Global Dairy Trade Results Update – 9/20/16
Executive Summary
Dairy product prices continued to increase during the GDT event held Sep 20th. Highlights from the most recent auction include:
• The GDT Price Index increased 1.7% at the Sep 20th event, finishing at the highest level experienced since Mar ’15.
• Price gains were widespread across products offered at the Sep 20th event with the exception of whole milk powder, which declined by 0.2%.
• Total quantities sold for all products at the Sep 20th event declined 4.5% from the previous auction, finishing 0.1% below last year’s average volumes sold for the month of September.
Additional Report Details
Dairy product prices increased for the fourth consecutive auction within the Global Dairy Trade (GDT) during the event held Sep 20th as the GDT Price Index finished up 1.7%. The GDT Price Index reached a new 18 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 19.9% above the previous year price levels at the Sep 20th event but remained 9.0% below the three year average price for the second auction of September. The GDT Price Index had finished lower on a YOY basis for 14 consecutive auctions prior to increasing throughout the past eight events.
Within the latest auction, price gains were widespread and led by butter milk powder (+7.0%), followed by anhydrous milkfat (+4.6%), lactose (+3.7%), butter (+3.6%), skim milk powder (+3.0%), cheddar cheese (+2.2%) and rennet casein (+2.0%). Whole milk powder was the only product to decline at the Sep 20th event, finishing down 0.2%.
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 Sep 19th 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 Sep 20th event of 36,748 MT were 4.5% below the previous auction. GDT quantities sold typically increase seasonally until highs are reached throughout the months of August and September.
Volumes sold for all products within the September auctions finished 0.1% below last year’s average volumes sold for the month of September and 23.0% below the previous three year average September quantities sold.
U.S. butter prices continue to remain at a premium to GDT winning prices through the Sep 20th event, despite GDT butter prices increasing to a new 18 month high. U.S. spot butter prices are currently trading at a 14.2% premium to GDT prices while CME futures prices are trading at a 15.0% premium to GDT prices from Oct ’16 – Mar ’17. The U.S. butter price premiums were the smallest experienced in the past 17 months. 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 increasing to a new two year high at the Sep 20th event. U.S. spot cheddar cheese prices fell 7.6% below GDT prices however CME futures prices are trading at a 4.6% premium to GDT prices from Oct ’16 – Feb ’17. Cheddar cheese was not sold at the GDT auction for Contract 6 (Mar ’17).
U.S. NFDM spot prices are currently trading 14.1% below GDT prices as GDT SMP prices increased to a 17 month high at the Sep 20th event. U.S. NFDM prices are expected to remain at a slight discount to GDT SMP prices throughout future months, as GDT prices are trading at a 1.5% average premium to U.S. prices from Oct ’16 – Mar ’17.
The GDT Price Index finished 19.9% above the previous year price levels at the Sep 20th event but remained 9.0% below the three year average price for the second auction of September. The GDT Price Index had finished lower on a YOY basis for 14 consecutive auctions prior to increasing throughout the past eight events.
Within the latest auction, price gains were widespread and led by butter milk powder (+7.0%), followed by anhydrous milkfat (+4.6%), lactose (+3.7%), butter (+3.6%), skim milk powder (+3.0%), cheddar cheese (+2.2%) and rennet casein (+2.0%). Whole milk powder was the only product to decline at the Sep 20th event, finishing down 0.2%.
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 Sep 19th 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 Sep 20th event of 36,748 MT were 4.5% below the previous auction. GDT quantities sold typically increase seasonally until highs are reached throughout the months of August and September.
Volumes sold for all products within the September auctions finished 0.1% below last year’s average volumes sold for the month of September and 23.0% below the previous three year average September quantities sold.
U.S. butter prices continue to remain at a premium to GDT winning prices through the Sep 20th event, despite GDT butter prices increasing to a new 18 month high. U.S. spot butter prices are currently trading at a 14.2% premium to GDT prices while CME futures prices are trading at a 15.0% premium to GDT prices from Oct ’16 – Mar ’17. The U.S. butter price premiums were the smallest experienced in the past 17 months. 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 increasing to a new two year high at the Sep 20th event. U.S. spot cheddar cheese prices fell 7.6% below GDT prices however CME futures prices are trading at a 4.6% premium to GDT prices from Oct ’16 – Feb ’17. Cheddar cheese was not sold at the GDT auction for Contract 6 (Mar ’17).
U.S. NFDM spot prices are currently trading 14.1% below GDT prices as GDT SMP prices increased to a 17 month high at the Sep 20th event. U.S. NFDM prices are expected to remain at a slight discount to GDT SMP prices throughout future months, as GDT prices are trading at a 1.5% average premium to U.S. prices from Oct ’16 – Mar ’17.