Global Dairy Trade Results Update – GDT Price Index…
Dairy product prices increased for the fourth consecutive event within the Global Dairy Trade (GDT), as the GDT Price Index increased 9.9% in the auction held October 6th. The GDT Price Index had declined by 46.8% in total over the ten auctions spanning Mar ’15 – Aug ’15 but has gained back nearly three quarters of the decline over the past four auctions. 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 increased above the previous year figures for the first time of the year, finishing 9.8% above last year but remains 20.8% below the three year average price for the first auction of October.
Price gains were led by butter milk powder (+13.8%), skim milk powder (+13.4%) and whole milk powder (+12.9%). Whole milk powder has accounted for over half of the total GDT volume over the past two years. Price gains were also experienced in anhydrous milkfat (+9.9%), lactose (+5.9%), rennet casein (+4.0%) and cheddar cheese (+0.5%). Butter was the only product to decline at the October 6th event, finishing 2.3% lower than the previous auction. U.S. SMP and butter did not trade at the event for the 28th and 29th 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 October 5th 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 October 6th event of 35,243 MT were 2.2% below the previous auction but the fifth most sold within 2015.
Volumes also remained lower on a seasonal basis as total quantities sold for all products within the first auction of October were 33.4% below last year’s average volumes sold for the month of October and 31.0% below the previous three year average October quantities sold.
Within the GDT auction, butter offered by U.S. sellers, representing product sold by Dairy America, did not trade for the 29th 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 increases 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. U.S. butter prices are currently trading at a 74.8% premium to GDT prices while CME futures prices are trading at a 36.3% premium to GDT prices from Dec ’15 – Apr ’16. 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 (Nov ’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. U.S. cheddar cheese prices are currently trading at a 17.9% premium to GDT prices while CME futures prices are trading at an 18.8% premium to GDT prices from Dec ’15 – Feb ’16. Cheddar cheese was not sold at the GDT auction for Contact 1 (Nov ’15), Contract 5 (Mar ’16) and Contract 6 (Apr ’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 through the early months of 2015 and once again increased to a seven month high over Europe SMP prices during the October 6th auction, trading 14.0% above European prices.
U.S. SMP, representing product sold by Dairy America, did not trade for the 28th 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 had not sold product via the GDT platform since Jan ’15. India SMP, representing product sold by Amul, traded for the first time in 11 auctions, finishing above Oceania and Europe prices.
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 increases in prices.
After declining below GDT SMP prices throughout recent weeks, U.S. SMP prices have regained a 3.9% premium to GDT prices. U.S. SMP prices are expected to remain above GDT SMP prices on average throughout the remainder of 2015 and into 2016, with CME NFDM futures prices trading at a 9.8% premium to GDT SMP future month winning prices from Nov ’15 – Apr ’16.
Price gains were led by butter milk powder (+13.8%), skim milk powder (+13.4%) and whole milk powder (+12.9%). Whole milk powder has accounted for over half of the total GDT volume over the past two years. Price gains were also experienced in anhydrous milkfat (+9.9%), lactose (+5.9%), rennet casein (+4.0%) and cheddar cheese (+0.5%). Butter was the only product to decline at the October 6th event, finishing 2.3% lower than the previous auction. U.S. SMP and butter did not trade at the event for the 28th and 29th 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 October 5th 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 October 6th event of 35,243 MT were 2.2% below the previous auction but the fifth most sold within 2015.
Volumes also remained lower on a seasonal basis as total quantities sold for all products within the first auction of October were 33.4% below last year’s average volumes sold for the month of October and 31.0% below the previous three year average October quantities sold.
Within the GDT auction, butter offered by U.S. sellers, representing product sold by Dairy America, did not trade for the 29th 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 increases 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. U.S. butter prices are currently trading at a 74.8% premium to GDT prices while CME futures prices are trading at a 36.3% premium to GDT prices from Dec ’15 – Apr ’16. 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 (Nov ’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. U.S. cheddar cheese prices are currently trading at a 17.9% premium to GDT prices while CME futures prices are trading at an 18.8% premium to GDT prices from Dec ’15 – Feb ’16. Cheddar cheese was not sold at the GDT auction for Contact 1 (Nov ’15), Contract 5 (Mar ’16) and Contract 6 (Apr ’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 through the early months of 2015 and once again increased to a seven month high over Europe SMP prices during the October 6th auction, trading 14.0% above European prices.
U.S. SMP, representing product sold by Dairy America, did not trade for the 28th 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 had not sold product via the GDT platform since Jan ’15. India SMP, representing product sold by Amul, traded for the first time in 11 auctions, finishing above Oceania and Europe prices.
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 increases in prices.
After declining below GDT SMP prices throughout recent weeks, U.S. SMP prices have regained a 3.9% premium to GDT prices. U.S. SMP prices are expected to remain above GDT SMP prices on average throughout the remainder of 2015 and into 2016, with CME NFDM futures prices trading at a 9.8% premium to GDT SMP future month winning prices from Nov ’15 – Apr ’16.