Talking dairy supply with the fluid milk team

The Milk Check

On this remarkably bullish episode of The Milk Check, the Teds bring in T.C. Jacoby & Co’s fluid milk team to talk about the market from their perspective. Gus Jacoby, president of fluid dairy ingredients and dairy support, leads the discussion with help from milk marketing manager Greg Scheer and fluid sales manager Jared Miklasz. Discussion lingered on tightness in the market, which points to a Q4 where we are short on milk domestically and internationally. Ted Jr. suggests the market is underestimating its own upside potential after being spoiled by long milk for about ten years. Gus agrees, and T3 teases the topic of discussion for the podcast's 50th episode. T3: Welcome to the Milk Check podcast. Today, we have our fluid group joining us. While my dad and I like to get on this podcast and just debate back and forth what we think markets are doing, picking out certain issues, it's Gus and Jared and Greg and Anna, who really are in the trenches, working with the dairy farmers in the different processors on the fluid side that we work with. And we thought it would be a great idea to have them lead the discussion today. And so I'd like to welcome Greg Scheer, who leads our Milk team, Jared Miklasz, who leads our Cream and UF Milk team, and my brother, Gus, who runs our fluid group. And really just give us their analysis of what they're seeing in the market today. With that Gus, I'll just turn it over to you. Gus: All right. Well, thank you, Teddy. We have a very interesting marketplace at this moment in time. A number of months now we've seen contraction, but with respect to milk production. But we've also seen some other areas, some manufactured liquids that have been pretty dynamic. And I guess, adverse for some of those folks who are looking for solids in one way, shape or form. And then we have that dynamic of Class IV and Class III, where Class IV is hovering above Class III which presents some challenges as well as opportunities for folks within our industry. But just to start with, I think what we want to mention is that at this moment in time, we've all seen the most recent milk production report showing that April was down a percentage point in milk production. We had a year ago, nine and a half million cows in the US dairy herd. And now we have 100,000 less cows in the US dairy herd. So that puts things in perspective for what we're dealing with and what we're looking at as we get out of this spring flush so to speak and into the second half of the year when folks, I think are a little bit more concerned about finding the solids they need to fill orders. To begin with, I think the Eastern half of the country is tight milk. And in addition to tight milk, we also have a major cheese plant that has come online in Michigan that has soaked up a bunch of butter fat, and that presents a prospect for cream supplies as well. And then you have the freight impact of traveling product throughout our country, whether it be farm milk and the impact on the producer there, whether it be manufactured liquids and the impact on folks trying to get solids from one part of the world to the other. I think there's a lot of good information we can get from our leadership team here. And I think the best place to start is with Greg in milk, and then we'll move into some other areas. Greg. Greg Scheer: Thanks, Gus. Yeah. And like you said, milk production down 1%. If you would've told us that milk prices would be where they're at today and we'd have declining milk, you'd say you're crazy. But you have the high cost of feed, the high cost of inputs, limited heifer supply, all those factors. And in some regions, a quota system that has really limited our milk production. Most years, we would see a long market. When we're getting into May and Memorial weekend, right around the corner into June, it's less long than we normally see at this time. You just have tightening milk market where milk is not ...