Global Dairy Trade Results Update – 11/1/16
Executive Summary
Dairy product prices increased sharply during the GDT event held Nov 1st. Highlights from the most recent auction include:
• The GDT Price Index increased 11.4% at the Nov 1st event, finishing higher for the sixth time in the past seven auctions and reaching a new two year high.
• Increases in prices at the Nov 1st event were led by whole milk powder, which increased by 19.8% throughout the auction.
• Total quantities sold for all products at the Nov 1st event declined 12.0% from the previous auction as volumes continue to decline seasonally. Total quantities sold at the Nov 1st event finished 13.4% below last year’s average volumes sold for the month of November.
Additional Report Details
Dairy product prices increased sharply within the Global Dairy Trade (GDT) during the event held Nov 1st as the GDT Price Index finished up 11.4%. The GDT Price Index increased to the highest figure experienced throughout the past two years. 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 33.2% above the previous year price levels at the Nov 1st event and 2.5% above the three year average price for the first auction of November. The GDT Price Index had finished lower on a YOY basis over 14 consecutive auctions prior to increasing throughout the past 11 events.
Within the latest auction, price gains were led by whole milk powder (+19.8%), followed by skim milk powder (+6.5%), butter (+4.0%), anhydrous milkfat (+2.6%) and cheddar cheese (+0.9%). Lactose (-4.0%), rennet casein (-4.8%) and butter milk powder (-5.4) declined at the Nov 1st 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 31st 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 Nov 1st event of 27,735 MT were 12.0% 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 first auction of November finished 13.4% below last year’s average volumes sold for the month of November and 33.6% below the previous three year average November quantities sold.
U.S. butter prices continue to remain at a slight premium to GDT winning prices through the Nov 1st event, despite GDT butter prices increasing by over 50% throughout the past three and a half months. U.S. spot butter prices are currently trading at a 3.4% premium to GDT prices while CME futures prices are trading at a 9.8% premium to GDT prices from Dec ’16 – May ’17. 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 Nov 1st event. U.S. spot cheddar cheese prices traded 14.5% above GDT prices while CME futures prices are trading at a 12.3% premium to GDT prices from Dec ’16 – Apr ’17. Cheddar cheese was not sold at the GDT auction for Contract 6 (May ’17).
U.S. NFDM spot prices are currently trading 21.4% below GDT prices as GDT SMP prices reached a 19 month high at the Nov 1st event. U.S. NFDM prices are expected to remain at a discount to GDT SMP prices throughout future months, as GDT prices are trading at a 9.6% average premium to U.S. prices from Dec ’16 – May ’17.
The GDT Price Index finished 33.2% above the previous year price levels at the Nov 1st event and 2.5% above the three year average price for the first auction of November. The GDT Price Index had finished lower on a YOY basis over 14 consecutive auctions prior to increasing throughout the past 11 events.
Within the latest auction, price gains were led by whole milk powder (+19.8%), followed by skim milk powder (+6.5%), butter (+4.0%), anhydrous milkfat (+2.6%) and cheddar cheese (+0.9%). Lactose (-4.0%), rennet casein (-4.8%) and butter milk powder (-5.4) declined at the Nov 1st 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 31st 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 Nov 1st event of 27,735 MT were 12.0% 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 first auction of November finished 13.4% below last year’s average volumes sold for the month of November and 33.6% below the previous three year average November quantities sold.
U.S. butter prices continue to remain at a slight premium to GDT winning prices through the Nov 1st event, despite GDT butter prices increasing by over 50% throughout the past three and a half months. U.S. spot butter prices are currently trading at a 3.4% premium to GDT prices while CME futures prices are trading at a 9.8% premium to GDT prices from Dec ’16 – May ’17. 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 Nov 1st event. U.S. spot cheddar cheese prices traded 14.5% above GDT prices while CME futures prices are trading at a 12.3% premium to GDT prices from Dec ’16 – Apr ’17. Cheddar cheese was not sold at the GDT auction for Contract 6 (May ’17).
U.S. NFDM spot prices are currently trading 21.4% below GDT prices as GDT SMP prices reached a 19 month high at the Nov 1st event. U.S. NFDM prices are expected to remain at a discount to GDT SMP prices throughout future months, as GDT prices are trading at a 9.6% average premium to U.S. prices from Dec ’16 – May ’17.