Global Dairy Trade Results Update – GDT Price Index…
Dairy product prices declined for the third consecutive event within the Global Dairy Trade (GDT), as the GDT Price Index fell 7.9% in the auction held November 17th. The GDT Price Index declined by 46.8% in total over the ten auctions spanning Mar ’15 – Aug ’15 but had gained back nearly three quarters of the decline from Aug ’15 to Oct ’15. The most recent decline pushed the GDT Price Index back to a five auction low. 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 7.4% below the previous year figures and 33.9% below the three year average price for the second auction of November.
Declines in prices were led by whole milk powder, which finished down 11.0%. Whole milk powder has accounted for over half of the total GDT volume over the past two years. Declined in prices were also experienced in skim milk powder (-8.1%), anhydrous milkfat (-5.9%), cheddar cheese (-5.0%), rennet casein (-4.4%), lactose (-2.0%) and butter milk powder (-1.0%). Butter (+5.6%) was the only product to finish higher at the November 17th event. U.S. SMP and butter did not trade at the event for the 31st and 32nd 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 November 16th 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 November 17th event of 30,044 MT were 11.6% below the previous auction and the least product sold since June.
Volumes also remained lower on a seasonal basis as total quantities sold for all products within the November auctions were 24.8% below last year’s average volumes sold for the month of November and 33.6% below the previous three year average November quantities sold.
Within the GDT auction, butter offered by U.S. sellers, representing product sold by Dairy America, did not trade for the 32nd 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 declined to a new low at the August 4th auction prior to the most recent increases in prices.
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 recent auctions. U.S. spot butter prices are currently trading at a 140.6% premium to GDT prices while CME futures prices are trading at a 56.9% premium to GDT prices from Jan ’16 – May ’16. 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 (Dec ’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. U.S. spot cheddar cheese prices are currently trading at a 10.4% premium to GDT prices while CME futures prices are trading at a 29.1% premium to GDT prices from Jan ’16 – Mar ’16. Cheddar cheese was not sold at the GDT auction for Contract 1 (Dec ’15), Contract 5 (Apr ’16) and Contract 6 (May ’16).
Oceania and Europe GDT SMP prices have converged since mid-2014 as prices have moved downward in tandem. Europe SMP did not trade at the November 17th event, however EU prices at the previous November 3rd auction traded at a 3.8% discount to Oceania SMP prices. U.S. SMP, representing product sold by Dairy America, did not trade for the 31st straight auction after trading at 69 consecutive auctions from Oct ’11 to Aug ’14. Dairy America is currently the only U.S. seller offering SMP within the GDT as it was recently announced that Land O’ Lakes has formally withdrawn from the global auction platform. Land O’ Lakes first joined GDT in Mar ’14 but had not sold product via the GDT platform since Jan ’15. India SMP, representing product sold by Amul, also did not trade at the November 17th event.
Although SMP offered by U.S. sellers has not traded since Aug ’14, the most recent U.S. / Oceania SMP price premiums experienced within the GDT auction have been the highest experienced since Sep ’12. Oceania SMP prices for short-term contract periods reached a new low at the August 4th auction prior to the most recent increases in prices.
U.S. SMP spot prices are 8.6% below GDT prices however U.S. SMP prices are expected to regain a premium to GDT SMP prices on average throughout the remainder of 2015 and into 2016. CME NFDM futures prices are trading at a 9.2% premium to GDT SMP future month winning prices from Dec ’15 – May ’16.
Declines in prices were led by whole milk powder, which finished down 11.0%. Whole milk powder has accounted for over half of the total GDT volume over the past two years. Declined in prices were also experienced in skim milk powder (-8.1%), anhydrous milkfat (-5.9%), cheddar cheese (-5.0%), rennet casein (-4.4%), lactose (-2.0%) and butter milk powder (-1.0%). Butter (+5.6%) was the only product to finish higher at the November 17th event. U.S. SMP and butter did not trade at the event for the 31st and 32nd 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 November 16th 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 November 17th event of 30,044 MT were 11.6% below the previous auction and the least product sold since June.
Volumes also remained lower on a seasonal basis as total quantities sold for all products within the November auctions were 24.8% below last year’s average volumes sold for the month of November and 33.6% below the previous three year average November quantities sold.
Within the GDT auction, butter offered by U.S. sellers, representing product sold by Dairy America, did not trade for the 32nd 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 declined to a new low at the August 4th auction prior to the most recent increases in prices.
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 recent auctions. U.S. spot butter prices are currently trading at a 140.6% premium to GDT prices while CME futures prices are trading at a 56.9% premium to GDT prices from Jan ’16 – May ’16. 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 (Dec ’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. U.S. spot cheddar cheese prices are currently trading at a 10.4% premium to GDT prices while CME futures prices are trading at a 29.1% premium to GDT prices from Jan ’16 – Mar ’16. Cheddar cheese was not sold at the GDT auction for Contract 1 (Dec ’15), Contract 5 (Apr ’16) and Contract 6 (May ’16).
Oceania and Europe GDT SMP prices have converged since mid-2014 as prices have moved downward in tandem. Europe SMP did not trade at the November 17th event, however EU prices at the previous November 3rd auction traded at a 3.8% discount to Oceania SMP prices. U.S. SMP, representing product sold by Dairy America, did not trade for the 31st straight auction after trading at 69 consecutive auctions from Oct ’11 to Aug ’14. Dairy America is currently the only U.S. seller offering SMP within the GDT as it was recently announced that Land O’ Lakes has formally withdrawn from the global auction platform. Land O’ Lakes first joined GDT in Mar ’14 but had not sold product via the GDT platform since Jan ’15. India SMP, representing product sold by Amul, also did not trade at the November 17th event.
Although SMP offered by U.S. sellers has not traded since Aug ’14, the most recent U.S. / Oceania SMP price premiums experienced within the GDT auction have been the highest experienced since Sep ’12. Oceania SMP prices for short-term contract periods reached a new low at the August 4th auction prior to the most recent increases in prices.
U.S. SMP spot prices are 8.6% below GDT prices however U.S. SMP prices are expected to regain a premium to GDT SMP prices on average throughout the remainder of 2015 and into 2016. CME NFDM futures prices are trading at a 9.2% premium to GDT SMP future month winning prices from Dec ’15 – May ’16.