Global Dairy Trade Results Update – 8/16/16
Executive Summary
Dairy product prices increased sharply during the GDT event held Aug 16th. Highlights from the most recent auction include:
• The GDT Price Index increased 12.7% at the Aug 16th event, finishing at the highest level experienced since Oct ’15.
• Price gains were widespread across all products offered at the Aug 16th event and led by whole milk powder. Whole milk powder prices increased 18.9%, finishing at a 22 auction high.
• Total quantities sold for all products at the Aug 16th event reached a 12 month high as demand continues to increase seasonally, however volumes remained 12.9% below the previous year volumes sold for the month of August.
Additional Report Details
Dairy product prices increased sharply within the Global Dairy Trade (GDT) during the event held Aug 16th as the GDT Price Index finished up 12.7%. The GDT Price Index reached a ten month high during the most recent event. 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 41.4% above the previous year price levels at the Aug 16th event but remained 13.9% below the three year average price for the second auction of August. The GDT Price Index had finished lower on a YOY basis for 14 consecutive auctions prior to increasing throughout the past six events.
Within the latest auction, price gains were widespread and led by whole milk powder (+18.9%), followed by butter milk powder (+18.1%), butter (+14.1%), cheddar cheese (+8.9%), anhydrous milkfat (+8.4%), lactose (+3.5%), skim milk powder (+3.0%) and rennet casein (+2.5%).
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 Aug 15th 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 Aug 16th event of 37,766 MT were 8.1% above the previous auction, finishing at a 12 month high. GDT quantities sold typically increase seasonally until highs are reached throughout the months of August and September.
Volumes sold for all products within the August auctions remained 12.9% below last year’s average volumes sold for the month of August and 26.1% below the previous three year average August quantities sold.
U.S. butter prices continue to remain at a significant premium to GDT winning prices through the Aug 16th event, despite GDT prices increasing to a 15 auction high. U.S. spot butter prices are currently trading at a 55.3% premium to GDT prices while CME futures prices are trading at a 52.9% premium to GDT prices from Sep ’16 – Feb ’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, despite GDT prices increasing to a 20 auction high at the Aug 16th event. U.S. spot cheddar cheese prices are currently trading at a 30.2% premium to GDT prices while CME futures prices are trading at a 22.1% premium to GDT prices from Sep ’16 – Jan ’17. Cheddar cheese was not sold at the GDT auction for Contract 6 (Feb ’17).
U.S. NFDM spot prices are currently trading 12.9% below GDT SMP prices as GDT prices increased to a 20 auction high at the Aug 16th event. U.S. NFDM prices are expected to regain a premium to GDT SMP prices throughout future months, however, as U.S. prices are trading at a 3.6% average premium to GDT prices from Sep ’16 – Feb ’17.
The GDT Price Index finished 41.4% above the previous year price levels at the Aug 16th event but remained 13.9% below the three year average price for the second auction of August. The GDT Price Index had finished lower on a YOY basis for 14 consecutive auctions prior to increasing throughout the past six events.
Within the latest auction, price gains were widespread and led by whole milk powder (+18.9%), followed by butter milk powder (+18.1%), butter (+14.1%), cheddar cheese (+8.9%), anhydrous milkfat (+8.4%), lactose (+3.5%), skim milk powder (+3.0%) and rennet casein (+2.5%).
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 Aug 15th 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 Aug 16th event of 37,766 MT were 8.1% above the previous auction, finishing at a 12 month high. GDT quantities sold typically increase seasonally until highs are reached throughout the months of August and September.
Volumes sold for all products within the August auctions remained 12.9% below last year’s average volumes sold for the month of August and 26.1% below the previous three year average August quantities sold.
U.S. butter prices continue to remain at a significant premium to GDT winning prices through the Aug 16th event, despite GDT prices increasing to a 15 auction high. U.S. spot butter prices are currently trading at a 55.3% premium to GDT prices while CME futures prices are trading at a 52.9% premium to GDT prices from Sep ’16 – Feb ’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, despite GDT prices increasing to a 20 auction high at the Aug 16th event. U.S. spot cheddar cheese prices are currently trading at a 30.2% premium to GDT prices while CME futures prices are trading at a 22.1% premium to GDT prices from Sep ’16 – Jan ’17. Cheddar cheese was not sold at the GDT auction for Contract 6 (Feb ’17).
U.S. NFDM spot prices are currently trading 12.9% below GDT SMP prices as GDT prices increased to a 20 auction high at the Aug 16th event. U.S. NFDM prices are expected to regain a premium to GDT SMP prices throughout future months, however, as U.S. prices are trading at a 3.6% average premium to GDT prices from Sep ’16 – Feb ’17.