Global Dairy Trade Results Update – GDT Price Index…
Dairy product prices declined within the Global Dairy Trade (GDT) auction held April 15th for the third event in a row, as the GDT Price Index fell 3.6%. The GDT Price Index declined to levels not experienced since the first week of Dec ’14, erasing the six consecutive gains experienced from late December through early March. 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 began 2014 up 47.7% YOY but declined throughout much of the year, regressing to levels not experienced since Aug ’09 in early December. Currently, the GDT Price Index is 36.0% below last year and 37.1% below the three year average price for the second auction of April.
Price declines were led by skim milk powder (SMP) and butter, which declined 7.8% and 6.6%, respectively. Whole milk powder (WMP), which accounted for over half of the GDT volume over the past two years, declined for the fourth consecutive auction, finishing 4.3% lower, while rennet casein declined 0.6%. Cheddar cheese, anhydrous milkfat and butter milk powder increased at the auction, finishing 2.7%, 2.3% and 2.1% higher, respectively. Sweet whey powder and lactose were not sold at the April 15th event. U.S. SMP and butter did not trade at the event for the 17th and 18th straight times, respectively.
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 SMP has been adjusted to 35% protein content (equivalent to U.S. NFDM) in the $/lb columns below. CME spot and average futures prices are based on April 14th 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 April 15th event of 25,596 MT were 10.5% higher than the previous auction. Quantities sold for all products have increased over the past two events after declining for 11 consecutive auctions and reaching a 22 month low in Mar ’15.
Despite recent increases, quantities sold for all products remain lower than previous years on a seasonal basis. Total quantities sold for all products within the April auctions were 36.0% below last year’s average volumes sold for the month of April and 10.7% below the previous three year average April quantities sold.
Within the GDT auction, butter offered by U.S. sellers, representing product sold by Dairy America, did not trade for the 18th straight auction after trading at each auction since being offered in Jul ’13. Butter offered by U.S. sellers for short-term contract periods has recently traded at a significant premium to butter offered by Oceania sellers for short-term contract periods, representing product sold by Fonterra. Jul ’14 U.S. / Oceania butter price premiums within the GDT auction were the highest ever experienced. Fonterra butter prices for short-term contract periods increasing by a total of 55.6% from Nov ’14 to Mar ’15, but declined to levels not experienced since Dec ’14 in the Apr 15th auction.
GDT winning prices in butter have been historically higher than U.S. butter prices until the run-up in domestic butter prices over much of 2014. Over the past 27 bi-weekly events leading up to April ’14, GDT butter prices traded at a $0.19 average premium to U.S. butter prices. From Apr ’14 – Dec ’14, however, U.S. butter prices traded at a $0.92 average premium to GDT butter prices. The U.S. butter price premium has been reduced throughout 2015, but has rebounded over the past two auctions.
GDT future month winning prices remain lower than CME futures prices, with CME futures prices trading at an average 35.1% premium to GDT prices. U.S. butter prices traded at an 83.3% premium to GDT butter prices from Jun ’14 – Dec ’14. Butter was not sold at the GDT auction for Contract 1 (May ’15).
Cheddar cheese available for purchase at GDT auctions is currently offered only by Fonterra, so GDT winning prices in cheddar cheese are a viable metric for Oceania prices. GDT prices traded at a premium to U.S. prices for most of 2013, with U.S. prices outpacing GDT prices for the majority of the bimonthly events since Jan ’14. CME futures prices are also trading above GDT prices in future months, with CME futures prices trading at a 23.7% average premium to GDT prices. Cheddar cheese was not sold at the GDT auction for Contact 1 (May ’15), Contract 4 (Aug ’15), Contract 5 (Sep ’15) and Contract 6 (Oct ’15).
GDT SMP prices converged over the second half of 2014, with Oceania and Europe prices moving downward in tandem. Oceania and Europe GDT SMP prices on short-term contracts traded within 5% of each other in 13 of the 16 events from Apr ’14 – Nov ’14. More recently, Oceania SMP prices have regained their premium, increasing to a 22 month high over Europe SMP prices in late March, prior to both prices declining throughout April. India SMP, representing product sold by Amul, remained at levels significantly higher than Oceania and Europe prices. U.S. SMP, representing product sold by Dairy America and Land O’Lakes, did not trade for the 17th straight auction after trading at 69 consecutive auctions from Oct ’11 to Aug ’14.
Within the GDT auction, SMP offered by U.S. sellers on short-term contracts has recently traded at a premium to SMP offered by Oceania sellers on short-term contracts, representing product sold by Fonterra. The most recent U.S. / Oceania SMP price premiums experienced within the GDT auction have been the highest since Sep ’12. Oceania SMP prices for short-term contract periods increased 37.7% from Dec ’14 to Mar ’15, but have declined over recent auctions and reached new lows at the April 15th auction.
GDT and U.S. SMP prices are expected to converge over the next several months, with GDT SMP future month winning prices trading at a 0.4% premium to CME NFDM futures prices throughout May – Oct ’15.
The GDT Price Index began 2014 up 47.7% YOY but declined throughout much of the year, regressing to levels not experienced since Aug ’09 in early December. Currently, the GDT Price Index is 36.0% below last year and 37.1% below the three year average price for the second auction of April.
Price declines were led by skim milk powder (SMP) and butter, which declined 7.8% and 6.6%, respectively. Whole milk powder (WMP), which accounted for over half of the GDT volume over the past two years, declined for the fourth consecutive auction, finishing 4.3% lower, while rennet casein declined 0.6%. Cheddar cheese, anhydrous milkfat and butter milk powder increased at the auction, finishing 2.7%, 2.3% and 2.1% higher, respectively. Sweet whey powder and lactose were not sold at the April 15th event. U.S. SMP and butter did not trade at the event for the 17th and 18th straight times, respectively.
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 SMP has been adjusted to 35% protein content (equivalent to U.S. NFDM) in the $/lb columns below. CME spot and average futures prices are based on April 14th 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 April 15th event of 25,596 MT were 10.5% higher than the previous auction. Quantities sold for all products have increased over the past two events after declining for 11 consecutive auctions and reaching a 22 month low in Mar ’15.
Despite recent increases, quantities sold for all products remain lower than previous years on a seasonal basis. Total quantities sold for all products within the April auctions were 36.0% below last year’s average volumes sold for the month of April and 10.7% below the previous three year average April quantities sold.
Within the GDT auction, butter offered by U.S. sellers, representing product sold by Dairy America, did not trade for the 18th straight auction after trading at each auction since being offered in Jul ’13. Butter offered by U.S. sellers for short-term contract periods has recently traded at a significant premium to butter offered by Oceania sellers for short-term contract periods, representing product sold by Fonterra. Jul ’14 U.S. / Oceania butter price premiums within the GDT auction were the highest ever experienced. Fonterra butter prices for short-term contract periods increasing by a total of 55.6% from Nov ’14 to Mar ’15, but declined to levels not experienced since Dec ’14 in the Apr 15th auction.
GDT winning prices in butter have been historically higher than U.S. butter prices until the run-up in domestic butter prices over much of 2014. Over the past 27 bi-weekly events leading up to April ’14, GDT butter prices traded at a $0.19 average premium to U.S. butter prices. From Apr ’14 – Dec ’14, however, U.S. butter prices traded at a $0.92 average premium to GDT butter prices. The U.S. butter price premium has been reduced throughout 2015, but has rebounded over the past two auctions.
GDT future month winning prices remain lower than CME futures prices, with CME futures prices trading at an average 35.1% premium to GDT prices. U.S. butter prices traded at an 83.3% premium to GDT butter prices from Jun ’14 – Dec ’14. Butter was not sold at the GDT auction for Contract 1 (May ’15).
Cheddar cheese available for purchase at GDT auctions is currently offered only by Fonterra, so GDT winning prices in cheddar cheese are a viable metric for Oceania prices. GDT prices traded at a premium to U.S. prices for most of 2013, with U.S. prices outpacing GDT prices for the majority of the bimonthly events since Jan ’14. CME futures prices are also trading above GDT prices in future months, with CME futures prices trading at a 23.7% average premium to GDT prices. Cheddar cheese was not sold at the GDT auction for Contact 1 (May ’15), Contract 4 (Aug ’15), Contract 5 (Sep ’15) and Contract 6 (Oct ’15).
GDT SMP prices converged over the second half of 2014, with Oceania and Europe prices moving downward in tandem. Oceania and Europe GDT SMP prices on short-term contracts traded within 5% of each other in 13 of the 16 events from Apr ’14 – Nov ’14. More recently, Oceania SMP prices have regained their premium, increasing to a 22 month high over Europe SMP prices in late March, prior to both prices declining throughout April. India SMP, representing product sold by Amul, remained at levels significantly higher than Oceania and Europe prices. U.S. SMP, representing product sold by Dairy America and Land O’Lakes, did not trade for the 17th straight auction after trading at 69 consecutive auctions from Oct ’11 to Aug ’14.
Within the GDT auction, SMP offered by U.S. sellers on short-term contracts has recently traded at a premium to SMP offered by Oceania sellers on short-term contracts, representing product sold by Fonterra. The most recent U.S. / Oceania SMP price premiums experienced within the GDT auction have been the highest since Sep ’12. Oceania SMP prices for short-term contract periods increased 37.7% from Dec ’14 to Mar ’15, but have declined over recent auctions and reached new lows at the April 15th auction.
GDT and U.S. SMP prices are expected to converge over the next several months, with GDT SMP future month winning prices trading at a 0.4% premium to CME NFDM futures prices throughout May – Oct ’15.