Global Dairy Trade Results Update – GDT Price Index…
Dairy product prices declined within the Global Dairy Trade (GDT) auction held April 1st for the second event in a row after six consecutive increases were experienced from Dec ’14 – Feb ’15. The GDT Price Index declined 10.8% on the session, which was the largest decline in over four and a half years on a percentage basis. Stabilization in prices has been experienced of late, with the GDT Price Index increasing by 26.6% over the past ten auctions prior to the most recent declines, although total volume sold has been below historical norms over much of the period. 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 began 2014 up 47.7% YOY but declined throughout much of the year, regressing to levels not experienced since Aug ’09 in early December. Currently, the GDT Price Index is 35.3% below last year and 36.5% below the three year average price for the first auction of April.
Price declines were widespread across all dairy products offered at the event and led by butter milk powder, which declined 25.1%. Whole milk powder (WMP), which accounted for over half of the GDT volume over the past two years, declined for the third consecutive auction, finishing 13.3% lower. Other price declines at the April 1st event included cheddar cheese falling 10.5%, skim milk powder (SMP) falling 9.9%, rennet casein falling 8.0%, butter falling 7.6% and anhydrous milkfat falling 5.3%. Sweet whey powder and lactose were not sold at the April 1st event. U.S. SMP and butter did not trade at the event for the 16th and 17th 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 March 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 April 1st event of 23,162 MT were 14.3% higher than the previous auction. Quantities sold for all products had declined for 11 consecutive auctions and reached a 22 month low prior to the 14.3% increase experienced April 1st.
Quantities sold for all products remain lower than previous years on a seasonal basis. Total quantities sold for all products within the April auction were 39.2% below last year’s average volumes sold for the month of April and 15.2% below the previous three year average April quantities sold.
Within the GDT auction, butter offered by U.S. sellers, representing product sold by Dairy America, did not trade for the 17th 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 continued to decline through October but have reversed trend, increasing by a total of 55.6% over the past eight auctions prior to the most recent price decline on March 17th. Within the April 1st auction, Fonterra butter did not trade within short-term contracts for the first time since being offered in Feb ’13.
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 has been reduced in recent weeks, prior to rebounding over the past auction.
GDT future month winning prices remain lower than CME futures prices, with CME futures prices trading at an average 27.4% 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 (May ’15), Contract 2 (Jun ’15), Contract 5 (Sep ’15) and Contract 6 (Oct ’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 33.1% average premium to GDT prices. Cheddar cheese was not sold at the GDT auction for Contact 1 (May ’15), Contract 4 (Aug ’15), Contract 5 (Sep ’15) and Contract 6 (Oct ’15).
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. More recently, Oceania SMP prices have regained their premium, increasing to a 22 month high over Europe SMP prices in late March prior to both prices declining in the April 1st event. India SMP, representing product sold by Amul, did not trade at the April 1st event after trading for four consecutive events from Feb ’14 – Mar ’14. U.S. SMP, representing product sold by Dairy America and Land O’Lakes, did not trade for the 16th straight auction after trading at 69 consecutive auctions from Oct ’11 to Aug ’14.
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 continued to decline throughout much of 2014 but have rebounded off of lows experienced in late Nov ’14 and are currently trading at a premium to CME NFDM futures prices, despite the most recent decline at the April 1st event.
GDT and U.S. SMP prices are expected to converge throughout the third quarter of 2015, with CME NFDM futures prices increasing to a 6.0% premium to GDT SMP future month winning prices in Oct ’15 when using a 35% normalized protein content. SMP was not sold at the GDT auction for Contact 1 (May ’15).
The GDT Price Index began 2014 up 47.7% YOY but declined throughout much of the year, regressing to levels not experienced since Aug ’09 in early December. Currently, the GDT Price Index is 35.3% below last year and 36.5% below the three year average price for the first auction of April.
Price declines were widespread across all dairy products offered at the event and led by butter milk powder, which declined 25.1%. Whole milk powder (WMP), which accounted for over half of the GDT volume over the past two years, declined for the third consecutive auction, finishing 13.3% lower. Other price declines at the April 1st event included cheddar cheese falling 10.5%, skim milk powder (SMP) falling 9.9%, rennet casein falling 8.0%, butter falling 7.6% and anhydrous milkfat falling 5.3%. Sweet whey powder and lactose were not sold at the April 1st event. U.S. SMP and butter did not trade at the event for the 16th and 17th 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 March 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 April 1st event of 23,162 MT were 14.3% higher than the previous auction. Quantities sold for all products had declined for 11 consecutive auctions and reached a 22 month low prior to the 14.3% increase experienced April 1st.
Quantities sold for all products remain lower than previous years on a seasonal basis. Total quantities sold for all products within the April auction were 39.2% below last year’s average volumes sold for the month of April and 15.2% below the previous three year average April quantities sold.
Within the GDT auction, butter offered by U.S. sellers, representing product sold by Dairy America, did not trade for the 17th 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 continued to decline through October but have reversed trend, increasing by a total of 55.6% over the past eight auctions prior to the most recent price decline on March 17th. Within the April 1st auction, Fonterra butter did not trade within short-term contracts for the first time since being offered in Feb ’13.
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 has been reduced in recent weeks, prior to rebounding over the past auction.
GDT future month winning prices remain lower than CME futures prices, with CME futures prices trading at an average 27.4% 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 (May ’15), Contract 2 (Jun ’15), Contract 5 (Sep ’15) and Contract 6 (Oct ’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 33.1% average premium to GDT prices. Cheddar cheese was not sold at the GDT auction for Contact 1 (May ’15), Contract 4 (Aug ’15), Contract 5 (Sep ’15) and Contract 6 (Oct ’15).
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. More recently, Oceania SMP prices have regained their premium, increasing to a 22 month high over Europe SMP prices in late March prior to both prices declining in the April 1st event. India SMP, representing product sold by Amul, did not trade at the April 1st event after trading for four consecutive events from Feb ’14 – Mar ’14. U.S. SMP, representing product sold by Dairy America and Land O’Lakes, did not trade for the 16th straight auction after trading at 69 consecutive auctions from Oct ’11 to Aug ’14.
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 continued to decline throughout much of 2014 but have rebounded off of lows experienced in late Nov ’14 and are currently trading at a premium to CME NFDM futures prices, despite the most recent decline at the April 1st event.
GDT and U.S. SMP prices are expected to converge throughout the third quarter of 2015, with CME NFDM futures prices increasing to a 6.0% premium to GDT SMP future month winning prices in Oct ’15 when using a 35% normalized protein content. SMP was not sold at the GDT auction for Contact 1 (May ’15).