Global Dairy Trade Results Update – 3/7/17
Executive Summary
Dairy product prices declined for the second consecutive auction during the GDT event held Mar 7th. Highlights from the most recent auction include:
The GDT Price Index remained 47.9% above the previous year price levels at the Mar 7th event but finished 4.9% below the three year average price for the first auction of March. The GDT Price Index has increased on a YOY basis throughout the past 19 events.
Within the latest auction, declines in prices were led by skim milk powder (-15.5%), followed by whole milk powder (-12.4%), rennet casein (-6.6%), lactose (-4.3%), cheddar cheese (-4.2%) and anhydrous milkfat (-0.8%). The declines more than offset increases in prices experienced within butter (+1.2%) and butter milk powder (+8.4%).
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 SMP has been adjusted to 35% protein content (equivalent to U.S. NFDM) in the $/lb columns below. CME spot and average futures prices are based on Mar 6th 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 Mar 7th event of 22,328 MT finished 9.0% above the previous auction, reaching a seven auction high. GDT quantities sold typically reach seasonal highs throughout the months of August and September prior to declining over the following several months.
Volumes sold for all products within the Mar 7thevent finished 5.6% above last year’s average volumes sold for the month of March but remained 18.7% below the previous three year average March quantities sold.
U.S. butter prices continue to remain at a premium to GDT winning prices through the Mar 7thevent, despite GDT butter prices increasing by over 70% throughout the past eight months. U.S. spot butter prices are currently trading at a 4.3% premium to GDT prices while CME futures prices are trading at a 7.4% premium to GDT prices from Apr ’17 – Aug ’17. Butter was not sold at the GDT auction for Contract 6 (Sep ’17). U.S. butter prices traded at an 83.3% premium to GDT butter prices over the second half of 2014 and a 53.9% premium to GDT butter prices throughout 2015 prior to prices converging over the second half of 2016.
U.S. cheddar cheese futures prices remained above GDT winning prices as GDT cheddar cheese prices declined to an eight auction low at the Mar 7thevent. U.S. spot cheddar cheese prices are currently trading 7.7% below GDT prices however CME futures prices are trading at a 7.6% premium to GDT prices from Apr ’17 – Jul ’17. Cheddar cheese was not sold at the GDT auction for Contract 5 (Aug ’17) or Contract 6 (Sep ’17).
U.S. NFDM spot prices are currently trading 18.6% below GDT prices despite GDT SMP prices declining to a 13 auction low at the Mar 7thevent. U.S. NFDM prices are expected to remain at a significant discount to GDT SMP prices throughout future months, as GDT prices are trading at a 13.1% average premium to U.S. prices from May ’17 – Aug ’17. SMP was not sold at the GDT auction for Contract 1 (Apr ’17) or Contract 6 (Sep ’17).
- The GDT Price Index declined to a nine auction low at the Mar 7th event, finishing 6.3% below the previous auction.
- Butter prices increased throughout the tenth consecutive auction at the Mar 7th event, finishing up 1.2%, however cheddar cheese prices declined 4.2%, finishing at an eight auction low. Skim milk powder and whole milk powder prices declined significantly throughout the event, finishing down 15.5% and 12.4%, respectively.
- Total quantities sold for all products at the Mar 7th event increased 9.0% from the previous auction, reaching a seven auction high. Total quantities sold within the first auction of March finished 5.6% above last year’s average volumes sold for the month of March but remained 18.7% below the previous three year average March quantities sold.
The GDT Price Index remained 47.9% above the previous year price levels at the Mar 7th event but finished 4.9% below the three year average price for the first auction of March. The GDT Price Index has increased on a YOY basis throughout the past 19 events.
Within the latest auction, declines in prices were led by skim milk powder (-15.5%), followed by whole milk powder (-12.4%), rennet casein (-6.6%), lactose (-4.3%), cheddar cheese (-4.2%) and anhydrous milkfat (-0.8%). The declines more than offset increases in prices experienced within butter (+1.2%) and butter milk powder (+8.4%).
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 SMP has been adjusted to 35% protein content (equivalent to U.S. NFDM) in the $/lb columns below. CME spot and average futures prices are based on Mar 6th 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 Mar 7th event of 22,328 MT finished 9.0% above the previous auction, reaching a seven auction high. GDT quantities sold typically reach seasonal highs throughout the months of August and September prior to declining over the following several months.
Volumes sold for all products within the Mar 7thevent finished 5.6% above last year’s average volumes sold for the month of March but remained 18.7% below the previous three year average March quantities sold.
U.S. butter prices continue to remain at a premium to GDT winning prices through the Mar 7thevent, despite GDT butter prices increasing by over 70% throughout the past eight months. U.S. spot butter prices are currently trading at a 4.3% premium to GDT prices while CME futures prices are trading at a 7.4% premium to GDT prices from Apr ’17 – Aug ’17. Butter was not sold at the GDT auction for Contract 6 (Sep ’17). U.S. butter prices traded at an 83.3% premium to GDT butter prices over the second half of 2014 and a 53.9% premium to GDT butter prices throughout 2015 prior to prices converging over the second half of 2016.
U.S. cheddar cheese futures prices remained above GDT winning prices as GDT cheddar cheese prices declined to an eight auction low at the Mar 7thevent. U.S. spot cheddar cheese prices are currently trading 7.7% below GDT prices however CME futures prices are trading at a 7.6% premium to GDT prices from Apr ’17 – Jul ’17. Cheddar cheese was not sold at the GDT auction for Contract 5 (Aug ’17) or Contract 6 (Sep ’17).
U.S. NFDM spot prices are currently trading 18.6% below GDT prices despite GDT SMP prices declining to a 13 auction low at the Mar 7thevent. U.S. NFDM prices are expected to remain at a significant discount to GDT SMP prices throughout future months, as GDT prices are trading at a 13.1% average premium to U.S. prices from May ’17 – Aug ’17. SMP was not sold at the GDT auction for Contract 1 (Apr ’17) or Contract 6 (Sep ’17).