Global Dairy Trade Results Update – 2/20/18
Executive Summary
Dairy product prices declined for the first time in the past four auctions during the GDT event held Feb 20th. Highlights from the most recent auction include:
Despite the decline, the GDT Price Index remained higher on a YOY basis for the second consecutive auction, finishing 3.5% above previous year price levels at the Feb 20th event. The GDT Price Index finished 21.3% above the three year average price for the second auction of February.
Within the latest auction, declines in prices were led by skim milk powder (-3.0%), followed by anhydrous milkfat (-1.9%) and cheddar cheese (-1.3%). The declines more than offset increases in whole milk powder (+0.3%), rennet casein (+0.7%) and butter (+1.1%) prices. Lactose and butter milk powder were not offered at the Feb 20th event.
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 Feb 16th 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 20th event of 20,256 MT declined 8.7% from the previous auction, finishing at a 21 month low. Total quantities sold also declined on a YOY basis for the first time in the past ten auctions.
Volumes sold for all products within February auctions declined 12.9% from average January volumes sold but finished 1.7% above last year’s average volumes sold for the month of February. Volume sold for all products within the February auctions remained 8.5% below the previous three year average February quantities sold, however.
U.S. butter prices finished at a discount to GDT winning prices at the Feb 20th event as GDT butter prices increased to a seven auction high. U.S. spot butter prices are currently trading at an 11.0% discount to GDT prices while CME futures prices traded at a 5.9% discount to GDT prices from Mar ’18 – Jul ’18. Butter was not sold at the GDT auction for Contract 6 (Aug ’18). 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 and into 2017.
U.S. cheddar cheese futures prices also finished at a discount to GDT winning prices at the Feb 20th event, despite GDT cheddar cheese prices declining from the five auction high experienced during the previous event. U.S. spot cheddar cheese prices are currently trading at an 11.5% discount to GDT prices while CME futures prices traded at a 5.9% discount to GDT prices from Mar ’18 – Jul ’18. Cheddar cheese was not sold at the GDT auction for Contract 6 (Aug ’18).
U.S. NFDM futures prices also remained at a discount to GDT winning prices at the Feb 20th event, despite GDT SMP prices declined from the ten auction high experienced during the previous event. U.S. spot NFDM prices are currently trading at a 20.2% discount to GDT prices while CME futures prices traded at a 14.9% discount to GDT prices from Mar ’18 – Jul ’18. SMP was not sold at the GDT auction for Contract 6 (Aug ’18).
- The GDT Price Index declined for the first time in the past four auctions during the Feb 20th event, finishing 0.5% below the nine auction high experienced during the previous event.
- Declines in prices within the Feb 20th event were led by skim milk powder, followed by anhydrous milkfat and cheddar cheese. Whole milk powder prices increased slightly, reaching an 18 auction high, while butter prices increased to a seven auction high throughout the event.
- Total quantities sold for all products at the Feb 20th event declined 8.7% from the previous auction, finishing at a 21 month low. Total quantities sold within the February auctions remained 1.7% above last year’s average volumes sold for the month of February but finished 8.5% below the previous three year average February quantities sold.
Despite the decline, the GDT Price Index remained higher on a YOY basis for the second consecutive auction, finishing 3.5% above previous year price levels at the Feb 20th event. The GDT Price Index finished 21.3% above the three year average price for the second auction of February.
Within the latest auction, declines in prices were led by skim milk powder (-3.0%), followed by anhydrous milkfat (-1.9%) and cheddar cheese (-1.3%). The declines more than offset increases in whole milk powder (+0.3%), rennet casein (+0.7%) and butter (+1.1%) prices. Lactose and butter milk powder were not offered at the Feb 20th event.
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 Feb 16th 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 20th event of 20,256 MT declined 8.7% from the previous auction, finishing at a 21 month low. Total quantities sold also declined on a YOY basis for the first time in the past ten auctions.
Volumes sold for all products within February auctions declined 12.9% from average January volumes sold but finished 1.7% above last year’s average volumes sold for the month of February. Volume sold for all products within the February auctions remained 8.5% below the previous three year average February quantities sold, however.
U.S. butter prices finished at a discount to GDT winning prices at the Feb 20th event as GDT butter prices increased to a seven auction high. U.S. spot butter prices are currently trading at an 11.0% discount to GDT prices while CME futures prices traded at a 5.9% discount to GDT prices from Mar ’18 – Jul ’18. Butter was not sold at the GDT auction for Contract 6 (Aug ’18). 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 and into 2017.
U.S. cheddar cheese futures prices also finished at a discount to GDT winning prices at the Feb 20th event, despite GDT cheddar cheese prices declining from the five auction high experienced during the previous event. U.S. spot cheddar cheese prices are currently trading at an 11.5% discount to GDT prices while CME futures prices traded at a 5.9% discount to GDT prices from Mar ’18 – Jul ’18. Cheddar cheese was not sold at the GDT auction for Contract 6 (Aug ’18).
U.S. NFDM futures prices also remained at a discount to GDT winning prices at the Feb 20th event, despite GDT SMP prices declined from the ten auction high experienced during the previous event. U.S. spot NFDM prices are currently trading at a 20.2% discount to GDT prices while CME futures prices traded at a 14.9% discount to GDT prices from Mar ’18 – Jul ’18. SMP was not sold at the GDT auction for Contract 6 (Aug ’18).