Executive Summary

Dairy product prices continued to increase during the GDT auction held Feb 1^st. Highlights from the most recent auction include:

• The GDT Price Index increased 4.1% at the Feb 1^st event, reaching a seven and a half year high level. The GDT Price Index has finished higher over ten of the past 12 auctions.
• Increases in prices within the Feb 1^st event were widespread across products offered for the second consecutive auction. Whole milk powder prices increased to an 11 month high level throughout the Feb 1^st event while skim milk powder prices reached a seven and a half year high level. Anhydrous milkfat prices reached a four year high level while butter and cheddar cheese prices each continued to reach new record high levels.
• Total quantities sold for all products at the Feb 1^st event finished 0.8% below previous year levels, declining on a YOY basis for the first time in the past three auctions.

Additional Report Details

Dairy product prices increased 4.1% within the Global Dairy Trade (GDT) event held Feb 1^st, reaching a seven and a half year high level. The GDT Price Index has finished higher over ten of the past 12 auctions. 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 28.0% above previous year price levels at the Feb 1^st auction, reaching an eight year high seasonal level. The GDT Price Index finished 38.5% above the three year average price for the first auction of February, remaining above three year average figures for the 30^th consecutive event.

Within the latest auction, increases in prices were widespread across products offered and led by butter milk powder (+9.7%), followed by whole milk powder (+5.8%), butter (+3.3%), cheddar cheese (+2.4%), skim milk powder (+2.1%) and anhydrous milkfat (+1.4%). Lactose and sweet whey powder were not sold at the Feb 1^st 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 Jan 31^st 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 1^st event declined 7.1% from the previous event while finishing 0.8% below previous year figures. The YOY decline in total quantities sold for all products was the first experienced throughout the past three auctions. Total quantities sold for all products had finished below previous year levels over 12 consecutive auctions through the end of the 2021 calendar year, prior to finishing higher throughout each of the two January events. Total quantities sold typically reach seasonal high levels throughout the month of November, prior to declining throughout the next several months.

Volumes sold for all products within the first auction of February declined 7.2% from average January volumes but remained 2.4% above last year’s average volumes sold for the month of February. Volumes sold for all products finished above previous year levels for the first time in the past six months throughout Jan ’22. 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 Feb 1^st event when accounting for differences in butterfat levels as GDT butter prices continued to reach new record high levels. U.S. spot butter prices are currently trading at a 9.7% discount to GDT prices while CME futures prices traded at a 13.9% discount to GDT prices from Mar ’22 – Jul ’22. Butter was not sold for Contract Period 6.

U.S. cheddar cheese prices remained at a discount to GDT winning prices at the Feb 1^st event as GDT cheddar cheese prices continued to reach new record high levels. U.S. spot cheddar cheese prices are currently trading at a 30.0% discount to GDT prices while CME futures prices traded at a 23.7% discount to GDT prices from Mar ’22 – Jun ’22. Cheddar cheese was not sold for Contract Period 5 and Contract Period 6.

U.S. nonfat dry milk futures prices remained at a discount to GDT skim milk powder winning prices at the Feb 1^st event when accounting for differences in protein values as GDT skim milk powder prices reached a seven and a half year high level. U.S. spot nonfat dry milk prices are currently trading at a 3.3% discount to GDT skim milk powder prices while CME futures prices traded at a 6.4% discount to GDT skim milk powder prices from Mar ’22 – Jul ’22. Skim milk powder was not sold for Contract Period 6.