Global Dairy Trade Results Update – 10/18/16
Executive Summary
Dairy product prices increased slightly during the GDT event held Oct 18th. Highlights from the most recent auction include:
• The GDT Price Index increased 1.4% at the Oct 18th event, finishing higher for the fifth time in the past six auctions.
• Increases in prices at the Oct 18th event were led by lactose, followed by whole milk powder and butter. Whole milk powder rebounded 2.9% from the three auction low experienced during the previous event.
• Total quantities sold for all products at the Oct 18th event declined 7.1% from the previous auction as volumes continue to decline seasonally. Total quantities sold throughout the October auctions finished 6.2% below last year’s average volumes sold for the month of October.
Additional Report Details
Dairy product prices increased slightly within the Global Dairy Trade (GDT) during the event held Oct 18th as the GDT Price Index finished up 1.4%. The GDT Price Index increased to the second highest figure experienced throughout the past 19 months. 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 10.6% above the previous year price levels at the Oct 18th event but remained 10.7% below the three year average price for the second auction of October. The GDT Price Index had finished lower on a YOY basis over 14 consecutive auctions prior to increasing throughout the past ten events.
Within the latest auction, price gains were led by lactose (+5.6%), followed by whole milk powder (+2.9%), butter (+2.6%), anhydrous milkfat (+1.1%) and butter milk powder (+0.2%). Skim milk powder (-0.3%), cheddar cheese (-3.7%) and rennet casein (-4.5) declined at the Oct 18th event.
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 Oct 17th 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 Oct 18th event of 31,525 MT were 7.1% below the previous auction. GDT quantities sold typically reach seasonal highs throughout the months of August and September prior to declining over the following several months.
Volumes sold for all products within the October auctions finished 6.2% below last year’s average volumes sold for the month of October and 25.7% below the previous three year average October quantities sold.
U.S. butter prices continue to remain at a slight premium to GDT winning prices through the Oct 18th event, despite GDT butter prices increasing by nearly 50% throughout the past three months. U.S. spot butter prices are currently trading at a 1.0% premium to GDT prices while CME futures prices are trading at a 6.8% premium to GDT prices from Nov ’16 – Apr ’17. The U.S. butter price premiums were the smallest experienced in the past 19 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 futures prices also continue to remain at a premium to GDT winning prices, despite GDT cheddar cheese prices remaining near a two year high at the Oct 18th event. U.S. spot cheddar cheese prices traded 0.2% below GDT prices however CME futures prices are trading at a 10.1% premium to GDT prices from Nov ’16 – Mar ’17. Cheddar cheese was not sold at the GDT auction for Contract 6 (Apr ’17).
U.S. NFDM spot prices are currently trading 14.2% below GDT prices as GDT SMP prices remained near an 18 month high at the Oct 18th event. U.S. NFDM prices are expected to remain at a slight discount to GDT SMP prices throughout future months, as GDT prices are trading at a 1.6% average premium to U.S. prices from Nov ’16 – Apr ’17.
The GDT Price Index finished 10.6% above the previous year price levels at the Oct 18th event but remained 10.7% below the three year average price for the second auction of October. The GDT Price Index had finished lower on a YOY basis over 14 consecutive auctions prior to increasing throughout the past ten events.
Within the latest auction, price gains were led by lactose (+5.6%), followed by whole milk powder (+2.9%), butter (+2.6%), anhydrous milkfat (+1.1%) and butter milk powder (+0.2%). Skim milk powder (-0.3%), cheddar cheese (-3.7%) and rennet casein (-4.5) declined at the Oct 18th event.
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 Oct 17th 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 Oct 18th event of 31,525 MT were 7.1% below the previous auction. GDT quantities sold typically reach seasonal highs throughout the months of August and September prior to declining over the following several months.
Volumes sold for all products within the October auctions finished 6.2% below last year’s average volumes sold for the month of October and 25.7% below the previous three year average October quantities sold.
U.S. butter prices continue to remain at a slight premium to GDT winning prices through the Oct 18th event, despite GDT butter prices increasing by nearly 50% throughout the past three months. U.S. spot butter prices are currently trading at a 1.0% premium to GDT prices while CME futures prices are trading at a 6.8% premium to GDT prices from Nov ’16 – Apr ’17. The U.S. butter price premiums were the smallest experienced in the past 19 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 futures prices also continue to remain at a premium to GDT winning prices, despite GDT cheddar cheese prices remaining near a two year high at the Oct 18th event. U.S. spot cheddar cheese prices traded 0.2% below GDT prices however CME futures prices are trading at a 10.1% premium to GDT prices from Nov ’16 – Mar ’17. Cheddar cheese was not sold at the GDT auction for Contract 6 (Apr ’17).
U.S. NFDM spot prices are currently trading 14.2% below GDT prices as GDT SMP prices remained near an 18 month high at the Oct 18th event. U.S. NFDM prices are expected to remain at a slight discount to GDT SMP prices throughout future months, as GDT prices are trading at a 1.6% average premium to U.S. prices from Nov ’16 – Apr ’17.