Session VIII: Ingredients Outlook Dairy€¦ · To utilize our team’s dairy industry experience to deliver unparalleled global market intelligence, opinion, strategy and execution

EXECUTION | MARKET INTELLIGENCE | ADVISORY | INSURANCE

Empowering You to Thrive in Dairy

Session VIII: Ingredients OutlookDairy

Lucas FuessDirector, Dairy Market Intelligence

HighGround DairyChicago, IL


Market Intelligence

Futures & Options

Execution

Advisory Programs

Insurance Services

About HighGround Dairy

Mission StatementTo utilize our team’s dairy industry experience to deliver unparalleled global market intelligence, opinion, strategy

and execution in a relentless pursuit of customer success.

Our ValuesIntegrity: we shoot it straight and do what we say

Relationships: we have never traded our own

personal funds in the dairy markets, keeping 100% of our

focus on customer goals & objectives

Confidentiality: we never share customer information

with anyone

Entrepreneurship: we succeed through quickness,

creativity and adaptability

Passion: we are driven to be the best in our industry

Respect: we foster an environment that appreciates one

another’s beliefs and contributions


Fuess Acres (Home!)• 200 milking cow dairy in Upstate New York• Average herd size for the area• Dairymaster Parlor

Education• Cornell University Dairy Science• Purdue University Agriculture Economics• Indiana University MBA

Glanbia Nutritionals (USA) (2011 - 2018)• Dairy Economist on Glanbia’s US Cheese business• Domestic US strategy and market analysis

HighGround Dairy (2018 - present)• Manage market analysis, content, price forecasting• Build European and global business

A Lifetime in Dairy!


760

800

840

880

920

960

Jan

Feb

Mar

Ap

r

May Jun

Jul

Au

g

Sep

Oct

No

v

Dec

Mill

ion

Po

un

ds

*30-Day Corrected Values* Source: USDA

Pennsylvania Milk Production

2017 2018 2019 2020

Production Growth Muted in 2019 at +0.4%

16,500

17,000

17,500

18,000

18,500

19,000

Jan

Feb

Mar

Ap

r

May Jun

Jul

Au

g

Sep

Oct

No

v

Dec

Mill

ion

Po

un

ds

*30-day Corrected Values* Source: USDA

US Milk Production

2017 2018 2019 2020

2,400

2,440

2,480

2,520

2,560

2,600

Jan

Feb

Mar

Ap

r

May Jun

Jul

Au

g

Sep

Oct

No

v

Dec

Mill

ion

Po

un

ds


Wisconsin Milk Production

2017 2018 2019 2020

700

800

900

1,000

1,100

1,200

1,300

Jan

Feb

Mar

Ap

r

May Jun

Jul

Au

g

Sep

Oct

No

v

Dec

Mill

ion

Po

un

ds


Texas Milk Production

2017 2018 2019 2020


Production Growth Muted in 2019 at +0.4%

-200

-100

N/C

+100

+200

+300

+400

+500

+600

Feb

Ap

r

Jun

Au

g

Oct

Dec

Feb

Ap

r

Jun

Au

g

Oct

Dec

Feb

Ap

r

Jun

Au

g

Oct

Dec

Feb

Ap

r

Jun

Au

g

Oct

Dec

Feb

Ap

r

Jun

Au

g

Oct

Dec

2015 2016 2017 2018 2019 2020

Mill

ion

Po

un

ds

Source: USDA

US Year-Over-Year Milk Production


Lower Cow Number Drove Production Stagnation, But…

9,240

9,280

9,320

9,360

9,400

9,440

9,480

Jan

Feb

Mar

Ap

r

May Jun

Jul

Au

g

Sep

Oct

No

v

Dec

1,0

00

hea

d

Source: USDA

US Milk Cows

2017 2018 2019 2020


Cow Numbers Are Recovering Quickly

8,700

8,750

8,800

8,850

8,900

Jan

Feb

Mar

Apr

May Jun

Jul

Aug Se

p

Oct

Nov

Dec

1,00

0 h

ead

Source: USDA

24 State Milk Cows2018 2019 2020


HighGround Estimates 1.5% Production Growth in 2020

16,500

17,000

17,500

18,000

18,500

19,000

Jan

Feb

Mar

Ap

r

May Jun

Jul

Au

g

Sep

Oct

No

v

Dec

Mill

ion

Po

un

ds

*30-day Corrected Values* Source: USDA

US Milk Production

2016 2017 2018 2019 2019 (f) 2020 (f)


-1,000

-800

-600

-400

-200

0

200

400

600

800

1,000

1,200

No

v-15

Jan-

16

Mar

-16

May

-16

Jul-1

6

Sep

-16

No

v-16

Jan-

17

Mar

-17

May

-17

Jul-1

7

Sep-

17

No

v-17

Jan-

18

Mar

-18

May

-18

Jul-1

8

Sep-

18

No

v-18

Jan-

19

Mar

-19

May

-19

Jul-1

9

Sep

-19

No

v-19

Tho

usa

nd

MT

Global Milk Production GrowthTop 5 Export Regions vs. prior year

US EU NZ AU AR Top 5

Global Milk Production Up Just 0.1% in 2019


(*) denotes a country that is a summarization of its component countries.

China Continues To Represent Sharpest US Export Decline


Nonfat Dry Milk Output Up In Back Half of 2019

140,000

160,000

180,000

200,000

220,000

240,000

Jan

Feb

Mar

Ap

r

May Jun

Jul

Au

g

Sep

Oct

No

v

Dec

NDM/SMP Combined Production2016 2017 2018 2019

*quoted in thousands of pounds


Stocks Still Lower Versus Prior Year, But Climbing

150,000

200,000

250,000

300,000

350,000

Jan

Feb

Mar

Ap

r

May Jun

Jul

Au

g

Sep

Oct

No

v

Dec

NDM Stocks

2016 2017 2018 2019



Export Growth Strong But 2020 Outlook Mixed

70

90

110

130

150

170

190

Jan

Feb

Mar

Ap

r

May Jun

Jul

Au

g

Sep

Oct

No

v

Dec

Mill

ion

Po

un

ds

*adj. to 30-day months

NDM/SMP Exports2016 2017 2018 2019


Q4 Whey Output Higher After Lower First Half

60,000

70,000

80,000

90,000

100,000

Jan

Feb

Mar

Ap

r

May Jun

Jul

Au

g

Sep

Oct

No

v

Dec

Dry Whey (Human) Production2016 2017 2018 2019



Q4 Dry Whey Stocks Exceed Prior Year

40,000

55,000

70,000

85,000

100,000

115,000

Jan

Feb

Mar

Ap

r

May Jun

Jul

Au

g

Sep

Oct

No

v

Dec

Dry Whey (Human) Stocks2016 2017 2018 2019



ASF Decimates Dry Whey Exports

20

25

30

35

40

45

50

Jan

Feb

Mar

Ap

r

May Jun

Jul

Au

g

Sep

Oct

No

v

Dec

Mill

ion

Po

un

ds


Dry Whey Exports2016 2017 2018 2019


HighGround Suspects Data Error in November Milk Sales

3,400

3,600

3,800

4,000

4,200

4,400

4,600

Jan

Feb

Mar

Ap

r

May Jun

Jul

Au

g

Sep

Oct

No

v

Dec

Mill

ion

Po

un

ds


Estimated Total US Fluid Milk Sales

2014 2015 2016 2017 2018 2019

Source: USDA


New Zealand Drought Would Be Bullish in Any Other Year


But Coronavirus Concerns Have Pushed Prices Lower


Coronavirus Fears Offset Drought Risks

Feb 2020 NZX WMP Futures Chart Feb 2020 NZX SMP Futures Chart


Coronavirus Fears Offset Drought Risks

Daily Chart: March 2020 Nonfat Dry Milk


Lower Global Stocks Still Lean Bullish for SMP

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$5,000

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000Ju

l-1

0

Sep

-10

No

v-1

0

Jan

-11

Ma

r-11

Ma

y-1

1

Jul-

11

Sep

-11

No

v-1

1

Jan

-12

Ma

r-12

Ma

y-1

2

Jul-

12

Sep

-12

No

v-1

2

Jan

-13

Ma

r-13

Ma

y-1

3

Jul-

13

Sep

-13

No

v-1

3

Jan

-14

Ma

r-14

Ma

y-1

4

Jul-

14

Sep

-14

No

v-1

4

Jan

-15

Ma

r-15

Ma

y-1

5

Jul-

15

Sep

-15

No

v-1

5

Jan

-16

Ma

r-16

Ma

y-1

6

Jul-

16

Sep

-16

No

v-1

6

Jan

-17

Ma

r-17

Ma

y-1

7

Jul-

17

Sep

-17

No

v-1

7

Jan

-18

Ma

r-18

Ma

y-1

8

Jul-

18

Sep

-18

No

v-1

8

Jan

-19

Ma

r-19

Ma

y-1

9

Jul-

19

Sep

-19

No

v-1

9

US$

per

Met

ric

Ton

Met

ric

Ton

s

NFDM/SMP Northern Hemisphere InventoriesUS, Canada, EU Public & Private Stock

Data from Canada absent from Aug '15-Jan '17

EU Private Stock Canada US EU Public IV CME Nonfat Dry Milk Value EEX SMP Average


International Price Comparisons

$2,976

$3,226

$3,476

$3,726

$3,976

$4,226

$4,476

$4,726

$1.35

$1.45

$1.55

$1.65

$1.75

$1.85

$1.95

$2.05

$2.15

Au

g-1

7

No

v-1

7

Feb

-18

Ma

y-1

8

Au

g-1

8

No

v-1

8

Feb

-19

Ma

y-1

9

Au

g-1

9

No

v-1

9

Feb

-20

USD

pe

r M

T

US

D p

er

po

un

d

International Cheese Prices

CME Monthly Block USDA Oceania Mid

GDT C2 German Edam



$3,300

$4,300

$5,300

$6,300

$7,300

$8,300

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

Au

g-1

7

No

v-1

7

Feb

-18

Ma

y-1

8

Au

g-1

8

No

v-1

8

Feb

-19

Ma

y-1

9

Au

g-1

9

No

v-1

9

Feb

-20

US

D p

er

MT

US

D p

er

po

un

d

International Butter Prices

CME Weekly Butter GDT C2 Unsalted Dutch Weekly



$1,433

$1,613

$1,793

$1,973

$2,153

$2,333

$2,513

$2,693

$2,873

$3,053

$0.65

$0.75

$0.85

$0.95

$1.05

$1.15

$1.25

$1.35

Au

g-1

7

No

v-1

7

Fe

b-1

8

Ma

y-1

8

Au

g-1

8

No

v-1

8

Fe

b-1

9

Ma

y-1

9

Au

g-1

9

No

v-1

9

Fe

b-2

0

USD

pe

r M

T

USD

pe

r p

ou

nd

International SMP/NFDM Prices

NFDM NDPSR Dutch Weekly GDT NZ C2 SMP



2,535

2,700

2,865

3,030

3,195

3,360

3,525

3,690

3,855

4,020

$1.15

$1.25

$1.35

$1.45

$1.55

$1.65

$1.75

$1.85

Au

g-1

7

No

v-1

7

Feb

-18

Ma

y-1

8

Au

g-1

8

No

v-1

8

Feb

-19

Ma

y-1

9

Au

g-1

9

No

v-1

9

Feb

-20

USD

pe

r M

T

US

D p

er

po

un

d

International WMP Prices

USDA WMP GDT NZ C2 WMP Dutch Weekly


NFDM Bearish Near Term; HighGround Leans Bullish in H2, But…

Month

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

Sep-12

Oct-12

Nov-12

Dec-12

Jan-13

Feb-13

Mar-13

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Ann Avg

2015 1.0202$ 1.0308$ 1.0217$ 0.9684$ 0.9464$ 0.9283$ 0.8366$ 0.7443$ 0.8007$ 0.8951$ 0.8372$ 0.7893$ 0.9016$

2016 0.7776$ 0.7689$ 0.7522$ 0.7307$ 0.7607$ 0.7888$ 0.8363$ 0.8588$ 0.8847$ 0.9222$ 0.9119$ 0.9579$ 0.8292$

2017 1.0229$ 0.9926$ 0.8493$ 0.8386$ 0.8704$ 0.9137$ 0.8991$ 0.8733$ 0.8499$ 0.8099$ 0.7553$ 0.7237$ 0.8666$

2018 0.6966$ 0.7084$ 0.6963$ 0.7134$ 0.7937$ 0.8150$ 0.7824$ 0.8111$ 0.8548$ 0.8739$ 0.8860$ 0.9020$ 0.7945$

H1 2018 Avg: 0.7372$ H2 2018 Avg: 0.8517$

2019 0.9513$ 0.9800$ 0.9589$ 0.9641$ 1.0149$ 1.0431$ 1.0393$ 1.0335$ 1.0519$ 1.0957$ 1.1540$ 1.2161$ 1.0419$

H1 2019 Avg: 0.9854$ H2 2019 Avg: 1.0984$

2020 1.2451$ 1.2395$ 1.1975$ 1.1826$ 1.2156$ 1.2445$ 1.2700$ 1.2828$ 1.3023$ 1.3088$ 1.3153$ 1.3219$ 1.2605$

H1 2020 Avg: 1.2208$ H2 2020 Avg: 1.3002$

2021 1.3091$ 1.3156$ 1.3222$ 1.3288$ 1.3355$ 1.3421$

H1 2021 Avg: 1.3256$ Forecasted

$0.60

$0.70

$0.80

$0.90

$1.00

$1.10

$1.20

$1.30

$1.40

$1.50

Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21

$ p

er

po

un

d

USDA-AMS Announced Nonfat Dry Milk Price Forecast(CME Futures)

Actual Forecast CME Futures 2-14-20


Slow, Steady Price Increase in Dry Whey

Month

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

Sep-12

Oct-12

Nov-12

Dec-12

Jan-13

Feb-13

Mar-13


2015 0.5875$ 0.5169$ 0.4824$ 0.4610$ 0.4450$ 0.4245$ 0.3937$ 0.3108$ 0.2442$ 0.2309$ 0.2341$ 0.2336$ 0.3804$

2016 0.2351$ 0.2469$ 0.2477$ 0.2466$ 0.2505$ 0.2601$ 0.2742$ 0.2846$ 0.3055$ 0.3303$ 0.3690$ 0.3994$ 0.2875$

2017 0.4421$ 0.4894$ 0.5239$ 0.5243$ 0.5094$ 0.4917$ 0.4514$ 0.4345$ 0.4167$ 0.3790$ 0.3587$ 0.3030$ 0.4437$

2018 0.2755$ 0.2525$ 0.2531$ 0.2592$ 0.2711$ 0.3086$ 0.3372$ 0.3681$ 0.4028$ 0.4470$ 0.4626$ 0.4685$ 0.3422$

H1 2018 Avg: 0.2700$ H2 2018 Avg: 0.4144$

2019 0.4805$ 0.4545$ 0.4127$ 0.3923$ 0.3784$ 0.3643$ 0.3631$ 0.3671$ 0.3698$ 0.3396$ 0.3071$ 0.3293$ 0.3799$

H1 2019 Avg: 0.4138$ H2 2019 Avg: 0.3460$

2020 0.3367$ 0.3628$ 0.3701$ 0.3719$ 0.3794$ 0.3870$ 0.3947$ 0.4026$ 0.4106$ 0.4168$ 0.4209$ 0.4293$ 0.3902$

H1 2020 Avg: 0.3680$ H2 2020 Avg: 0.4125$

2021 0.4304$ 0.4325$ 0.4347$ 0.4369$ 0.4391$ 0.4413$


$0.10

$0.20

$0.30

$0.40

$0.50

$0.60


$ p

er p

ou

nd

USDA-AMS Announced Dry Whey Price Forecast(CME Futures)

Actual Forecast CME Futures 2-14-20


WPC 34 Will Follow NFDM Higher

Month

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

Sep-12

Oct-12

Nov-12

Dec-12

Jan-13

Feb-13

Mar-13


2015 1.1727$ 1.0970$ 1.0031$ 0.9439$ 0.9088$ 0.8620$ 0.7863$ 0.6473$ 0.5610$ 0.5333$ 0.5311$ 0.5300$ 0.7980$

2016 0.5445$ 0.5750$ 0.5852$ 0.6076$ 0.6239$ 0.6616$ 0.6937$ 0.7151$ 0.7305$ 0.7706$ 0.7961$ 0.8608$ 0.6804$

2017 0.9318$ 0.9905$ 0.9681$ 0.9425$ 0.9138$ 0.9013$ 0.8919$ 0.8486$ 0.8231$ 0.8080$ 0.7768$ 0.7475$ 0.8787$

2018 0.7268$ 0.7211$ 0.6960$ 0.7027$ 0.7502$ 0.7949$ 0.8092$ 0.8144$ 0.8437$ 0.8658$ 0.8817$ 0.8851$ 0.7910$

H1 2018 Avg: 0.7320$ H2 2018 Avg: 0.8500$

2019 0.8929$ 0.8995$ 0.9025$ 0.9025$ 0.9074$ 0.9244$ 0.9297$ 0.9444$ 0.9465$ 0.9530$ 0.9597$ 0.9854$ 0.9290$

H1 2019 Avg: 0.9049$ H2 2019 Avg: 0.9531$

2020 1.0017$ 1.0178$ 1.0205$ 1.0305$ 1.0354$ 1.0404$ 1.0558$ 1.0611$ 1.0664$ 1.0717$ 1.0771$ 1.0825$ 1.0467$

H1 2020 Avg: 1.0244$ H2 2020 Avg: 1.0691$

2021 1.0879$ 1.0933$ 1.0988$ 1.1043$ 1.1098$ 1.1153$


$0.40

$0.50

$0.60

$0.70

$0.80

$0.90

$1.00

$1.10

$1.20


$ p

er

po

un

d

USDA Central & West Whey Protein Concentrate 34% Midpoint Price Forecast

Actual Forecast


Slight Growth In Lactose Expected

Month

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

Sep-12

Oct-12

Nov-12

Dec-12

Jan-13

Feb-13

Mar-13


2015 0.3210$ 0.2870$ 0.2472$ 0.2370$ 0.2353$ 0.2170$ 0.1995$ 0.1911$ 0.1893$ 0.1850$ 0.1850$ 0.1914$ 0.2238$

2016 0.2061$ 0.2166$ 0.2280$ 0.2408$ 0.2551$ 0.2616$ 0.2769$ 0.2948$ 0.3208$ 0.3416$ 0.3525$ 0.3633$ 0.2798$

2017 0.3718$ 0.3750$ 0.3826$ 0.4038$ 0.4100$ 0.3998$ 0.3745$ 0.3435$ 0.2958$ 0.2643$ 0.2409$ 0.2200$ 0.3402$

2018 0.2146$ 0.2159$ 0.2200$ 0.2333$ 0.2573$ 0.2796$ 0.3099$ 0.3254$ 0.3363$ 0.3475$ 0.3510$ 0.3580$ 0.2874$

H1 2018 Avg: 0.2368$ H2 2018 Avg: 0.3380$

2019 0.3700$ 0.3639$ 0.3650$ 0.3525$ 0.3339$ 0.3150$ 0.3085$ 0.2973$ 0.2919$ 0.2809$ 0.2884$ 0.2900$ 0.3214$

H1 2019 Avg: 0.3501$ H2 2019 Avg: 0.2928$

2020 0.2979$ 0.3056$ 0.3071$ 0.3094$ 0.3117$ 0.3141$ 0.3164$ 0.3188$ 0.3212$ 0.3236$ 0.3260$ 0.3285$ 0.3150$

H1 2020 Avg: 0.3076$ H2 2020 Avg: 0.3224$

2021 0.3301$ 0.3318$ 0.3351$ 0.3384$ 0.3418$ 0.3452$


$0.10

$0.15

$0.20

$0.25

$0.30

$0.35

$0.40

$0.45

$0.50


$ pe

r po

und

USDA Central & West Lactose Midpoint Price Forecast

Actual Forecast


Disclaimer

HighGround Dairy is a division of HighGround Trading, LLC. ("HGT"). HGT is registered as an Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.

Futures and options trading involves risk of loss and is not suitable for all individuals. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

All information, communications, publications, and reports distributed by HGT shall be construed as a solicitation for entering into a derivatives transaction. HGT does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71. Copying, reproduction, modification, distribution, display or transmission of any of the contents in this document for any purpose without the prior written consent of HighGround Dairy is strictly prohibited.

While every reasonable effort is made to ensure that the information provided in this presentation is accurate, no guarantees for the accuracy of information are made.

Lucas FuessDirector – HighGround Dairy

425 S. Financial Place, Suite 2301

Chicago, IL 60605 USA

Phone: +1 312 870 1186

Mobile: +1 315 796 0520

Email: [email protected]

www.highgrounddairy.com

Thank You & Disclaimer

mailto:[email protected]

http://www.highgrounddairy.com/

Documents

Session VIII: Ingredients Outlook Dairy€¦ · To utilize our team’s dairy industry experience to deliver unparalleled global market intelligence, opinion, strategy and execution