Global Dairy Trade Results Update – 9/6/16
Executive Summary
Dairy product prices continued to increase during the GDT event held Sep 6th. Highlights from the most recent auction include:
• The GDT Price Index increased 7.7% at the Sep 6th event, finishing at the highest level experienced since Mar ’15.
• Price gains were widespread across all products offered at the Sep 6th event and led by anhydrous milkfat, followed by butter.
• Total quantities sold for all products at the Sep 6th event declined 2.7% from the 12 month high experienced during the previous month but finished 2.2% above last year’s average volumes sold for the month of September.
Additional Report Details
Dairy product prices increased for the third consecutive auction within the Global Dairy Trade (GDT) during the event held Sep 6th as the GDT Price Index finished up 7.7%. The GDT Price Index reached an 18 month high during the most recent event. 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 37.3% above the previous year price levels at the Sep 6th event but remained 7.1% below the three year average price for the first auction of September. The GDT Price Index had finished lower on a YOY basis for 14 consecutive auctions prior to increasing throughout the past seven events.
Within the latest auction, price gains were widespread and led by anhydrous milkfat (+15.4%), followed by butter (+14.9%), skim milk powder (+10.0%), cheddar cheese (+9.0%), butter milk powder (+6.8%), rennet casein (+6.7%), whole milk powder (+3.7%) and lactose (+2.0%).
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 Sep 2nd 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 Sep 6th event of 36,748 MT were 2.7% below the 12 month high experienced during the previous auction. GDT quantities sold typically increase seasonally until highs are reached throughout the months of August and September.
Volumes sold for all products within first auction of September finished 2.2% above last year’s average volumes sold for the month of September but remained 21.2% below the previous three year average September quantities sold.
U.S. butter prices continue to remain at a significant premium to GDT winning prices through the Sep 6th event, despite GDT butter prices increasing to an 18 month high. U.S. spot butter prices are currently trading at a 23.7% premium to GDT prices while CME futures prices are trading at a 23.1% premium to GDT prices from Oct ’16 – Mar ’17. The U.S. price premiums were the smallest experienced in the past 17 months. U.S. butter prices traded at an 83.3% premium to GDT butter prices over the second half of 2014 and a 53.9% premium to GDT butter prices throughout 2015.
U.S. cheddar cheese prices also continue to remain at a premium to GDT winning prices, despite GDT cheddar cheese prices increasing to a new two year high at the Sep 6th event. U.S. spot cheddar cheese prices are currently trading at a 5.2% premium to GDT prices while CME futures prices are trading at a 9.3% premium to GDT prices from Oct ’16 – Feb ’17. Cheddar cheese was not sold at the GDT auction for Contract 6 (Mar ’17).
U.S. NFDM spot prices are currently trading 16.2% below GDT prices as GDT SMP prices increased to an 11 month high at the Sep 6th event. U.S. NFDM prices are expected to regain a premium to GDT SMP prices throughout future months, however, as U.S. prices are trading at a 1.3% average premium to GDT prices from Oct ’16 – Mar ’17.
The GDT Price Index finished 37.3% above the previous year price levels at the Sep 6th event but remained 7.1% below the three year average price for the first auction of September. The GDT Price Index had finished lower on a YOY basis for 14 consecutive auctions prior to increasing throughout the past seven events.
Within the latest auction, price gains were widespread and led by anhydrous milkfat (+15.4%), followed by butter (+14.9%), skim milk powder (+10.0%), cheddar cheese (+9.0%), butter milk powder (+6.8%), rennet casein (+6.7%), whole milk powder (+3.7%) and lactose (+2.0%).
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 Sep 2nd 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 Sep 6th event of 36,748 MT were 2.7% below the 12 month high experienced during the previous auction. GDT quantities sold typically increase seasonally until highs are reached throughout the months of August and September.
Volumes sold for all products within first auction of September finished 2.2% above last year’s average volumes sold for the month of September but remained 21.2% below the previous three year average September quantities sold.
U.S. butter prices continue to remain at a significant premium to GDT winning prices through the Sep 6th event, despite GDT butter prices increasing to an 18 month high. U.S. spot butter prices are currently trading at a 23.7% premium to GDT prices while CME futures prices are trading at a 23.1% premium to GDT prices from Oct ’16 – Mar ’17. The U.S. price premiums were the smallest experienced in the past 17 months. U.S. butter prices traded at an 83.3% premium to GDT butter prices over the second half of 2014 and a 53.9% premium to GDT butter prices throughout 2015.
U.S. cheddar cheese prices also continue to remain at a premium to GDT winning prices, despite GDT cheddar cheese prices increasing to a new two year high at the Sep 6th event. U.S. spot cheddar cheese prices are currently trading at a 5.2% premium to GDT prices while CME futures prices are trading at a 9.3% premium to GDT prices from Oct ’16 – Feb ’17. Cheddar cheese was not sold at the GDT auction for Contract 6 (Mar ’17).
U.S. NFDM spot prices are currently trading 16.2% below GDT prices as GDT SMP prices increased to an 11 month high at the Sep 6th event. U.S. NFDM prices are expected to regain a premium to GDT SMP prices throughout future months, however, as U.S. prices are trading at a 1.3% average premium to GDT prices from Oct ’16 – Mar ’17.