Global Dairy Trade Results Update – 8/2/16
Executive Summary
Dairy product prices increased for the first time in four auctions during the GDT event held Aug 2nd. Highlights from the most recent auction include:
• The GDT Price Index increased 6.6% at the Aug 2nd event, finishing at the highest level experienced since November.
• Price gains were widespread across products offered at the Aug 2nd event with the only decline exhibited within cheddar cheese prices, which declined by less than one percent. Whole milk powder prices increased 9.9%, finishing at a 2016 high.
• Total quantities sold for all products at the Aug 2nd event reached a ten month high as demand continues to increase seasonally, however volumes remained 16.3% below the previous year volumes sold for the month of August.
Additional Report Details
Dairy product prices increased for the first time in four auctions within the Global Dairy Trade (GDT) during the event held Aug 2n as the GDT Price Index finished up 6.6%. The GDT Price Index had declined to a 14 auction low during mid-March but rebounded to a ten auction high during the second auction of June, prior to declining slightly in total throughout the July events. The GDT Price Index reached a nine month high during the most recent event. 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 44.0% above the previous year price levels at the Aug 2nd event but remained 20.7% below the three year average price for the first auction of August. The GDT Price Index had finished lower on a YOY basis for 14 consecutive auctions prior to increasing throughout the past five events.
Within the latest auction, price gains were widespread and led by rennet casein (+16.3%), followed by whole milk powder (+9.9%), butter milk powder (+7.7%), butter (+6.6%), anhydrous milkfat (+4.7%), lactose (+3.7%) and skim milk powder (+2.1%). Cheddar cheese was the only product to experience a decline in prices from the previous event, finishing 0.8% lower.
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 Aug 1st 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 Aug 2nd event of 34,928 MT were 11.4% above the previous auction, finishing at a ten month high. GDT quantities sold typically increase seasonally until highs are reached throughout the months of August and September.
Volumes sold for all products within first auction of August remained 16.3% below last year’s average volumes sold for the month of August and 28.9% below the previous three year average August quantities sold.
U.S. butter prices continue to remain at a significant premium to GDT winning prices through the Aug 2nd event. U.S. spot butter prices are currently trading at a 69.2% premium to GDT prices while CME futures prices are trading at a 67.3% premium to GDT prices from Sep ’16 – Feb ’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 prices also continue to remain at a premium to GDT winning prices. U.S. spot cheddar cheese prices are currently trading at a 35.5% premium to GDT prices while CME futures prices are trading at a 34.7% premium to GDT prices from Sep ’16 – Jan ’17. Cheddar cheese was not sold at the GDT auction for Contract 6 (Feb ’17).
U.S. NFDM spot prices are currently trading 8.2% below GDT SMP prices however U.S. NFDM prices are expected to regain a premium to GDT SMP prices during future months, as U.S. prices are trading at a 9.2% average premium to GDT prices from Sep ’16 – Feb ’17.
The GDT Price Index finished 44.0% above the previous year price levels at the Aug 2nd event but remained 20.7% below the three year average price for the first auction of August. The GDT Price Index had finished lower on a YOY basis for 14 consecutive auctions prior to increasing throughout the past five events.
Within the latest auction, price gains were widespread and led by rennet casein (+16.3%), followed by whole milk powder (+9.9%), butter milk powder (+7.7%), butter (+6.6%), anhydrous milkfat (+4.7%), lactose (+3.7%) and skim milk powder (+2.1%). Cheddar cheese was the only product to experience a decline in prices from the previous event, finishing 0.8% lower.
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 Aug 1st 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 Aug 2nd event of 34,928 MT were 11.4% above the previous auction, finishing at a ten month high. GDT quantities sold typically increase seasonally until highs are reached throughout the months of August and September.
Volumes sold for all products within first auction of August remained 16.3% below last year’s average volumes sold for the month of August and 28.9% below the previous three year average August quantities sold.
U.S. butter prices continue to remain at a significant premium to GDT winning prices through the Aug 2nd event. U.S. spot butter prices are currently trading at a 69.2% premium to GDT prices while CME futures prices are trading at a 67.3% premium to GDT prices from Sep ’16 – Feb ’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 prices also continue to remain at a premium to GDT winning prices. U.S. spot cheddar cheese prices are currently trading at a 35.5% premium to GDT prices while CME futures prices are trading at a 34.7% premium to GDT prices from Sep ’16 – Jan ’17. Cheddar cheese was not sold at the GDT auction for Contract 6 (Feb ’17).
U.S. NFDM spot prices are currently trading 8.2% below GDT SMP prices however U.S. NFDM prices are expected to regain a premium to GDT SMP prices during future months, as U.S. prices are trading at a 9.2% average premium to GDT prices from Sep ’16 – Feb ’17.