI, we’ve seen futures sell off a bit and we’ve seen a little bit more volume traded at the CME spot call. What’s that mean going forward? Jacob Menge: The most interesting thing going forward is you don’t talk to single person that says these prices are gonna stick around for six months. And so it’s really a matter of timing, how long do we stay up here? I think we’re already up here longer than most anybody thought. And the other thing is, nobody got this market right. Some people got in at a buck 25. Those guys sold at a buck 40. They said, “I’m gonna take my 15, 20 cents and run.” And they felt like a genius for about three days before we were quickly at a buck 60. And we’ve got this really interesting dynamic of no market participant really happy with it being up here because nobody really made money on the way up. And everybody convinced that, okay it’s on the clock for when it comes off. And I’m not even gonna disagree with that, right? I don’t think anybody would argue that long-term we’re gonna have $2.50 nonfat in 2028 or whatever. But this really comes down to a question of timing, and I think that’s where you get mixed opinions. But in general, I think most people are of the opinion that it’s not gonna be that long before this thing does start to fall. I don’t have that strong of an opinion actually, but what I do have an opinion on is if this doesn’t start falling soon, I think there’s gonna be people that are trying to make money on the short side of this thing because they didn’t make money on the long side, that they’re gonna start feeling some pain. And as our curve has come up a bit over the past month, we’ve got this really interesting market conditions where, again, if we’re up at these levels even a month from now, two months from now sure, I’d make the argument, why couldn’t you have another squeeze higher? Because there’s still not that much product available right now today. We’re starting to see that change. We saw some really nice volume on the CME spot auction just this morning. But that’s what the eyes are on is how long does this thing take? And if it starts this week versus six weeks from now, I think those have very different implications for how the market reacts. Josh White: We’ve got three different reactions to the nonfat market right now. You’ve got the true nonfat participants that need product now, and that’s priced in the $2.25-plus type range right now on the countryside. And to your point, we’re seeing a few more loads available which is a decent sign. The market participants seem pretty convinced that we’re gonna see an easing from this price, but so are futures. And I think that’s another important thing to point out is that the futures curve is inverted and it’s quite a bit lower than the spot price today. So, you can have both situations. You can have a spot price drop while the futures price maybe doesn’t as much. Over the past few days, the futures curve has definitely traded lower, confirming what we heard there is that most people don’t believe in this market being as tight as it is currently into the future. And we have to remember, this is traditionally a globally traded product and our competitors across the pond are still quite a bit lower and making a whole lot of skim milk powder today. So, I think longer term, if the assumption is that we need to compete globally for at least some business, particularly in markets like Asia, we’re gonna have to be a little bit more aggressive to compete, but futures are saying we will be. Another important topic was now we’re starting to see an acceleration of the NDPSR price now that we’ve had several months of higher spot prices, and that’s starting to have an impact on markets other than just the powder market. And I think maybe, Gus, you would have a little bit more to say about how the market’s reacting to some of the component prices moving higher in the solids nonfat side of things. Gus Jacoby: The situation as we’ve talked about in the past is protein is being pulled in a lot of different directions and we don’t see that demand going away anytime soon. The one comment I would make though is your isolated protein, certainly UF milk in fluid form, are seeing some of the highest demand that we’ve seen in a very long time. So, if you’re cheese maker, if you wanna fortify, and certainly on higher butterfat milk, there’s plenty of folks that wanna fortify right now, there’s probably a little bit of a pull on all the skim solids at this moment in time. I don’t think that story has changed. We’ve beaten that up for a while. But that’s certainly gonna pull a fair amount of milk out of the dryer for nonfat. You look at where the capacity has been added, whether it be in the Southwest with all the large cheese plants that have been added there, and then Upstate New York where some dryers are also gonna sit idle as some new processing capacity comes on there. That’s two areas of the country that are gonna get a lot less milk into the nonfat dryers than previous. And certainly here we are now in the flush as these plants ramp up, it would typically be your highest powder production timeframe, and instead those solids are going elsewhere, and that will keep nonfat production down for the foreseeable future. Ted Jacoby III: Gus, are you seeing milk move towards Class IV plants instead of Class III plants this year? Gus Jacoby: We still see fortification solids during this flush finding its way into cheese plants. But that’s your surplus skim solids that might exist, and those are only available, I believe, because of the flush. Now, it’s not UF milk, right? UF milk tends to be going elsewhere whether it be going to some sort of IV or II-type arrangement, whether it be a high-protein beverage or a high-protein dry product. But you are still seeing a fair amount of condensed and other skim solids going to the cheese vat for fortification purposes. I think the way that will unfold likely is that those surplus skim solids that aren’t being turned into isolated protein products, they’re gonna probably get pulled out to a certain degree of the cheese plants, and then cheese plants will just not be able to utilize fortification as they are typically used to or would like as we move through the year. Ted Jacoby III: So, what you’re saying is if the price stays up here, the milk that is going into the dryers making nonfat will continue to do so longer than usual, and they won’t lose the flush-specific skim solids? Gus Jacoby: I don’t know if I’d agree with that, Ted. I think the flush, no matter where you’re at in the country, the surplus solids find its way to the dryer typically. And as we come out of the flush, certainly less solids everywhere will go toward the nonfat dryer, just as it always does during those seasonality changes and we come out of the spring. It’s just that the areas I talked about, Southwest and Northeast, they’re not getting near as much as they used to in the flush, and so overall that production is going to be missed upon the market. Ted Jacoby III: Do you sense any kind of competition right now between Class III and Class IV for the surplus milk, or is it just following its usual path? Gus Jacoby: There’s some surplus condensed solids going to cheese plants that if a better price could be had into a powder plant, it would go there. Ted Jacoby III: Okay. Gus Jacoby: And that’s happening predominantly in the upper Midwest, and maybe a little bit in other areas. But certainly if you’re gonna get a higher return going into cheese than you could going into powder, you’re gonna go after it right now. And that’s where the demand I would say is. But surplus is surplus, and you’re gonna sell it to the highest return you can. Ted Jacoby III: Okay. That sounds good. Joe, anything to add on the nonfat side? Joe Maixner: Any milk that is making it to dryers, they’re prioritizing the milk to try to get into the milk protein concentrate (MPC) sector or milk protein isolate (MPI) as opposed to nonfat because the return is better. Ted Jacoby III: Makes sense to me. Joe, Josh, are we seeing MPC prices rise faster than nonfat right now? Josh White: Yeah, no, it has to be faster than nonfat because basis is appreciating. You’ve got an MPC market that likes to trade on a multiple of nonfat, and that has appreciated. That has continued to increase. Now, again, I noted earlier we got an inverted forward curve, which means that basis can be going up and price could stay the same or even go down the second part of the year. So, that’s the dichotomy we’re dealing with right now, is that from a cost basis, it looks like it could be pretty okay the rest of the year. And if there’s dry time available, you would think you’re gonna maximize that MPC. And when compared to whey protein concentrate (WPC) prices, MPC 85 is a bargain. But again, not everyone can easily substitute between the two, and that takes some time for the market to figure out which market participants may be able to switch between WPCs and MPCs, may take a little time for them to make that switch. Ted Jacoby III: So, I just wanna clarify for the audience. There’s two different ways we can look at it. If we’re selling it forward into the second half of the year, from a market perspective, we may be selling it for a lower price because the futures curve is a lot lower than the cash price is today. But if we’re selling MPC or nonfat today, you’re telling me that the nonfat price has effectively doubled in the last three months, and the MPC price has more than doubled because not only has its basis doubled based on the nonfat market, but the overage above that has also gone up. Josh, you’re on mute. Josh White: I thought you said clarify for the audience, so I didn’t realize it was a question for me. Ted Jacoby III: Oh the answer is yes. That’s exactly what’s happening. Josh White: Yes. Nailed it. Ted Jacoby III: All right. So, basically what we’re saying is skim solids and protein are in high demand. That’s loud and clear. [Center commercial] Ted Jacoby III: Mike, what about from a federal order perspective, how this all feeds through the federal order? Obviously, since it’s a higher market right now, Class IV is what’s driving Class I prices. Obviously, it drives Class II prices. Is there anything else that kind of shifts around in a market like this? Mike Brown: There’s a couple things. First of all, a lot of your Class IV production is co-op owned. And what we’re seeing is depooling in Class IV, and to some degree Class II where it’s possible. So, rather than to go into the pool and get a blend price that’s below your class price, they’re electing to depool, just like we saw with cheese last fall when it was much higher than butter powder. We’re seeing some of that. But if you’re pooled, you’re ambivalent because you’re gonna pull the pool draw out anyway, and it’s not gonna make a lot of difference. It’s markets like the Southwest where a lot of that milk is never pooled or rarely pooled, and even in the eastern part of Kansas, changes in central order, you less have to pool it because the differential is so much wider now from Kansas City than it used to be. You may see more activity as you watch pool decisions being made since last June when the changes, people are getting a lot better at predicting whether or not they should be involved with the pool or not because it’s getting easier to predict because behavior is more what you’d expect. So, from my point of view, it has some effect, certainly, and if you’re trying to maximize a return to your owners and you have a plant with capacity and you get a higher value product, you’re gonna try to run the milk through that plant. Second part of that, of course, if you already have obligations, and some of these new cheese plants have supply obligations, they’re gonna get their milk regardless of the shift in price. So, it has less effect than you might think, but there is still effect, particularly if you’re having to pool your IV. There’s certainly a lot of IV being depooled right now. Production isn’t much lower. It’s just regionally shifted some, a lot more in the West Coast right now than in the Southwest. The orders kinda mute what would be the normal market decision to maximize return on milk for a producer because if you’re gonna blend it anyway, you don’t have the incentive that you do if you don’t. That said, right now, Class III guys, they’re pooled. The other part of this III-IV spread is, of course, what is the value of those solids into those cheese plants? I’m working on that today, Ted, trying to figure out how much does the high-WPC80 and WPI market bring to the value of buying outside Class IV solids to justify the price? Just on the price of cheese, I got some numbers here in front of me, you’re looking at on a per-pound cheese yield basis, if you buy powder in the powder market right now, it’s 25 to 40 cents more per pound cheese yield than it would be if you’re getting it from Class III. Mike Brown: You better either have a great margin or you’re really hitting up the whey market, and I’m gonna figure out exactly what that is. But that decision isn’t just a cheese decision, particularly with whey protein so high. There is a value of that nonfat dry milk whey protein that in the past didn’t matter as much as it does now. So, it may make that slightly more attractive or less unattractive than it would’ve in the past because your whey returns are so high on that protein compared to what they have been historically. So, it’s complicated, but it’s not just the value in cheese. It’s the value in cheese and in whatever your plant can make for whey. If you can make WPC80, you can pay more for those nonfat solids, obviously, than you can if you don’t. Ted Jacoby III: So to clarify, usually when you ship fluid into a Class III plant, you pay the Class III solids price. Mike Brown: That’s correct. Ted Jacoby III: If you use powder, you’re gonna have to pay whatever the prevailing nonfat price is. And most everybody running a cheese plant right now would really like their skim solids in fluid form so they can pay those Class III values instead of the Class IV values. Mike Brown: Oh, absolutely. But if they’ve got excess fat, and a lot of our American-style cheese plants now do have excess fat, what’s your market for that fat, and does it make sense to pay a little more for that protein from the Class IV side so that I can get a better price for that fat? Although we all know multiples this year aren’t near as horrible as they were a year ago. Yeah. So it’s a little better market. If you’re gonna get right down to dollars and cents, really you gotta look at your whole product mix out of your cheese plant and figure out what can you really afford to pay for those solids . And plus the opportunity of running your plant more full. What’s your fixed cost savings by running more product through your plant even if the cost is a little higher? Ted Jacoby III: Speaking of butterfat, Joe, this butter market just feels like it’s gone a lot lower than we expected it to go. Joe Maixner: Yeah, it’s weak. Cream’s not sloppy. It sure doesn’t seem like it’s super long in the market. But there’s still plenty of butter being made, and I think that this market’s also pricing in the fact that we’re anticipating that export reports are gonna decrease in the amount of butter that will get out monthly moving forward until this Middle East conflict gets resolved. And we’re basically peak flush through east of the Rockies, so this is the highest production point we’re gonna see through the rest of the year until we get past the holidays. Ted Jacoby III: Gus, are cream multiples poor right now as well? Gus Jacoby: We’re still on the flush, right? But they’re much, much tighter and higher than they were a year ago this time. It just goes to show that the additional churn capacity we’ve seen around the country and some better preparation by a lot of folks in dealing with excess butterfat has made this market a fair amount healthier when it comes to cream. Not near as sloppy as it was a year ago. Multiples have held at or better than even the year previous for flush times. So, I would imagine that what we’re gonna see here going forward is representative of this new marketplace. Ted Jacoby III: Josh, anything to say about the whey protein market? Josh White: Maybe some early signs of a market trying to figure out if it wants to continue on the trajectory it’s been on. WPC80, the general consensus out of ADPI is it remains tight. Seen a few extra spot loads trade this week though, so maybe some people were waiting for that information to let go of a little excess inventory or some incremental loads. WPI feels like it’s pretty stable. And the market came to the conclusion, I believe, during the ADPI conference, that, okay, it seems to be priced right. It doesn’t feel like WPI needs to go up at the moment. And we’ve definitely seen more offers since the show. Not ready to conclude that’s going lower because of where the WPC80 price is and how tight the WPC80 market is. So, those two have really converged at the moment, almost to a point that doesn’t make a lot of sense, the price spread between the two, so the market’s going to figure that out. So, yeah, that would be the only changes. Other than that, maybe just reiterating that we are constantly talking to new customers about new demand creation, and also outside of the traditional sports nutrition category, a lot of new CPG product launches and things like that are absolutely still in motion and consuming a lot of dry protein. Ted Jacoby III: Makes sense to me, and I would agree. And then, what I would say about cheese is it was easily the most boring market at the ADPI. I’d start by saying that. It feels like a market where a lot of people are complaining that the price isn’t low enough for them to get new sales on, but they also can’t find a ton of product out there. There is some spot product trading around, but there’s not massive quantities of it like you sometimes see in the height of the flush, which just makes me feel that right now the cheese market is in balance. In balance in a way that maybe we’re not getting a huge amount of additional export sales on the books, but we are continuing to export at a pretty high rate , especially considering there’s a lot of sales on the books that were put on the books earlier in the year that are gonna continue to ship. And it’s kept this market, this cheese market, I think, relatively well cleaned up considering we’re in the height of the flush. So, we don’t see a lot of movement going forward, at least in the next few months in cheese. You’re gonna trade in a 30 cent range, 20 cent range around where the current price is. That would be my take on the cheese market. All right. To all our listeners, I really appreciate you guys listening to us. I hope this information is helpful, and we look forward to talking to you soon. Take care. [Ending credits]

Steady Markets, Shaky Ground

With Easter behind us, demand is easing, milk production is climbing, and the spring flush is here. But beneath the surface, the dairy complex is anything but comfortable. In the latest episode of The Milk Check, host Ted Jacoby III and the Jacoby team look at the fault lines hiding beneath today’s seemingly stable dairy market. In this episode, we cover: * Why milk is getting longer, but not everywhere * How added processing capacity is changing the spring flush * Whether butter has found its floor, or is simply stuck * Why energy may be the biggest wildcard in dairy right now From regional milk balances to butter’s next move and the growing influence of energy costs, we look at what is really driving the dairy complex right now. To hear what could hold, what could crack and what the next few months may mean for dairy, listen to The Milk Check episode 97: Steady Markets, Shaky Ground. GOT QUESTIONS? We’d love to hear them. Submit below, and we might answer it on the show. Ask The Milk Check [https://forms.office.com/Pages/ResponsePage.aspx?id=eRDVZfxajkWh7K5qOl4X3WIbMEBcVqdIgPXZ5NPFsw1URFhBTzg0QjM5VzdVTldSRDVHMTg3MlIyMC4u] [https://www.jacoby.com/wp-content/uploads/2026/04/Screenshot-2026-04-15-at-5.44.37-PM.png] Ted Jacoby III: Coming up on the Milk Check. Joe Maixner: It’s really watching the energy markets because it’s going to affect literally everything. Ted Jacoby III: Welcome to the Milk Check from T.C. Jacoby and Company, your complete guide to dairy markets, from the milking parlor to the supermarket shelf. I’m Ted Jacoby. Let’s dive in. Today is April 6th, 2026. It’s the day after Easter. it’s also the birthday of a few illustrious people like Paul Rudd, Lando Calrissian, or actually Billy D. Williams and our own Joe Maixner, and we’re here to talk about dairy markets today. Sorry, Joe, and we’re here to talk about dairy markets today, and what we’re gonna be talking about is it’s the day after Easter and demand for the next oh five months or so tends to slow down a bit, while milk production tends to pick up and it’s peaking probably right as we speak, and over the course of the next four to five weeks. So, what does that mean for the dairy landscape? What does that mean for the price landscape? When I started thinking about what we were gonna talk about for this podcast, the market seemed to be in a lull right now. And then I realized it’s that time of the year. The question is, are they gonna stay here? Are they gonna go lower? We know that milk production is gonna continue to increase, especially in the Midwest, and we know that the next demand event of any significance is at least five to six months away. But where we’ll start is we’ll start with milk production. This is the time of year when things tend to get a little bit long. Gus, is milk long right now? Gus Jacoby: Depends what region of the U.S. you wanna talk about. From what I understand, there’s some areas of the West that are very long. The upper Midwest, when you have plants go down, it gets a bit ugly. But looking into the mid East, the Northeast, the Southeast, certainly the Southwest, where there’s quite a bit of new processing capacity, all these areas, are not all that long. It’s certainly the spring flush, but when you look at the Milk Production Report, you would think they would be a lot longer. And I think additional processing capacity in all these regions that we just discussed are where we’re a little bit shorter than we anticipated, considering what time of year it is. Ted Jacoby III: Usually, this time of year we’re hearing of milk moving at 2, 3, 4, $5 under. Is that happening this April? Gus Jacoby: There’s some spots in the upper Midwest where it gets that discounted, yes. But I would say that has more to do with plants being down in addition to the surplus that causes it to get that long. I think if everything is functioning in the region — in the upper Midwest, Mideast or anywhere on the Eastern corridor — you’re not seeing quite the growth that’s shown in the Milk Production Report. Anytime you see north of 2.5% or 3% in a Milk Production Report, usually that means the flush is a really ugly period of time. But in these regions of the country, we’ve added enough processing capacity to balance things out a bit more and not make it quite as long as you would think. Ted Jacoby III: So we didn’t really add any plants west of the Rocky Mountains. And in that case, the flush, especially in California, is probably already in the rear view mirror. Are we seeing milk really long in California and along the west coast right now? Gus Jacoby: I’ve heard that California, for a while there did get pretty long. That area hasn’t had the additional processing capacity outside of the Pasco facility to deal with the level of surplus we have in those regions. Ted Jacoby III: That means it’s fair to say that we’re in the flush right now, maybe past the flush out West Milk has gotten long, milk is plentiful, but we’ve added enough milk processing capacity that generally speaking, as long as there in, there are not any plant breakdowns. We seem to be able to handle the additional milk supply and we’re getting it all processed. Gus Jacoby: Yes, that’s the truth. Joe Maixner: The West has been running full for the past couple of months. But cream has not been super long. It’s been getting into the churns, but it’s also been finding homes elsewhere and it’s had decent demand. It’s been a little surprising that we haven’t had as excess of cream as we would’ve anticipated given how long milk has been. Ted Jacoby III: What about on the powder side? I’ve heard that the plants are not necessarily dumping any milk, but the plants are full enough that they can’t run anything specialty. So, all they’re running is straight up nonfat dry milk, which these days with protein component values in the milk the way they are, 38% protein, but they’re just running ’em flat out to get all that milk processed and dried. Is that a fair way to put it? Josh White: Yeah, I would say so. Ted Jacoby III: Okay. Milk’s getting processed. We’re making a lot of it, but Easter’s now in the rear view mirror. Since our runup, late January, early February, the cheese market seems to have settled into a price somewhere in the $1.60s, the butter market’s been $1.70s, $1.80s, it popped up over $2 and it seems to have faded since. Is it in its sweet spot yet, or where do you think the butter market will go over the next three to four months? Joe Maixner: I think there’s a lot of factors that go into where the butter market’s gonna price over the next few months. Obviously, we’ve got the macro events going on, the conflict in the Middle East, that’s pulled a lot of export opportunity out, as we’ve talked about at length in the past few podcasts. But there’s been a lot of product trading in this 15¢ to 20¢ range that we’ve been in over the past couple of weeks, and it seems that we’ve found a good range where buyers and sellers are happy to move product. There’s probably not much more downside potential at this price. But it’s a very real possibility that we could just stagnate here for the next few months until we see any type of real demand shift and production dies off into the summer. Ted Jacoby III: Are we gonna continue to be exporting butter? Joe Maixner: Yeah, absolutely. We’re still seeing exports move. Obviously we’ve lost some of our largest growth markets with this conflict, at least temporarily. But we’re still exporting to other regions, and all of those markets are growing. Will it be enough to offset the losses? I’m not sure, but we’re still moving product out of the country. Ted Jacoby III: The cheese export numbers have been phenomenal for about the last six months. We’ve been up over 30% year over year, almost to the extent of being a little bit surprising. Are we gonna be able to keep that up, do you think? Or is this market going to peter out a little bit ? Jacob Menge: You gotta suspect that you stop getting the blockbuster export numbers before too long because it has been two months now since we’ve come off of kind of those rock bottom prices that we were at. I think that will certainly take the top off of those export numbers. Cheese in general has probably been one of the quieter of the dairy markets, probably the quietest. It’s been sneaky though. There’s been these moments where it’s been hard to find product. There’s been moments where you can find product and I think it definitely is a tale of exactly what cheese you’re looking for. I don’t think colored cheddar has been particularly hard to come by. Meanwhile, white, for export has been pretty tough. All of that has resulted in this really nice gentle climb higher on cheese prices. We’re starting to see some cracks in the floor, especially internationally. We’re hearing mozz prices starting to get some pushback outta Europe. Those blockbuster export numbers on the cheese side are probably nearing an end. And if not then I think that’s gonna be the only thing that can keep driving the cheese price appreciably higher from where it’s at. If we can keep getting these pretty impressive numbers, sure, I don’t see why we couldn’t keeps stair stepping higher. Ted Jacoby III: Where the export numbers go, the price of cheese goes. Is that a fair way to put it? Jacob Menge: It certainly seems like an export driven market right now. Our opinion kinda long term is that’s U.S. cheese. This last year or so, maybe more 18 months, reflecting back on it, been the coming of age era for a serious export driven cheese price in the U.S. Historically, obviously export have played a factor, but it seems like that’s going to be the dominant force today and in the future. Ted Jacoby III: Yeah, I think I’d have to agree with that. And then there’s nonfat. Josh, this nonfat market, it sure went a lot higher than anybody expected. Even when it started to rally, we thought it could go up into the $1.50s, $1.60s, but I don’t think we expected the $1.90s. Is this market gonna stay here? Where does this market feel like it’s at today? And how does play out from here? Josh White: It’s still a tight market, Ted. Seems like there’s some commitments that are still behind. On the manufacturing level, it seems like demand’s been very strong. Let’s be clear, the West Coast is running a lot of nonfat right now, and it’s not changing the climate. Where we’re really seeing the vacancy in production is in the middle part of the country. It’s pretty well reported now. Everyone’s clueing in on this idea that there’s just been a lot of growth in the protein beverage market and in the UF space, and that seems to have kept a lid on our production growth for nonfat dry milk relative to the milk production growth and the protein growth that we’re experiencing in the milk. So yeah, it still remains pretty strong. There’s still good demand. Yeah, there’s a lot more conversations and we’re having a lot of conversations with customers across all the different industries that consume dairy products about what these higher prices mean. Are they real? Are they here to stay? If you look at the futures curve though, we’re way higher than that current futures price, and it’s an inverted curve, so we’re gonna have to pay a lot of attention to how that plays out, particularly as we get into these heavier milk production months, domestically and in Europe. But to be clear, there’s a lot of milk; that milk’s being processed into a lot of products; but in the U.S. side, we’re not seeing huge nonfat increases. I think across the pond though, they’re making a lot more skim milk powder, and they’re the beneficiaries of this tight market right now. Clearing a lot of that product into the international clients that, historically may have been looking to the U.S. as well. Ted Jacoby III: Do you think that means we’re gonna be export handicapped for the next three to four months that might just weaken the demand side of the equation for U.S. nonfat? Josh White: Yeah. The trade’s not as free as we all hope and expect it to be, and what I mean by that is there’s barriers to entry for bringing, like European product into Mexico. Approved brands across the world that might make it more difficult to exchange one supplier for another. But I think the answer to your question, the longer we maintain this type of premium, the less likely we are to export into some contestable markets. And it’s really tough when you’re talking about managing supply chain over the course of a year to get that right. There’s a real possibility that, we could miss some business that we wished we had later in the year. But, as it stands right now, it’s not like we’re sitting on a lot of extra product to move. Ted Jacoby III: So, when we look to the next, 1, 2, 3 months, things are tight enough. The nonfat market’s still coming from a place of overcommitment and then still trying to work through that. And there’s No reason to think that we’re gonna be trading nonfat in the $1.20s by Memorial Day. Josh White: No reason to think that. I think that we’re putting ourselves in a position where now’s the moment where we can take a little bit of the pressure off the market. We’re starting to see a little bit more seasonal milk in the middle part of the country. Nothing compared to what we saw a year ago going through the dryers, but we are starting to see maybe some signs of some relief. Ted Jacoby III: Proteins is the other market that seems to be shooting for the moon, up there with Artemis II. Are those protein prices gonna stay there or are they gonna come down? Josh White: Pointed question. Not for the second quarter, it sure doesn’t feel like they’re coming down. Every spot load that I see offered trades almost in the air. There still seems to be really good demand despite higher prices. And also despite a lot of customers asking about substitution. The answer to that question is maybe different for the next quarter than it might be for the next year. We’ll have to see. But as it stands right now as it relates to whey proteins, no slowdown in demand. Price strength remains, loads are very expensive. Conversations are less about the willingness to buy product than they are about the credit worthiness to sell that product to the clients because of just how expensive a load of WPC 80 or WPI cost today. We’re also starting to see some momentum in the MPC markets. Shouldn’t be a surprise. MPC 85 prices have been increasing. We’re starting to see customers that have the flexibility to do some substitution between WPCs and MPCs, considering it. More conversations about alternatives within the dairy complex like caseins and caseinate. But then, I have to imagine there’s also conversations happening about substitution outside of the dairy complex for plant proteins and alternative proteins. It’s a challenging market. Certainly a good sign that the consumer, particularly in the U.S. is paying a lot of attention not to just wanting more protein in their diet, but also the quality of the protein that they’re consuming. And it’ll be really interesting over the next year to see that tug of war: the valorization of high-quality, highly digestible dairy proteins, versus cheaper proteins going into certain applications and how the consumer responds to those economies. Ted Jacoby III: What’s the one product in the dairy complex right now that you’re really worried about? Because right now we just went through all the major commodities and there seems to be at least stability in the short term. Which one do you think breaks first in terms of price? What market should we be paying attention to if this dairy complex is gonna start to weaken on us? Jacob Menge: I’m paying most attention to butter right now, because I think the butter price has made these kind of violent moves. Not nonfat, violent, but more like consistently trending lower all last year. And then it’s made a pretty good recovery with that new crop, old crop switch. And then it’s trended lower from there. I think that’s important because that’s gonna have a big impact on that Class III, Class IV spread. And I think that Class III, Class IV spread is gonna ultimately drive some decisions at the fluid level, which is gonna have knock on effects for export markets, not just for butter, right? This is for all of these products. Because of that butter price , I think the math can be swayed one way or the other depending on where that goes. We have these kind of baked in assumptions on, okay, nonfat’s probably not staying at $2 through 2026, okay. We have some baked in assumptions on cheese. I think that means that decision maker is butter. And would anybody be shocked if it went up 50¢? Probably not. Would anybody be shocked if it went down another 10¢ or so? Probably not. I think you certainly would have debates around this, but that changes that Class III, Class IV spread enough that I think that has a lot of knock on effects. Ted Jacoby III: That makes a lot of sense. Josh, what about you? Which market are you paying attention to the most? Josh White: I would just say just the market. I think nonfat’s the obvious answer to that, but our entire dairy markets have been really changed this year by this protein movement. And what I can’t get my head around is the GLP-1 and cheaper GLP-1 catalyst. At what moment does a hundred dollars to fill a gas tank on a sedan start to change what people are willing to spend? That’s the one that I can’t really get my head around because it would be very easy to say, “Look out: these high protein products are here to stay.” The science backs it; people are eating less calories, but better calories. And that absolutely works for dairy proteins. But then on the other side, when you’re forced to make a decision about how you spend your money are you gonna get to a point where it’s choosing whether or not to fill your gas tank or whether or not to buy the powdered isolate. I wonder if we find that threshold at some moment this year. Ted Jacoby III: Yeah, I think that’s a great answer. Which market do you think is affecting the dairy markets the most right now? It’s the gas market. I think that’s fair. Joe, how about you? Joe Maixner: I’m clearly watching butter for obvious reasons. But I echo what Josh is saying. It’s really watching the energy markets because it’s going to affect literally everything over the course of this year. Jake brought up a great point about the Class III, Class IV spread, though. With the strength in nonfat, I hadn’t given a whole lot of thought process to butter’s impact in Class IV because you’re seeing Class IV through the rest of the year and into 27 at a minimum in the mid eighteens level which is a dollar premium to Class III, even with an inverted nonfat market. That’s definitely one to keep an eye on as well. But again, as a whole, just energy, energy’s going to affect everything all the way down to the consumer level. Ted Jacoby III: Yeah, I guess I agree. Gus, what are your thoughts on this market? Gus Jacoby: It’s hard not to talk about energy right now. That’s pretty obvious. Certainly when you’re hauling milk it has a big impact. Those fuel surcharges, hiking up to the degree that they have has made hauling milk quite a bit more expensive, considering the amount of water that’s being hauled and how much more expensive it is.  That is something we can’t control. None of these markets are anything we can control. But when it comes to the dairy markets, I think the skim solids is something that has been very interesting to me. Gus Jacoby: How tight that market gets, the limitation that cheese has in getting fortification solids, are we gonna start turning to powder to fortify, and can cheese plants afford it with the Class III, Class IV spread as we shift, obviously with this protein demand continuing to increase and all the other areas that skin solids are required. I think it’s going to have a ripple effect on our industry that’s gonna take a while for us to get used to as skim continues to, find more and more demand. So, for me, it’s an interesting marketplace and I’ve been paying a lot of attention to that lately. Ted Jacoby III: Sounds good. Awesome. Thanks guys very much. I thought that was a nice summary of what’s going on in our markets right now. We’ll see how the next few months play out. Appreciate the time. Thanks for joining us today, and everybody stay safe out there.

A Logistics Expert on the Iran Conflict and Dairy Trade

Weeks into the Iran conflict, the disruption to dairy logistics is becoming more visible. Shipping dairy to the Middle East used to take 30 to 40 days. Now it can take 60 to 75. And the longer this conflict lasts, the more pressure it puts on the dairy trade. In this episode of The Milk Check, host Ted Jacoby III talks with our logistics expert, Tyler Jokerst [https://www.linkedin.com/in/tylerjokerst/], Director of Trade Operations, about what all this means for dairy producers, traders and exporters. In this episode, we cover: * Why Persian Gulf access remains severely limited, and how exporters are responding * How normal 30- to 40-day transit times can stretch to 60 to 75 days * Why alternate routes are creating new choke points * How higher oil prices are raising shipping and trucking costs * Why fertilizer, feed costs and food inflation are becoming part of the conversation * How delayed demand, product displacement and global economic stress could bring more dairy market volatility Listen to The Milk Check episode 096: A Logistics Expert on the Iran Conflict and Dairy Trade. GOT QUESTIONS? We’d love to hear them. Submit below, and we might answer it on the show. Ask The Milk Check [https://www.jacoby.com/wp-content/uploads/2026/04/The-milk-check-096.png] Ted Jacoby III: Coming up on The Milk Check. Tyler Jokerst: As this thing progresses, it could prolong it. Ted Jacoby III: 30 to 40 days of shipping from the East Coast to the Middle East is now 60 to 75. Welcome to The Milk Check from T.C. Jacoby and Company, your complete guide to dairy markets, from the milking parlor to the supermarket shelf. I’m Ted Jacoby. Let’s dive in. Ted Jacoby III: Today, we have a special guest, Tyler Jokerst, our Director of Trade Operations, and we’re asking Tyler to join us ’cause we thought it would be a pretty timely topic to discuss logistics, both international and domestic. With everything going on in the Middle East, how is that affecting logistics, in terms of global trade for dairy, especially important for U.S. dairy, considering the fact that we’re exporting over 20% of our milk production these days? But it’s also affecting us domestically. Gas prices are probably up over 30% at this point, which is going to affect costs when we’re getting all the dairy products we make to consumers here at home. So, Tyler, welcome and thanks for joining us. Tyler Jokerst: Thanks for having me, Ted. Ted Jacoby III: Tyler, what is going on in the Middle East? How is it affecting logistics? Are we going to be able to get container ships into the Persian Gulf anytime soon? And if not, what are we doing in response to that? Tyler Jokerst: I think the easy answer is: we don’t know, other than there is a war over there. That’s the biggest thing right now causing the impact, and the huge leverage point Iran has is the Strait of Hormuz. For that strait, there’s a lot of product that goes in and out of there. Primarily oil, but, yeah, a big part of that is containerized shipments, as well. As we all know, the Middle East is a big purchaser of dairy products as well, right now. And we’re seeing a lot of disruption there as far as what we can get in or out of there. It’s almost come to a virtual stop. Ted Jacoby III: So, they can’t get into the Persian Gulf. Are there other options? Tyler Jokerst: Tomorrow, there might not be. That’s the situation we’re in right now. Every day is a day-to-day situation. The current workarounds are what the steamship lines are calling landbridges. So, essentially, you’re porting into ports on the other side of Saudi Arabia, where you’re not going into the Persian Gulf, and they’re either working on truck or train routes. It can get across, over to Riyadh or Dammam. Ted Jacoby III: So, Dammam is the main container port for Saudi Arabia and the Persian Gulf. What’s the port in the Red Sea that we’re using now instead? Tyler Jokerst: King Abdullah is one of ’em. If you go further north, where you’re getting into Jordan, you have Jeddah as well. So, there are a couple of different options there. I think the biggest issue that poses is you’re putting a lot of stress on infrastructure that maybe wasn’t built to handle that much volume coming through. This is another ripple effect we’re keeping an eye on, and we’re staying close with our freight forwarders and our steamship lines to see if we’re gonna have any ripple effects as far as boats that are anchoring offshore and waiting to get checked. If you were to look at it right now, you’re looking at a miniature effect of what COVID was like in LA back in 2020, when you had numerous boats anchoring offshore, waiting to get offloaded, because you’re at a choke point, trying to put all that supply into one port. So, it’s unfolding as we go through this day by day. Ted Jacoby III: So, I take it, there’s a traffic jam going into Jeddah and King Abdullah at [00:03:00] the moment? Tyler Jokerst: Just a little bit. Ted Jacoby III: What delays are we experiencing? Tyler Jokerst: If you were to look at the product on the water, we are currently looking at maybe 15 to 20 days in our current state. As this thing progresses, it’s gonna be up to the providers, the steamship lines and the freight forwarders and how they work with us to be able to dictate what new routes they need to take or what alternatives they need to make, as far as getting this product to those consumers. So, it could prolong it to where it’s a constant 20-day longer shipping period than what we’re used to seeing in those areas, which is typically anywhere from 30 to 40 days. Ted Jacoby III: 30 to 40 days of shipping from the East Coast to the Middle East is now 60 to 75. Tyler Jokerst: Yep. Absolutely. You’re right on that one. Ted Jacoby III: Are we still loading containers of cheese and powder and butter and other things and putting ’em on boats and sending ’em to the Middle East? Tyler Jokerst: Yeah. We are. One of the key things that we’re having to keep an eye on is per steamship line. So, if you’re working with freight forwarders, they work with numerous different steamship lines, and every steamship line handles it differently. And the main part of why they’re handling it differently is all related to the geopolitics. Some of the steamship lines are owned by Mediterranean companies, maybe in Italy. There are other steamship lines owned by companies in Israel. They’re probably not getting through the Strait. And then you have the Chinese and Korean-owned steamship lines that tend to have a little more leeway because they might be a little more neutral with Iran, where they might be allowed to pass.  It’s different with every carrier. So, whenever we look at this, and we assess the notes that we have to have with our freight forwarders, we have: who’s the service provider that we think we should be using, because that’s the one that tends to have the golden ticket in. Tyler Jokerst: And that’s where we have to balance out cost and service. They might have the golden ticket that can get them into the port. That’s gonna come at a price. They know the demand’s higher because, from a geopolitical standpoint, they can get in and they can get the job done where maybe the other providers can’t. You start peeling a lot more layers back than what you’ve historically had to, where you just look at a rate in a transit and say, “Okay, this works. We’ll communicate according to our customer and meet their demands.” Now, you’re dealing with a war. It’s unpredictable for those involved directly and indirectly, including us. And that’s where we have to weigh out additional options that are being thrown at us on a daily basis. That target is moving. We’ll come in tomorrow, and we’ll probably have a different set of rules that we need to follow for that day. Ted Jacoby III: But you bring up a good point. I never thought of it that way before. It’s like you can’t take Delta Air Lines into the Middle East because it’s American-owned, but you could probably take Emirates. Most big steamships are actually not owned by the U.S., and those steamship lines that have good relationships over there actually can still get product in. Tyler Jokerst:  I don’t think you get any airplanes into the Middle East right now, but yeah, from a steamship line standpoint, you can. Whenever I say they can pass through Hormuz, you went from several hundred ships going through the Strait of Hormuz in a day to now, single digits. So, that’s a loose thing where it’s allowed, but less risk of impact or targeting from an economic standpoint, whenever you’re going on [00:06:00] one ship versus the other, that’s the biggest thing to consider. Ted Jacoby III: How much have shipping costs increased? What was the going rate for a container into the Middle East from the East Coast, and what is it now? Tyler Jokerst: If you’re looking at door-to-door, or door-to- port, we were hovering around $ 8,000, all in, and now it’s looking more around $10,000, all in. Ted Jacoby III: Maybe 20%, 30% increase in shipping costs. But that’s not double or triple. Tyler Jokerst: Not yet. It could be by next week, though. Ted Jacoby III: Got it. Tyler Jokerst: Yep. Mike Brown: Tyler, when you have a select group of shipping companies you can work with, and you look at the 20%, 30%, that surprised me, it’s not higher. Do we see people deciding we’re just gonna lay low and not try to ship to that market for a while until we see things more stable because of the risk? Tyler Jokerst: I won’t name specific providers, but we do have some providers where when this thing started to kick off, they were already putting some plans together, and then by the following week, they decided that any of their refrigerated equipment they didn’t want going on that landbridge option that we were talking about earlier. So, you are seeing that as well, where they’re purely looking at it from an insurance standpoint. Insurance costs are going up a thousand x and saying, “Okay, the risk isn’t worth the reward right now,” because of how much insurance costs to go in there—Wartime, surcharges, things like that. And they’re completely staying out of the situation altogether and just rerouting their equipment. The bigger effect is that as this goes on, and there’s no improvement to the current situation, it will ripple into the rest of the markets, and you will start to see delays at other ports that maybe service these ports, as far as these types of trade lanes. And you’ll start to see some disruptions in the supply chain because people have to do something with that product that maybe they already sold. Reselling it might not be an option because the way the markets are right now, the pricing might not allow for that to happen, especially with dairy. If you’re getting a premium for exporting it versus selling it domestically, you’re gonna sit on it and wait this thing out. So, now you start to have backups in your supply chains at the origin ports, maybe the domestic warehousing, or even, in some cases, the manufacturing sites. So, there are a lot of effects that come from that. Ted Jacoby III: Tyler, I know that Europe has traditionally sold a lot more dairy into the Middle East than the U.S., even though the U.S. does do a decent amount of business there. They’re having the same problem we are in terms of getting to these ports, but are they capable of shipping product over the land? Let’s say across Istanbul, through Turkey and get there that way? Or are there too many issues with that approach? You’re going through Jordan, you’re going through Syria, you’re going through the Kurds. Territory. Tyler Jokerst: Israel’s dropping bombs north of the country as well. You’re not just looking at us dropping bombs in Iran and then Iran, throwing missiles across the water. You got Israel trying to take on a two-front war as well. I couldn’t see how a land option would be feasible. Ted Jacoby III: Yeah, I would have to agree with that. So, we know what’s going on in the Middle East. We know that it’s harder to get the product there right now. How’s it affecting us back home? Where are we seeing the effects [00:09:00] in logistics back home? Tyler Jokerst: Gas prices all day. I think barrels are currently sitting at around $95 a barrel. We’ve seen truck prices rise anywhere from 10 to 20%. It is a prolonged tightness in capacity, as well, but fuel has been a big factor as far as our domestic truckload goes, and the rates that we’re used to paying at this time of year. Ted Jacoby III: Outside of just increased cost because of increased diesel prices, are we seeing any other effects? What about the domestic ports? Are we seeing any backup at the domestic ports? Or are our ports still functioning normally, and it’s really only a fuel surcharge problem? Tyler Jokerst: Yeah. Our ports are operating functionally, as it stands. Those ripple effects will eventually hit us. They haven’t yet, but the longer this thing goes on, the more exposure that leaves to ports that are further away from the epicenter. Joe Maixner: Keep in mind, a lot of the stuff that is still shipping over into the Middle East is contracts that were put on the books before any of this started. We haven’t seen much interest on anything since the beginning of March going into that region, for obvious reasons. Ted Jacoby III: So, we’re not seeing any new contracts, but we’re still having conversations with our customers about how to fulfill the contracts that were on the books that were expected to ship at this time before the conflict started. Joe Maixner: Yeah. I think there’s going to be some pent-up demand the longer that this goes on. It’s gonna cause a pop in markets when this finally gets resolved because everybody’s gonna see that demand come back. Especially given the fact that the longer this goes on, the more potential for our markets to weaken because we’re not getting additional sales on the books and product out. So we could see a quick pop when things really do open back up. I do think it would take a while for that stuff to even roll through the system because there’s gonna be a backlog in ports and products still needing to ship anyway. So, expect more volatility. Tyler Jokerst: We’re currently going through an annual slowdown, too, in the Middle East. I think it’s Eid al-Fitr that’s going on right now during Ramadan. So, a lot of the buildup in exports is prior to that, with them trying to get all the product over there.  Just looking at last year, before we had any major geopolitical events happening, aside from tariffs, we would typically see a slowdown this time of year going into that region.  That’s a good point. Diego, what are your thoughts? Diego Carvallo: I know that energy is hugely affected by the Hormuz channel being blocked. But is food impacted as much as energy? I think the answer is no. I think most of the destinations where we take our dairy products are both from the U.S. and from Europe. At least access has not been blocked as bad as it has happened for exports of energy. So I’m just wondering if that impact on dairy is mainly caused by energy or just because it’s impacting fundamentals for our products. Ted Jacoby III: I know that Dammam is the big port in the Gulf for container ships. It’s a big oil port too, but there’s a separate container port, and then Bahrain and Qatar and even Dubai have their own ports. But then, Saudi [00:12:00] Arabia in particular has Jeddah and King Abdullah. And so, those two ports have taken over in the meantime. Tyler’s comment about Ramadan being in the rearview mirror is appropriate. This is the slowdown time with demand. And so we probably aren’t feeling the effect as much. I also think, from an energy perspective, the closing of the Strait of Hormuz is affecting other countries, like China, a lot more than it’s affecting the U.S. because we have, over the last 20 years, grown more energy independent because of the shale and fracking we’ve been doing domestically. And I think that has helped quite a bit. Joe Maixner: Oceania is at a severe disadvantage with this right now, too. I was looking at their energy prices and their diesel costs in Australia, for example. It’s the equivalent of $8.20 a gallon in U.S. terms. They’re really feeling the pinch, and I believe that New Zealand’s in the same boat, and that’s going to affect their shipping rates. Ted Jacoby III: All these huge container ships, what is their fuel? Diesel? Tyler Jokerst: Yeah. Ted Jacoby III: So, it’s just like trucks. They just buy a lot of diesel. So, if they’re dropping off in Australia, they’ve gotta fill up in Australia, where that oil costs a lot more than it does in other places. Mike Brown: I think this is all walking around the macro effects, and I think we need to talk about that. Let’s talk about the cost of producing food with what we’re doing to the urea, the nitrogen fertilizer markets, with the cutoff of moving product through the strait. Yes, a lot of it’s already bought; it isn’t all already bought. Between that and what we’re seeing with tariffs in Canada and their struggles with potash, we’re raising the cost of growing food because cows eat food just like we eat food. So, there are costs there that I think we have to think about. The other thing is these, particularly the Asian or even European, but Asia, ’cause that’s our export opportunities, those economies are so dependent on oil coming through the strait. And as those economies slow down, they tend to be much more price-sensitive about products than we are because they don’t have the incomes we have. Is that gonna slow down? Is that gonna cause a longer-term impact? If we see the world economy basically slow down, what will that do to dairy demand? Dairy is essential, but it is something cost-wise that they may be looking for other alternatives, particularly on the fat side. We can’t ignore that possibility. Right now, it looks good. Look at the butter market, today it recovered a little bit again. Prices, right now, for farmers are good. They can make money in current markets. But how much global slowdown will we see from this, and how will that affect demand for our U.S. dairy products, is still a concern of mine. Ted Jacoby III: We’re sitting here at the tail end of March. If this thing doesn’t show real signs of starting to wrap up in the next few weeks, I think there’s gonna be a tone shift in the general macroeconomic markets. There’s been a lot of talk: how is the U.S., and how is Trump gonna extract ourselves from this conflict? And we’re getting to that point where the length of time is becoming a very real issue. We haven’t quite got there, I don’t think. But I think we’re getting close. Mike Brown: Those of us who lived through stagflation in the late seventies, [00:15:00] it’s feeling a little bit too much like that right now. Ted Jacoby III: I would agree. In the seventies, gas prices caused it. Mike Brown: Oh, absolutely. And it was the conflict with Iran that caused some of that, too. Ted Jacoby III: Yeah. I think that the economy had already been set up for stagflation for other reasons, government debt being the big one, but you add this to it, yeah, you’re right. That’s very problematic in terms of getting the economy to function smoothly. Mike Brown: Government debt isn’t exactly our strong point right now. Ted Jacoby III: The only saving grace is that everybody has the same problem. You look at any developed country, and they’ve all got the same problem we do when it comes to government debt. Mike Brown: Yeah, they do. And if you’re looking at our export opportunities, that isn’t necessarily a good thing. There’s a lot to be nervous about right now. Tyler Jokerst: If you tie it back to dairy exports, the Middle East accounts for like 20% of all dairy exports in the world. They consume a lot of cheese. That seems to be a growing sector for ’em as well. For us, that hurts the bottom line. So it seems to be one of the biggest issues for us as a handler of dairy products. Mike Brown: One of the conversations at U.S. Dairy Export Council meetings this week was displacement. If the product can’t get there, who’s gonna buy it? That’s more competition for us because that’s the close-by market for Europe. They love it. It’s close, it’s efficient, but if they can’t get the product there, we’re gonna compete with them somewhere else. Ted Jacoby III: When it comes to cheese and butter, Mike, you’re spot on. We’re getting lucky on the non-fat side because Iran was a skim milk powder exporter. And that’s off the market, too. Mike Brown: If you look at prices powder’s not having a problem with finding demand. Ted Jacoby III: They aren’t. Mike Brown: A lot in supply. Ted Jacoby III: [Laughter] Tyler Jokerst: Alright. Tristan Suellentrop: We’ve all dealt with shipment delays before, but what’s the most absurd reason you’ve ever seen or heard of one being held up for? Tyler Jokerst: Oh, shipment delays. Yeah, the worst one I had wasn’t at Jacoby; we seemed to have it dialed in here. The worst one was from my previous employer. We hit a trans shipment point. Transshipment points are where you’ll have the steamship lines connect with another boat, and they’ll offload some of their containers to the other boat and continue. And it was something like a 40-day delay of just getting it from one boat to another that severely hurt us. This is one that we’ve had. During 2020, there were plenty of ’em. You looked at the ports of LA and Long Beach, and it could be 30-40 days. And these boats were just anchored off the shore and waiting to get offloaded. But because of all the causes and effects that we had with COVID, you ran into a lot of delays from that. That was a regular occurrence back in 2020 and 2021. Ted Jacoby III: Tyler, thanks for joining us. Really appreciate it. Great discussion. So thankful that you’re helping us navigate all this stuff in these very interesting times.  Thanks, everybody, for joining us today.