Global Dairy Trade Results Update – 7/5/16
Executive Summary
Overall, dairy product prices declined slightly during the GDT event held Jul 5th. Highlights from the most recent auction include:
• The GDT Price Index declined 0.4% at the Jul 5th event, finishing at a three auction low.
• Butter milk powder, butter and whole milk powder prices declined most significantly at the Jul 5th event. Whole milk powder prices finished at levels not experienced since the first auction of April.
• Total quantities sold for all products at the Jul 5th event finished at an eight month high but remained 11.3% below the previous three year average July quantities sold as volumes increased seasonally.
Additional Report Details
Dairy product prices declined slightly within the Global Dairy Trade (GDT) during the auction held Jul 5th as the GDT Price Index finished down 0.4%. The GDT Price Index declined by 46.8% in total over the ten auctions spanning Mar ’15 – Aug ’15 but had gained back nearly three quarters of the decline from Aug ’15 to Oct ’15. The GDT Price Index had fallen back to a 14 auction low during mid-March but remained at a ten auction high during the second auction of June, prior to the most recent decline. The GDT Price Index represents a weighted-average of the percentage changes in prices between trading events for all products offered.
The GDT Price Index finished 9.4% above the previous year price levels at the Jul 5th event but remained 31.9% below the three year average price for the first auction of July. The GDT Price Index had finished lower on a YOY basis for 14 consecutive auctions prior to the three most recent events.
Within the latest auction, price declines were led by butter milk powder (-7.5%), followed by butter (-3.1%), whole milk powder (-1.6%), lactose (-1.2%) and cheddar cheese (-0.5%). Increases in prices were experienced within anhydrous milkfat (+1.1%), skim milk powder (+2.6%) and rennet casein (+4.9%).
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 Jul 1st 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 Jul 5th event of 32,500 MT were 40.8% more than the previous auction, finishing at the highest figure experienced since Nov ’15. Total quantities sold typically increase seasonally from June – July, finishing an average of 33.9% higher over the past five years.
Volumes sold for all products within the first auction of July were 0.2% above last year’s average volumes sold for the month of July but remained 11.3% below the previous three year average July quantities sold.
U.S. butter prices continue to remain at a significant premium to GDT winning prices through the Jul 5th event. U.S. spot butter prices are currently trading at an 87.8% premium to GDT prices while CME futures prices are trading at an 83.2% premium to GDT prices from Aug ’16 – Jan ’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.
U.S. cheddar cheese prices also continue to remain at a premium to GDT winning prices. U.S. spot cheddar cheese prices are currently trading at a 26.9% premium to GDT prices while CME futures prices are trading at a 30.5% premium to GDT prices from Sep ’16 – Nov ’16. Cheddar cheese was not sold at the GDT auction for Contract 1 (Aug ’16), Contract 5 (Dec ’16) and Contract 6 (Jan ’17).
U.S. NFDM spot prices are currently trading 7.7% below GDT SMP prices however U.S. NFDM prices are expected to regain a premium to GDT SMP prices during future months, as U.S. prices are trading at a 10.3% average premium to GDT prices from Aug ’16 – Jan ’17.
The GDT Price Index finished 9.4% above the previous year price levels at the Jul 5th event but remained 31.9% below the three year average price for the first auction of July. The GDT Price Index had finished lower on a YOY basis for 14 consecutive auctions prior to the three most recent events.
Within the latest auction, price declines were led by butter milk powder (-7.5%), followed by butter (-3.1%), whole milk powder (-1.6%), lactose (-1.2%) and cheddar cheese (-0.5%). Increases in prices were experienced within anhydrous milkfat (+1.1%), skim milk powder (+2.6%) and rennet casein (+4.9%).
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 Jul 1st 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 Jul 5th event of 32,500 MT were 40.8% more than the previous auction, finishing at the highest figure experienced since Nov ’15. Total quantities sold typically increase seasonally from June – July, finishing an average of 33.9% higher over the past five years.
Volumes sold for all products within the first auction of July were 0.2% above last year’s average volumes sold for the month of July but remained 11.3% below the previous three year average July quantities sold.
U.S. butter prices continue to remain at a significant premium to GDT winning prices through the Jul 5th event. U.S. spot butter prices are currently trading at an 87.8% premium to GDT prices while CME futures prices are trading at an 83.2% premium to GDT prices from Aug ’16 – Jan ’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.
U.S. cheddar cheese prices also continue to remain at a premium to GDT winning prices. U.S. spot cheddar cheese prices are currently trading at a 26.9% premium to GDT prices while CME futures prices are trading at a 30.5% premium to GDT prices from Sep ’16 – Nov ’16. Cheddar cheese was not sold at the GDT auction for Contract 1 (Aug ’16), Contract 5 (Dec ’16) and Contract 6 (Jan ’17).
U.S. NFDM spot prices are currently trading 7.7% below GDT SMP prices however U.S. NFDM prices are expected to regain a premium to GDT SMP prices during future months, as U.S. prices are trading at a 10.3% average premium to GDT prices from Aug ’16 – Jan ’17.