Global Dairy Trade Results Update – 1/3/17
Executive Summary
Dairy product prices finished lower during the GDT event held Jan 3rd. Highlights from the most recent auction include:
Despite finishing lower, the GDT Price Index remained 44.0% above the previous year price levels at the Jan 3rd event and 4.9% above the three year average price for the first auction of January. The GDT Price Index has increased on a YOY basis throughout the past 15 events.
Within the latest auction, price declines were led by whole milk powder (-7.7%), followed by lactose (-2.9%), rennet casein (-2.7%) and anhydrous milkfat (-0.6%). The declines more than offset increases in prices experienced within butter (+0.5%), cheddar cheese (+1.4%), skim milk powder (+2.3%) and butter milk powder (+4.5%).
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 30th 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 Jan 3rd event of 22,396 MT finished 0.3% above the seven month low experienced during the previous auction. 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 first auction of January finished 5.9% below last year’s average volumes sold for the month of January and 32.8% below the previous three year average January quantities sold.
U.S. butter prices continue to remain at a premium to GDT winning prices through the Jan 3rd event, despite GDT butter prices increasing by over 60% throughout the past six months. U.S. spot butter prices are currently trading at an 18.9% premium to GDT prices while CME futures prices are trading at a 20.0% premium to GDT prices from Feb ’17 – Jul ’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 prior to prices converging over the second half of 2016.
U.S. cheddar cheese futures prices finished slightly below GDT winning prices as GDT cheddar cheese prices increased to a new two year high at the Jan 3rd event. U.S. spot cheddar cheese prices are currently trading 9.4% below GDT prices while CME futures prices are trading at a 0.8% discount to GDT prices from Feb ’17 – Jun ’17. Cheddar cheese was not sold at the GDT auction for Contract 6 (Jul ’17).
U.S. NFDM spot prices are currently trading 17.9% below GDT prices as GDT SMP prices reached a 21 month high at the Jan 3rd 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 an 11.4% average premium to U.S. prices from Feb ’17 – Jul ’17.
- The GDT Price Index declined for the second consecutive auction at the Jan 3rd event, finishing 3.9% below the previous event. Overall, the GDT Price Index finished at a four auction low at the Jan 3rd event.
- Declines in prices at the Jan 3rd event were led by whole milk powder, followed by lactose, rennet casein and anhydrous milkfat. Whole milk powder prices finished 7.7% lower at the Jan 3rd event, declining to a five auction low overall.
- Total quantities sold for all products at the Jan 3rd event increased 0.3% from the seven month low experienced during the previous auction but remained 5.9% below last year’s average volumes sold for the month of January.
Despite finishing lower, the GDT Price Index remained 44.0% above the previous year price levels at the Jan 3rd event and 4.9% above the three year average price for the first auction of January. The GDT Price Index has increased on a YOY basis throughout the past 15 events.
Within the latest auction, price declines were led by whole milk powder (-7.7%), followed by lactose (-2.9%), rennet casein (-2.7%) and anhydrous milkfat (-0.6%). The declines more than offset increases in prices experienced within butter (+0.5%), cheddar cheese (+1.4%), skim milk powder (+2.3%) and butter milk powder (+4.5%).
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 30th 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 Jan 3rd event of 22,396 MT finished 0.3% above the seven month low experienced during the previous auction. 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 first auction of January finished 5.9% below last year’s average volumes sold for the month of January and 32.8% below the previous three year average January quantities sold.
U.S. butter prices continue to remain at a premium to GDT winning prices through the Jan 3rd event, despite GDT butter prices increasing by over 60% throughout the past six months. U.S. spot butter prices are currently trading at an 18.9% premium to GDT prices while CME futures prices are trading at a 20.0% premium to GDT prices from Feb ’17 – Jul ’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 prior to prices converging over the second half of 2016.
U.S. cheddar cheese futures prices finished slightly below GDT winning prices as GDT cheddar cheese prices increased to a new two year high at the Jan 3rd event. U.S. spot cheddar cheese prices are currently trading 9.4% below GDT prices while CME futures prices are trading at a 0.8% discount to GDT prices from Feb ’17 – Jun ’17. Cheddar cheese was not sold at the GDT auction for Contract 6 (Jul ’17).
U.S. NFDM spot prices are currently trading 17.9% below GDT prices as GDT SMP prices reached a 21 month high at the Jan 3rd 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 an 11.4% average premium to U.S. prices from Feb ’17 – Jul ’17.