Global Dairy Trade Results Update – GDT Price Index…
Dairy product prices at the Global Dairy Trade (GDT) auction held November 4th declined for the 16th time in the last 18 auctions, falling 0.3%. Prices have begun to stabilize over the past several auctions, with the GDT Price Index up 1.1% since Oct 1st, however prices remain significantly below last year’s levels. 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 began the year up 47.7% YOY but has declined of late, regressing to levels not experienced since mid-2012. The GDT Price Index remains 47.4% below the peak reached in Dec ’13. The November 4th event finished 45.2% below last year and 32.0% below the three year average GDT Price Index for the first week of November. Total quantity sold for all products was 10.5% lower than the previous auction but 8.2% higher than the 2014 average total quantity sold.
Whole milk powder (WMP), which accounted for over half of the GDT volume sold in 2013, increased 1.6% on the auction but all other products experienced price declines or were not sold at the event. Cheddar cheese (-9.2%), butter milk powder (-6.9%), butter (-4.1%), rennet casein (-2.2%), anhydrous milk fat (-1.6%) and skim milk powder (-1.2%) continued their recent declines. Lactose and sweet whey powder were not sold at the November 4th event. Despite the overall increase in WMP prices, gains were only experienced from Contract 4 (Mar ’15) to Contract 6 (May ’15). WMP prices declined 5.6% in Contract 1 (Dec ’14). U.S. butter and SMP did not trade at the event for the seventh and eighth straight times, respectively.
See the table below for 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 November 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.
Within the GDT auction, butter offered by U.S. sellers, representing product sold by Dairy America, did not trade for the seventh straight auction after trading at each auction since being offered in Jul ’13. Butter offered by U.S. sellers for short-term contract periods has recently traded at a significant premium to butter offered by Oceania sellers for short-term contract periods, representing product sold by Fonterra. July ’14 U.S. / Oceania butter price premiums within the GDT auction were the highest ever experienced.
GDT winning prices in butter have been historically higher than U.S. butter prices until the recent run-up in domestic butter prices. Over the past 27 bi-weekly events leading up to April ’14, GDT butter prices have traded at a $0.19 average premium to U.S. butter prices. Over the past 15 auctions, U.S. butter prices have traded at a $0.97 average premium to GDT butter prices, however the most recent U.S. butter price premium of $0.84 is $1.10 off of recent highs. Due to freight charges, duties and differences in butterfat standards, butter is rarely imported domestically; however anecdotal evidence suggests that some butter and processed butterfat has been imported.
GDT future month winning prices remain lower than CME futures prices, with Jan ’15 – Apr ’15 CME futures prices trading at an average 56.2% premium to GDT prices. U.S. butter prices have traded at a 91.7% premium to GDT butter prices since Jun ’14. Butter was not sold at the GDT auction for Contract 1 (Dec ’14) or Contract 6 (May ’15).
Cheddar cheese available for purchase at GDT auctions is currently offered only by Fonterra, so GDT winning prices in cheddar cheese is a viable metric for Oceania prices. GDT prices traded at a premium to U.S. prices for most of 2013, with U.S. prices outpacing GDT prices for the majority of the bimonthly events since Jan ’14. CME futures prices are also trading above GDT prices in future months, with CME futures prices trading at an average premium of 40.1% to GDT prices. Cheddar cheese was not sold at the GDT auction for Contact 1 (Dec ’14), Contract 5 (Apr ’15) and Contract 6 (May ’15).
GDT SMP prices have converged since the beginning of the year, with U.S., Oceania, Europe and India prices all moving downward. Oceania and Europe GDT SMP prices on short-term contracts have traded within 5% of each other in 12 of the last 15 events. India SMP, representing product sold by Amul, was sold for the second time in five auctions on November 4th, with prices remaining at a premium to Oceania and Europe SMP prices. U.S. SMP, representing product sold by Dairy America and Land O’Lakes, did not trade for the eighth straight auction after trading at 61 consecutive auctions from Oct ’11 to Apr ’14.
Within the GDT auction, SMP offered by U.S. sellers on short-term contracts has recently traded at a premium to SMP offered by Oceania sellers on short-term contracts, representing product sold by Fonterra. Recent U.S. / Oceania SMP price premiums within the GDT auction have been the highest since Sep ’12. The gain in U.S. SMP prices relative to Oceania SMP prices within the GDT auction is due to a more severe decline in Oceania SMP prices in recent months. Overall, the GDT SMP Price Index fell 40.9% since the first of April, with Oceania short-term contracts falling 43.9% during the same period. SMP was not sold at the GDT auction for Contact 1 (Dec ’14).
The recent run-up in domestic SMP/NFDM prices relative to GDT prices is expected to continue into 2015 as CME NFDM futures prices are trading at an average 12.0% premium to the GDT SMP future month winning prices from Dec ’14 – Apr ’14 when using a 35% normalized protein content, however GDT SMP future month winning prices exceeded CME NFDM futures prices by 2.1% in May ’15.
The GDT Price Index began the year up 47.7% YOY but has declined of late, regressing to levels not experienced since mid-2012. The GDT Price Index remains 47.4% below the peak reached in Dec ’13. The November 4th event finished 45.2% below last year and 32.0% below the three year average GDT Price Index for the first week of November. Total quantity sold for all products was 10.5% lower than the previous auction but 8.2% higher than the 2014 average total quantity sold.
Whole milk powder (WMP), which accounted for over half of the GDT volume sold in 2013, increased 1.6% on the auction but all other products experienced price declines or were not sold at the event. Cheddar cheese (-9.2%), butter milk powder (-6.9%), butter (-4.1%), rennet casein (-2.2%), anhydrous milk fat (-1.6%) and skim milk powder (-1.2%) continued their recent declines. Lactose and sweet whey powder were not sold at the November 4th event. Despite the overall increase in WMP prices, gains were only experienced from Contract 4 (Mar ’15) to Contract 6 (May ’15). WMP prices declined 5.6% in Contract 1 (Dec ’14). U.S. butter and SMP did not trade at the event for the seventh and eighth straight times, respectively.
See the table below for 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 November 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.
Within the GDT auction, butter offered by U.S. sellers, representing product sold by Dairy America, did not trade for the seventh straight auction after trading at each auction since being offered in Jul ’13. Butter offered by U.S. sellers for short-term contract periods has recently traded at a significant premium to butter offered by Oceania sellers for short-term contract periods, representing product sold by Fonterra. July ’14 U.S. / Oceania butter price premiums within the GDT auction were the highest ever experienced.
GDT winning prices in butter have been historically higher than U.S. butter prices until the recent run-up in domestic butter prices. Over the past 27 bi-weekly events leading up to April ’14, GDT butter prices have traded at a $0.19 average premium to U.S. butter prices. Over the past 15 auctions, U.S. butter prices have traded at a $0.97 average premium to GDT butter prices, however the most recent U.S. butter price premium of $0.84 is $1.10 off of recent highs. Due to freight charges, duties and differences in butterfat standards, butter is rarely imported domestically; however anecdotal evidence suggests that some butter and processed butterfat has been imported.
GDT future month winning prices remain lower than CME futures prices, with Jan ’15 – Apr ’15 CME futures prices trading at an average 56.2% premium to GDT prices. U.S. butter prices have traded at a 91.7% premium to GDT butter prices since Jun ’14. Butter was not sold at the GDT auction for Contract 1 (Dec ’14) or Contract 6 (May ’15).
Cheddar cheese available for purchase at GDT auctions is currently offered only by Fonterra, so GDT winning prices in cheddar cheese is a viable metric for Oceania prices. GDT prices traded at a premium to U.S. prices for most of 2013, with U.S. prices outpacing GDT prices for the majority of the bimonthly events since Jan ’14. CME futures prices are also trading above GDT prices in future months, with CME futures prices trading at an average premium of 40.1% to GDT prices. Cheddar cheese was not sold at the GDT auction for Contact 1 (Dec ’14), Contract 5 (Apr ’15) and Contract 6 (May ’15).
GDT SMP prices have converged since the beginning of the year, with U.S., Oceania, Europe and India prices all moving downward. Oceania and Europe GDT SMP prices on short-term contracts have traded within 5% of each other in 12 of the last 15 events. India SMP, representing product sold by Amul, was sold for the second time in five auctions on November 4th, with prices remaining at a premium to Oceania and Europe SMP prices. U.S. SMP, representing product sold by Dairy America and Land O’Lakes, did not trade for the eighth straight auction after trading at 61 consecutive auctions from Oct ’11 to Apr ’14.
Within the GDT auction, SMP offered by U.S. sellers on short-term contracts has recently traded at a premium to SMP offered by Oceania sellers on short-term contracts, representing product sold by Fonterra. Recent U.S. / Oceania SMP price premiums within the GDT auction have been the highest since Sep ’12. The gain in U.S. SMP prices relative to Oceania SMP prices within the GDT auction is due to a more severe decline in Oceania SMP prices in recent months. Overall, the GDT SMP Price Index fell 40.9% since the first of April, with Oceania short-term contracts falling 43.9% during the same period. SMP was not sold at the GDT auction for Contact 1 (Dec ’14).
The recent run-up in domestic SMP/NFDM prices relative to GDT prices is expected to continue into 2015 as CME NFDM futures prices are trading at an average 12.0% premium to the GDT SMP future month winning prices from Dec ’14 – Apr ’14 when using a 35% normalized protein content, however GDT SMP future month winning prices exceeded CME NFDM futures prices by 2.1% in May ’15.