Executive Summary

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

• The GDT Price Index increased 5.1% at the Mar 1^st event, reaching a 14 year high level. The GDT Price Index has finished higher over 12 of the past 14 auctions.
• Increases in prices within the Mar 1^st event were widespread across products offered for the fourth consecutive auction. Butter, cheddar cheese and anhydrous milkfat prices all reached new record high levels throughout the Mar 1^st event. Skim milk powder and whole milk powder prices reached seven and a half and eight year high levels, respectively.
• Total quantities sold for all products at the Mar 1^st event finished 1.4% below previous year levels, finishing slightly lower on a YOY basis for the second time in the past three auctions.

Additional Report Details

Dairy product prices increased 5.1% within the Global Dairy Trade (GDT) event held Mar 1^st, reaching a 14 year high level. The GDT Price Index has finished higher over 12 of the past 14 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 18.4% above previous year price levels at the Mar 1^st auction, reaching a record high seasonal level. The GDT Price Index finished 42.1% above the three year average price for the first auction of March, remaining above three year average figures for the 32^nd consecutive event.

Within the latest auction, increases in prices were widespread across products offered and led by cheddar cheese (+10.9%), followed by butter (+5.9%), butter milk powder (+5.8%), whole milk powder (+5.7%), skim milk powder (+4.7%), anhydrous milkfat (+2.1%) and lactose (+0.9%). Sweet whey powder was not sold at the Mar 1^st event. Widespread increases in product prices have been exhibited throughout four consecutive auctions. Whole milk powder and skim milk powder combined to account for 79% of all products traded within GDT events throughout 2021.

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 Feb 28^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 Mar 1^st event declined seasonally to a five month low level, finishing 9.1% below the previous event and 1.4% below previous year figures. Total quantities sold have finished slightly below previous year levels over two of the past three auctions. 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 March declined 10.3% from average February volumes while finishing 3.8% below last year’s average volumes sold for the month of March. The Mar ’22 YOY decline in volumes sold would be the first experienced throughout the past four months.

U.S. butter prices remained at a discount to GDT winning prices at the Mar 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 16.1% discount to GDT prices while CME futures prices traded at a 17.1% discount to GDT prices from Apr ’22 – Aug ’22. Butter was not sold for Contract Period 6 (Sep ’22).

U.S. cheddar cheese prices remained at a discount to GDT winning prices at the Mar 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 32.3% discount to GDT prices while CME futures prices traded at a 27.5% discount to GDT prices from Apr ’22 – Sep ’22. Cheddar cheese was not sold for Contract Period 5 (Aug ’22).

U.S. nonfat dry milk futures prices remained at a discount to GDT skim milk powder winning prices at the Mar 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 an 11.6% discount to GDT skim milk powder prices while CME futures prices traded at a 14.0% discount to GDT skim milk powder prices from Apr ’22 – Aug ’22. Skim milk powder was not sold for Contract Period 6 (Sep ’22).

GDT equivalent Class III and Class IV milk prices reached values of $31.26/cwt and $29.11/cwt, respectively, throughout the most recent auction based on GDT butter, cheddar cheese and skim milk powder prices. The GDT equivalent Class III and Class IV prices each reached record high levels.

U.S. Class III milk prices are currently trading at the largest discount on record to GDT equivalent Class III milk prices (-$9.21/cwt). U.S. Class IV milk prices are currently trading at a ten month large discount to GDT equivalent Class IV milk prices (-$4.37/cwt).