Global Dairy Trade Results Update – GDT Price Index…
Dairy product prices continued to decline within the Global Dairy Trade (GDT), as the GDT Price Index fell 10.7% in the auction held July 15th. The GDT Price Index has declined for nine consecutive events, falling to levels not experienced since Dec ’02. The GDT Price Index represents a weighted-average of the percentage changes in prices between trading events for all products offered. Currently, the GDT Price Index is 41.1% below last year and 46.9% below the three year average price for the second auction of July.
Price declines were widespread across products offered at the event and led by cheddar cheese (-13.9%) and whole milk powder (-13.1%). Whole milk powder, which accounted for over half of the GDT volume over the past two years, declined for the tenth consecutive auction. Price declines were also experienced in anhydrous milkfat (-10.6%), skim milk powder (-10.1%), butter (-9.5%), rennet casein (-8.0%) and butter milk powder (-4.4%). Lactose was the only product to increase at the July 15th event, finishing 1.9% higher. U.S. SMP and butter did not trade at the event for the 23rd and 24th 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 July 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 July 15th event of 31,691 MT were 4.5% less than the previous auction. Jul ’15 average quantities sold for all products remain at a six month high as volumes continue to increase seasonally through the summer months.
Despite the increase in quantities sold, volumes remain lower than previous years on a seasonal basis. Total quantities sold for all products within the July auctions were 17.0% below last year’s average volumes sold for the month of July and 15.4% below the previous three year average July quantities sold.
Within the GDT auction, butter offered by U.S. sellers, representing product sold by Dairy America, did not trade for the 24th 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 a new low at the July 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 was reduced throughout the first several weeks of 2015 but has rebounded over the past nine auctions, with CME futures prices currently trading at an average 66.6% 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 (Aug ’15), Contract 3 (Oct ’15) and Contract 4 (Nov ’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 43.5% premium to GDT prices. Cheddar cheese was not sold at the GDT auction for Contact 1 (Aug ’15), Contract 3 (Oct ’15), Contract 5 (Dec ’15) and Contract 6 (Jan ’16).
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. Oceania SMP prices regained their premium, increasing to a 22 month high over Europe SMP prices in late March, but converged downward towards Europe SMP prices yet again throughout recent auctions. U.S. SMP, representing product sold by Dairy America and Land O’Lakes, did not trade for the 23rd straight auction after trading at 69 consecutive auctions from Oct ’11 to Aug ’14. Europe SMP, representing product sold by Arla and Euroserum, did not trade for the second consecutive auction after trading for 40 consecutive auctions from Nov ’13 to Jun ’15 while India SMP, representing product sold by Amul, did not trade for the sixth consecutive auction.
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 a new low at the July 15th auction.
U.S. SMP prices are expected to remain above GDT SMP prices throughout the second half of 2015, with CME NFDM futures prices trading at a 13.8% premium to GDT SMP future month winning prices from Aug ’15 – Jan ’16.
Price declines were widespread across products offered at the event and led by cheddar cheese (-13.9%) and whole milk powder (-13.1%). Whole milk powder, which accounted for over half of the GDT volume over the past two years, declined for the tenth consecutive auction. Price declines were also experienced in anhydrous milkfat (-10.6%), skim milk powder (-10.1%), butter (-9.5%), rennet casein (-8.0%) and butter milk powder (-4.4%). Lactose was the only product to increase at the July 15th event, finishing 1.9% higher. U.S. SMP and butter did not trade at the event for the 23rd and 24th 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 July 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 July 15th event of 31,691 MT were 4.5% less than the previous auction. Jul ’15 average quantities sold for all products remain at a six month high as volumes continue to increase seasonally through the summer months.
Despite the increase in quantities sold, volumes remain lower than previous years on a seasonal basis. Total quantities sold for all products within the July auctions were 17.0% below last year’s average volumes sold for the month of July and 15.4% below the previous three year average July quantities sold.
Within the GDT auction, butter offered by U.S. sellers, representing product sold by Dairy America, did not trade for the 24th 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 a new low at the July 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 was reduced throughout the first several weeks of 2015 but has rebounded over the past nine auctions, with CME futures prices currently trading at an average 66.6% 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 (Aug ’15), Contract 3 (Oct ’15) and Contract 4 (Nov ’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 43.5% premium to GDT prices. Cheddar cheese was not sold at the GDT auction for Contact 1 (Aug ’15), Contract 3 (Oct ’15), Contract 5 (Dec ’15) and Contract 6 (Jan ’16).
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. Oceania SMP prices regained their premium, increasing to a 22 month high over Europe SMP prices in late March, but converged downward towards Europe SMP prices yet again throughout recent auctions. U.S. SMP, representing product sold by Dairy America and Land O’Lakes, did not trade for the 23rd straight auction after trading at 69 consecutive auctions from Oct ’11 to Aug ’14. Europe SMP, representing product sold by Arla and Euroserum, did not trade for the second consecutive auction after trading for 40 consecutive auctions from Nov ’13 to Jun ’15 while India SMP, representing product sold by Amul, did not trade for the sixth consecutive auction.
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 a new low at the July 15th auction.
U.S. SMP prices are expected to remain above GDT SMP prices throughout the second half of 2015, with CME NFDM futures prices trading at a 13.8% premium to GDT SMP future month winning prices from Aug ’15 – Jan ’16.