Global Dairy Trade Results Update – GDT Price Index…
Dairy product prices increased for the first time since Mar ’15 within the Global Dairy Trade (GDT), as the GDT Price Index increased 14.8% in the auction held August 18th. The GDT Price Index had declined by 46.8% in total over the ten previous auctions. The GDT Price Index represents a weighted-average of the percentage changes in prices between trading events for all products offered. Despite the increase during the August 18th event, the GDT Price Index remains 32.6% below last year and 44.7% below the three year average price for the second auction of August.
Price gains were led by anhydrous milkfat (+26.6%), followed by whole milk powder (+19.1%). Whole milk powder, which accounted for over half of the GDT volume over the past two years, increased for the first time since Feb ’15. Price gains were also experienced in butter (+10.8%), skim milk powder (+8.5%), cheddar cheese (+4.4%) and rennet casein (+3.0%). Butter milk powder and lactose were the only products to decline at the August 18th event, finishing 13.8% and 7.8% lower, respectively. U.S. SMP and butter did not trade at the event for the 25th and 26th 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 August 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 August 18th event of 36,904 MT were 20.7% below the nine month high experienced in the previous auction. Despite the decline, volumes sold remained at the second highest level of 2015.
Volumes were also lower than previous years on a seasonal basis. Total quantities sold for all products within the August auctions were 2.0% below last year’s average volumes sold for the month of August and 17.0% below the previous three year average August quantities sold.
Within the GDT auction, butter offered by U.S. sellers, representing product sold by Dairy America, did not trade for the 26th 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 had declined to a new low at the August 4th auction, prior to the most recent increase 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, with CME futures prices currently trading at an average 73.7% 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 (Sep ’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 43.0% premium to GDT prices. Cheddar cheese was not sold at the GDT auction for Contact 1 (Sep ’15), Contract 5 (Jan ’16) and Contract 6 (Feb ’16).
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. Oceania SMP prices regained their premium, increasing to a 22 month high over Europe SMP prices in late March, but converged downward towards Europe SMP prices yet again throughout recent auctions, currently trading 20.0% below Europe prices.
U.S. SMP, representing product sold by Dairy America, did not trade for the 25th 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 has not sold product via the GDT platform since Jan ’15. India SMP, representing product sold by Amul, did not trade for the eighth consecutive auction while EU SMP traded for the first time in four auctions at the August 18th event.
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 for short-term contract periods reached a new low at the August 4th auction prior to the most recent increase in prices.
U.S. SMP prices are expected to remain above GDT SMP prices throughout the remainder of 2015 and into 2016, with CME NFDM futures prices trading at a 28.6% premium to GDT SMP future month winning prices from Oct ’15 – Feb ’16.
Price gains were led by anhydrous milkfat (+26.6%), followed by whole milk powder (+19.1%). Whole milk powder, which accounted for over half of the GDT volume over the past two years, increased for the first time since Feb ’15. Price gains were also experienced in butter (+10.8%), skim milk powder (+8.5%), cheddar cheese (+4.4%) and rennet casein (+3.0%). Butter milk powder and lactose were the only products to decline at the August 18th event, finishing 13.8% and 7.8% lower, respectively. U.S. SMP and butter did not trade at the event for the 25th and 26th 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 August 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 August 18th event of 36,904 MT were 20.7% below the nine month high experienced in the previous auction. Despite the decline, volumes sold remained at the second highest level of 2015.
Volumes were also lower than previous years on a seasonal basis. Total quantities sold for all products within the August auctions were 2.0% below last year’s average volumes sold for the month of August and 17.0% below the previous three year average August quantities sold.
Within the GDT auction, butter offered by U.S. sellers, representing product sold by Dairy America, did not trade for the 26th 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 had declined to a new low at the August 4th auction, prior to the most recent increase 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, with CME futures prices currently trading at an average 73.7% 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 (Sep ’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 43.0% premium to GDT prices. Cheddar cheese was not sold at the GDT auction for Contact 1 (Sep ’15), Contract 5 (Jan ’16) and Contract 6 (Feb ’16).
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. Oceania SMP prices regained their premium, increasing to a 22 month high over Europe SMP prices in late March, but converged downward towards Europe SMP prices yet again throughout recent auctions, currently trading 20.0% below Europe prices.
U.S. SMP, representing product sold by Dairy America, did not trade for the 25th 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 has not sold product via the GDT platform since Jan ’15. India SMP, representing product sold by Amul, did not trade for the eighth consecutive auction while EU SMP traded for the first time in four auctions at the August 18th event.
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 for short-term contract periods reached a new low at the August 4th auction prior to the most recent increase in prices.
U.S. SMP prices are expected to remain above GDT SMP prices throughout the remainder of 2015 and into 2016, with CME NFDM futures prices trading at a 28.6% premium to GDT SMP future month winning prices from Oct ’15 – Feb ’16.