Global Dairy Trade Results Update – 2/4/20
Executive Summary
Dairy product prices declined during the GDT event held Feb 4th. Highlights from the most recent auction include:
The GDT Price Index remained 0.1% above previous year price levels at the Feb 4th event, increasing on a YOY basis for the 15th consecutive event. The GDT Price Index finished 3.0% below the three year average price for the first auction of February, however, finishing below three year average figures for the first time in the past 27 events.
Within the latest auction, declines in prices were led by whole milk powder (-6.2%), followed by butter milk powder (-5.2%), anhydrous milkfat (-4.5%) and skim milk powder (-4.2%). The declines more than offset increases in butter (+0.2%), lactose (+2.5%), rennet casein (+6.0%) and cheddar cheese (+6.0%) prices. Sweet whey powder was not sold at the Feb 4th event. Whole milk powder prices declined to a seven month low level as concerns over Chinese demand have been raised with the emergence of coronavirus. Over 90% of Chinese whole milk powder imports originated from within New Zealand throughout 2019.
The table below provides a summary of the most recent GDT weighted average winning prices for key products. Butter has been adjusted to 80% butterfat and skim milk powder (SMP) has been adjusted to 35% protein content (equivalent to U.S. nonfat dry milk) in the $/lb columns below. CME spot and average futures prices are based on Feb 3rd figures. CME average futures prices are weighted average prices based on the most recently reported percentage of the total quantity sold in each GDT contract period.
Total quantities sold for all products at the Feb 4th event of 29,006 MT declined 12.5% from the previous event but remained 24.4% higher on a YOY basis. The YOY increase in total quantities sold was the third experienced in a row.
Volumes sold for all products within the first auction of February declined 12.4% from average January volumes sold but finished 19.2% above last year’s average volumes sold for the month of February. Feb ’20 volumes sold for all products are on pace to finish 31.0% above three year average seasonal figures, reaching a six year seasonal high level.
U.S. butter prices remained at a premium to GDT winning prices at the Feb 4th event, despite GDT butter prices rebounding to a six month high level. U.S. spot butter prices are currently trading at a 1.1% premium to GDT prices while CME futures prices traded at an 8.8% premium to GDT prices from Mar ’20 – Jul ’20. Butter was not sold at the GDT auction for Contract 6 (Aug ’20).
U.S. cheddar cheese prices finished at a discount to GDT winning prices at the Feb 4th event as GDT cheddar cheese prices increased to an eight month high level. U.S. spot cheddar cheese prices are currently trading at a 13.5% discount to GDT prices while CME futures prices traded at an 8.0% discount to GDT prices from Mar ’20 – Jul ’20. Cheddar cheese was not sold at the GDT auction for Contract 6 (Aug ’20).
U.S. nonfat dry milk (NFDM) futures prices remained at a discount to GDT winning prices at the Feb 4th event, despite GDT SMP prices declining from the previous event. U.S. spot NFDM prices are currently trading at a 9.4% discount to GDT prices while CME futures prices also traded at an 11.1% discount to GDT prices from Mar ’20 – Jul ’20. SMP was not sold at the GDT auction for Contract 6 (Aug ’20).
- The GDT Price Index declined 4.7% at the Feb 4th event, finishing at a five month low level. The GDT Price Index finished below three year average seasonal price levels for the first time in the past 27 events.
- Declines in prices within the Feb 4th event were led by whole milk powder, followed by butter milk powder, anhydrous milkfat and skim milk powder. Whole milk powder prices declined to a seven month low level as concerns over Chinese demand have been raised with the emergence of coronavirus. Over 90% of Chinese whole milk powder imports originated from within New Zealand throughout 2019. Butter and cheddar cheese prices increased throughout the Feb 4th event, reaching six and eight month high levels, respectively.
- Total quantities sold for all products at the Feb 4th event declined seasonally from the previous event but remained higher on a YOY basis for the third consecutive event. Volumes sold for all products within the first auction of February finished 19.2% above last year’s average volumes sold for the month of February and 31.0% above three year average seasonal figures, reaching a six year high seasonal level, overall.
The GDT Price Index remained 0.1% above previous year price levels at the Feb 4th event, increasing on a YOY basis for the 15th consecutive event. The GDT Price Index finished 3.0% below the three year average price for the first auction of February, however, finishing below three year average figures for the first time in the past 27 events.
Within the latest auction, declines in prices were led by whole milk powder (-6.2%), followed by butter milk powder (-5.2%), anhydrous milkfat (-4.5%) and skim milk powder (-4.2%). The declines more than offset increases in butter (+0.2%), lactose (+2.5%), rennet casein (+6.0%) and cheddar cheese (+6.0%) prices. Sweet whey powder was not sold at the Feb 4th event. Whole milk powder prices declined to a seven month low level as concerns over Chinese demand have been raised with the emergence of coronavirus. Over 90% of Chinese whole milk powder imports originated from within New Zealand throughout 2019.
The table below provides a summary of the most recent GDT weighted average winning prices for key products. Butter has been adjusted to 80% butterfat and skim milk powder (SMP) has been adjusted to 35% protein content (equivalent to U.S. nonfat dry milk) in the $/lb columns below. CME spot and average futures prices are based on Feb 3rd figures. CME average futures prices are weighted average prices based on the most recently reported percentage of the total quantity sold in each GDT contract period.
Total quantities sold for all products at the Feb 4th event of 29,006 MT declined 12.5% from the previous event but remained 24.4% higher on a YOY basis. The YOY increase in total quantities sold was the third experienced in a row.
Volumes sold for all products within the first auction of February declined 12.4% from average January volumes sold but finished 19.2% above last year’s average volumes sold for the month of February. Feb ’20 volumes sold for all products are on pace to finish 31.0% above three year average seasonal figures, reaching a six year seasonal high level.
U.S. butter prices remained at a premium to GDT winning prices at the Feb 4th event, despite GDT butter prices rebounding to a six month high level. U.S. spot butter prices are currently trading at a 1.1% premium to GDT prices while CME futures prices traded at an 8.8% premium to GDT prices from Mar ’20 – Jul ’20. Butter was not sold at the GDT auction for Contract 6 (Aug ’20).
U.S. cheddar cheese prices finished at a discount to GDT winning prices at the Feb 4th event as GDT cheddar cheese prices increased to an eight month high level. U.S. spot cheddar cheese prices are currently trading at a 13.5% discount to GDT prices while CME futures prices traded at an 8.0% discount to GDT prices from Mar ’20 – Jul ’20. Cheddar cheese was not sold at the GDT auction for Contract 6 (Aug ’20).
U.S. nonfat dry milk (NFDM) futures prices remained at a discount to GDT winning prices at the Feb 4th event, despite GDT SMP prices declining from the previous event. U.S. spot NFDM prices are currently trading at a 9.4% discount to GDT prices while CME futures prices also traded at an 11.1% discount to GDT prices from Mar ’20 – Jul ’20. SMP was not sold at the GDT auction for Contract 6 (Aug ’20).