Executive Summary

Dairy product prices increased slightly during the GDT event held Aug 17^th. Highlights from the most recent auction include:

• The GDT Price Index increased 0.3% at the Aug 17^th event, finishing higher for the first time in the past nine auctions but remaining near recently experienced six month low levels. The GDT Price Index finished at an eight year high seasonal level for the second auction of August.
• Increases in prices within the Aug 17^th event were led by butter, followed by cheddar cheese, anhydrous milkfat and skim milk powder. Butter prices rebounded to a three month high level throughout the Aug 17^th event while anhydrous milkfat prices reached a four month high level. Whole milk powder prices declined to a six month low level throughout the Aug 17^th event, however, finishing lower for the sixth consecutive event.
• Total quantities sold for all products at the Aug 17^th event remained below previous year levels for the fourth consecutive week, down 28.0%. The Aug 17^th YOY decline in total quantities sold was the largest experienced throughout the past five years. Aug ’21 quantities sold for all products reached the lowest seasonal level on record.

Additional Report Details

Dairy product prices increased 0.3% within the Global Dairy Trade (GDT) event held Aug 17^th, finishing higher for the first time in the past nine auctions but remaining near recently experienced six month low levels. The GDT Price Index finished 13.2% 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 finished 26.5% above previous year price levels at the Aug 17^th auction, remaining at an eight year high seasonal level. The GDT Price Index finished 22.9% above the three year average price for the second auction of August, remaining above three year average figures for the 19^th consecutive event.

Within the latest auction, increases in prices were led by butter (+4.0%), followed by cheddar cheese (+2.8%), anhydrous milkfat (+1.5%) and skim milk powder (+1.1%). Lactose prices finished unchanged from the previous event while whole milk powder prices finished lower (-1.5%). Butter milk powder and sweet whey powder were not sold at the Aug 17^th 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 16^th 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 17^th event declined 6.4% from the previous event while finishing 28.0% below previous year figures. The weekly YOY decline in total quantities sold for all products was the fourth 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 August auctions declined 0.1% from average July volumes while finishing 27.2% below last year’s average volumes sold for the month of August. Aug ’21 volumes sold for all products reached the lowest seasonal level on record. The July – August seasonal decline in volumes sold was the first experienced on record. July – August volumes sold have increased by an average of 28.9% throughout the past ten years. There has been speculation that the reduced quantities sold are due to the removal of an aggressive bidder within the GDT auctions, which is presumably acquiring their product outside of the auction platform.

U.S. butter prices remained at a discount to GDT winning prices at the Aug 17^th event when accounting for differences in butterfat levels as GDT butter prices rebounded to a three month high level. U.S. spot butter prices are currently trading at a 20.0% discount to GDT prices while CME futures prices traded at a 17.3% 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 17^th event as GDT cheddar cheese prices finished higher for the third consecutive auction. U.S. spot cheddar cheese prices are currently trading at a 13.8% discount to GDT prices while CME futures prices traded at a 6.3% 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 17^th event when accounting for differences in protein values as GDT skim milk powder prices finished higher for the second consecutive auction. U.S. spot nonfat dry milk prices are currently trading at an 11.6% discount to GDT skim milk powder prices while CME futures prices traded at an 11.0% discount to GDT skim milk powder prices from Sep ’21 – Feb ’22.