Executive Summary

Dairy product prices continued to increase during the GDT auction held Dec 7^th. Highlights from the most recent auction include:

• The GDT Price Index increased 1.4% at the Dec 7^th event, reaching a seven and a half year high level. The increase in the GDT Price Index was the seventh experienced throughout the past eight events.
• Increases in prices within the Dec 7^th event were widespread across products offered. Whole milk powder prices increased to a six month high level throughout the Dec 7^th event while butter prices reached a nine month high level. Anhydrous milkfat prices reached a four year high level while skim milk powder prices reached a seven year high level. Cheddar cheese prices continued to reach new record high levels throughout the Dec 7^th event.
• Total quantities sold for all products at the Dec 7^th event increased seasonally to an 11 month high level but remained below previous year levels for the 11^th consecutive auction, down 3.0%. Dec ’21 quantities sold for all products are on pace to reach a four year low seasonal level.

Additional Report Details

Dairy product prices increased 1.4% within the Global Dairy Trade (GDT) event held Dec 7^th, reaching a seven and a half year high level. The increase in the GDT Price Index was the seventh experienced throughout the past eight events. 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 33.6% above previous year price levels at the Dec 7^th auction, remaining at an eight year high seasonal level. The GDT Price Index finished 37.8% above the three year average price for the first auction of December, remaining above three year average figures for the 26^th consecutive event.

Within the latest auction, increases in prices were widespread across products offered. Increases in prices were led by butter (+4.6%), followed by lactose (+3.5%), anhydrous milkfat (+3.0%), butter milk powder (+2.9%), skim milk powder (+1.3%), cheddar cheese (+1.0%) and whole milk powder (+0.6%). Sweet whey powder was not sold at the Dec 7^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 Dec 6^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 Dec 7^th event increased 2.3% from the previous event but remained 3.0% below previous year figures. The YOY decline in total quantities sold for all products was the 11^th experienced in a row but the smallest experienced throughout the period. Total quantities sold typically reach seasonal low levels throughout the month of May, prior to increasing seasonally throughout the next several months. Total quantities sold for all products at the Dec 7^th event reached an 11 month high level, overall.

Volumes sold for all products within the first auction of December increased 3.1% from average November volumes but remained 2.5% below last year’s average volumes sold for the month of December. Dec ’21 volumes sold for all products are on pace to reach a four year low seasonal level. There has been speculation that the recently experienced 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 Dec 7^th event when accounting for differences in butterfat levels as GDT butter prices reached a nine month high level. U.S. spot butter prices are currently trading at a 21.5% discount to GDT prices while CME futures prices traded at a 21.0% discount to GDT prices from Jan ’22 – May ’22. Butter was not sold for Contract Period 6.

U.S. cheddar cheese prices remained at a discount to GDT winning prices at the Dec 7^th event as GDT cheddar cheese prices continued to reach new record high levels. U.S. spot cheddar cheese prices are currently trading at a 26.5% discount to GDT prices while CME futures prices traded at a 22.8% discount to GDT prices from Jan ’22 – Jun ’22.

U.S. nonfat dry milk futures prices remained at a discount to GDT skim milk powder winning prices at the Dec 7^th event when accounting for differences in protein values as GDT skim milk powder prices reached a seven year high level. U.S. spot nonfat dry milk prices are currently trading at a 10.1% discount to GDT skim milk powder prices while CME futures prices traded at an 11.1% discount to GDT skim milk powder prices from Jan ’22 – May ’22. Skim milk powder was not sold for Contract Period 6.