Global Dairy Trade Results Update – 12/20/16
Executive Summary
Dairy product prices finished slightly lower during the GDT event held Dec 20th. Highlights from the most recent auction include:
Despite finishing slightly lower, the GDT Price Index remained 47.3% above the previous year price levels at the Dec 20th event and 9.3% above the three year average price for the first auction of December. The GDT Price Index has increased on a YOY basis throughout the past 14 events.
Within the latest auction, price declines were led by anhydrous milkfat (-2.3%), followed by lactose (-1.6%) and whole milk powder (-0.8%). The declines more than offset increases in prices experienced within butter (+0.5%), cheddar cheese (+1.9%), butter milk powder (+3.1%) and rennet casein (+3.3%). Skim milk powder prices remained flat at the Dec 20th event.
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 Dec 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 Dec 20th event of 22,321 MT finished 0.7% below the previous auction, reaching a seven month low. GDT quantities sold typically reach seasonal highs throughout the months of August and September prior to declining over the following several months.
Volumes sold for all products within the December auctions finished 15.6% below last year’s average volumes sold for the month of December and 40.9% below the previous three year average December quantities sold.
U.S. butter prices continue to remain at a premium to GDT winning prices through the Dec 20th event, despite GDT butter prices increasing by nearly 60% throughout the past five months. U.S. spot butter prices are currently trading at an 18.4% premium to GDT prices while CME futures prices are trading at an 18.6% premium to GDT prices from Jan ’17 – Jun ’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 futures prices also continue to remain at a slight premium to GDT winning prices, despite GDT cheddar cheese prices reaching a new two year high at the Dec 20th event. U.S. spot cheddar cheese prices are currently trading 2.9% below GDT prices however CME futures prices are trading at a 1.8% premium to GDT prices from Jan ’17 – May ’17. Cheddar cheese was not sold at the GDT auction for Contract 6 (Jun ’17).
U.S. NFDM spot prices are currently trading 16.5% below GDT prices as GDT SMP prices reached a 21 month high at the Dec 20th event. U.S. NFDM prices are expected to remain at a discount to GDT SMP prices throughout future months, as GDT prices are trading at a 10.7% average premium to U.S. prices from Jan ’17 – Jun ’17.
- The GDT Price Index declined slightly at the Dec 20th event, finishing 0.5% below the two year high experienced during the previous event. The decline in the GDT Price Index was the first experienced throughout the past five auctions.
- Declines in prices at the Dec 20th event were led by anhydrous milkfat, followed by lactose and whole milk powder. Whole milk powder prices had increased 34.0% throughout the past four auctions prior to declining by less than one percent at the Dec 20th event.
- Total quantities sold for all products at the Dec 20th event declined 0.7% from the previous auction, reaching a seven month low. Total quantities sold within the December events finished 15.6% below last year’s average volumes sold for the month of December.
Despite finishing slightly lower, the GDT Price Index remained 47.3% above the previous year price levels at the Dec 20th event and 9.3% above the three year average price for the first auction of December. The GDT Price Index has increased on a YOY basis throughout the past 14 events.
Within the latest auction, price declines were led by anhydrous milkfat (-2.3%), followed by lactose (-1.6%) and whole milk powder (-0.8%). The declines more than offset increases in prices experienced within butter (+0.5%), cheddar cheese (+1.9%), butter milk powder (+3.1%) and rennet casein (+3.3%). Skim milk powder prices remained flat at the Dec 20th event.
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 Dec 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 Dec 20th event of 22,321 MT finished 0.7% below the previous auction, reaching a seven month low. GDT quantities sold typically reach seasonal highs throughout the months of August and September prior to declining over the following several months.
Volumes sold for all products within the December auctions finished 15.6% below last year’s average volumes sold for the month of December and 40.9% below the previous three year average December quantities sold.
U.S. butter prices continue to remain at a premium to GDT winning prices through the Dec 20th event, despite GDT butter prices increasing by nearly 60% throughout the past five months. U.S. spot butter prices are currently trading at an 18.4% premium to GDT prices while CME futures prices are trading at an 18.6% premium to GDT prices from Jan ’17 – Jun ’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 futures prices also continue to remain at a slight premium to GDT winning prices, despite GDT cheddar cheese prices reaching a new two year high at the Dec 20th event. U.S. spot cheddar cheese prices are currently trading 2.9% below GDT prices however CME futures prices are trading at a 1.8% premium to GDT prices from Jan ’17 – May ’17. Cheddar cheese was not sold at the GDT auction for Contract 6 (Jun ’17).
U.S. NFDM spot prices are currently trading 16.5% below GDT prices as GDT SMP prices reached a 21 month high at the Dec 20th event. U.S. NFDM prices are expected to remain at a discount to GDT SMP prices throughout future months, as GDT prices are trading at a 10.7% average premium to U.S. prices from Jan ’17 – Jun ’17.