Executive Summary

Dairy product prices continued to decline during the GDT event held Aug 3^rd. Highlights from the most recent auction include:

• The GDT Price Index declined 1.0% at the Aug 3^rd event, finishing lower for the ninth time in the past ten auctions and reaching a six month low level. The GDT Price Index remained at an eight year high seasonal level for the first auction of August, however.
• Declines in prices within the Aug 3^rd event were led by butter milk powder, followed by whole milk powder and lactose. Whole milk powder prices declined to a six month low level throughout the Aug 3^rd event. Skim milk powder and butter prices each rebounded from seven month low levels experienced throughout the previous auction, however, while cheddar cheese prices finished higher for the second consecutive auction.
• Total quantities sold for all products at the Aug 3^rd event remained below previous year levels for the third consecutive week, down 26.3%. The Aug 3^rd YOY decline in total quantities sold was the largest experienced throughout the past five years. Aug ’21 quantities sold for all products are on pace to reach the lowest seasonal level on record.

Additional Report Details

Dairy product prices declined 1.0% within the Global Dairy Trade (GDT) event held Aug 3^rd, finishing lower for the ninth time in the past ten auctions and reaching a six month low level. The GDT Price Index finished 13.4% below the seven year high level experienced throughout the first auction of Mar ’21. 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 remained 24.0% above previous year price levels at the Aug 3^rd auction, reaching an eight year high seasonal level. The GDT Price Index finished 20.3% above the three year average price for the first auction of August, finishing above three year average figures for the 18^th consecutive event.

Within the latest auction, declines in prices were led by butter milk powder (-8.0%), followed by whole milk powder (-3.8%) and lactose (-3.1%). Price increases were led by butter (+3.8%), followed by skim milk powder (+1.5%), anhydrous milkfat (+1.3%) and cheddar cheese (+0.7%). Sweet whey powder was not sold at the Aug 3^rd 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 skim milk powder (SMP) has been adjusted to 35% protein content (equivalent to U.S. nonfat dry milk) in the $/lb columns below. CME spot and average futures prices are based on Aug 2^nd 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 3^rd event increased 7.5% from the previous event but remained 26.3% below previous year figures. The weekly YOY decline in total quantities sold for all products was the third experienced in a row and the largest experienced throughout the past five years. Total quantities sold typically reach seasonal low levels throughout the month of May, prior to increasing seasonally throughout the next several months.

Volumes sold for all products within the first auction of August increased 3.2% from average July volumes sold but remained 24.8% below last year’s average volumes sold for the month of August. Aug ’21 volumes sold for all products are on pace to reach the lowest seasonal level on record.

U.S. butter prices remained at a discount to GDT winning prices at the Aug 3^rd event when accounting for differences in butterfat levels as GDT butter prices rebounded from the seven month low level experienced throughout the previous auction. U.S. spot butter prices are currently trading at a 16.3% discount to GDT prices while CME futures prices traded at a 16.8% discount to GDT prices from Sep ’21 – Feb ’22.

U.S. cheddar cheese prices remained at a discount to GDT winning prices at the Aug 3^rd event as GDT cheddar cheese prices finished higher for the second consecutive auction. U.S. spot cheddar cheese prices are currently trading at a 20.1% discount to GDT prices while CME futures prices traded at a 7.2% discount to GDT prices from Sep ’21 – Feb ’22.

U.S. nonfat dry milk futures prices remained at a discount to GDT skim milk powder winning prices at the Aug 3^rd event when accounting for differences in protein values as GDT skim milk powder prices rebounded from the seven month low level experienced throughout the previous auction. U.S. spot nonfat dry milk prices are currently trading at a 9.6% discount to GDT skim milk powder prices while CME futures prices traded at a 9.0% discount to GDT skim milk powder prices from Sep ’21 – Jan ’22. Skim milk powder was not sold for Contract Period 6.