Global Dairy Trade Results Update – 2/7/17
Executive Summary
Dairy product prices increased slightly during the GDT event held Feb 7th. Highlights from the most recent auction include:
The GDT Price Index finished 60.7% above the previous year price levels at the Feb 7th event and 5.3% above the three year average price for the first auction of February. The GDT Price Index has increased on a YOY basis throughout the past 17 events.
Within the latest auction, increases in prices were led by lactose (+12.4%), followed by butter (+4.9%), anhydrous milkfat (+4.0%), whole milk powder (+1.0%) and skim milk powder (+0.1%). The increases more than offset declines in prices experienced within rennet casein (-0.4%), cheddar cheese (-3.7%) and butter milk powder (-7.5%).
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 Feb 6th 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 Feb 7th event of 21,273 MT finished 3.4% below the previous auction, reaching a 17 auction 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 Feb 7th event finished 8.5% below last year’s average volumes sold for the month of February and 23.8% below the previous three year average February quantities sold.
U.S. butter prices continue to remain at a premium to GDT winning prices through the Feb 7th event, despite GDT butter prices increasing by over 70% throughout the past seven months. U.S. spot butter prices are currently trading at a 6.1% premium to GDT prices while CME futures prices are trading at an 8.9% premium to GDT prices from Mar ’17 – Aug ’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 above GDT winning prices as GDT cheddar cheese prices declined from the two and a half year high experienced during the previous event. U.S. spot cheddar cheese prices are currently trading 0.7% below GDT prices however CME futures prices are trading at a 1.7% premium to GDT prices from Mar ’17 – Jul ’17. Cheddar cheese was not sold at the GDT auction for Contract 6 (Aug ’17).
U.S. NFDM spot prices are currently trading 22.8% below GDT prices despite GDT SMP prices remaining largely flat throughout the Feb 7th 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 20.9% average premium to U.S. prices from Mar ’17 – Aug ’17.
- The GDT Price Index increased for the second consecutive auction at the Feb 7th event, finishing 1.3% above the previous event.
- Butter prices increased over the eighth consecutive auction at the Feb 7th event however cheddar cheese prices declined for the first time in seven events. Whole milk powder prices rebounded from the six auction low experienced during the previous event while skim milk powder prices were largely flat.
- Total quantities sold for all products at the Feb 7th event declined 3.4% from the previous auction, reaching a 17 auction low. Total quantities sold within the Feb 7th event finished 8.5% below last year’s average volumes sold for the month of February.
The GDT Price Index finished 60.7% above the previous year price levels at the Feb 7th event and 5.3% above the three year average price for the first auction of February. The GDT Price Index has increased on a YOY basis throughout the past 17 events.
Within the latest auction, increases in prices were led by lactose (+12.4%), followed by butter (+4.9%), anhydrous milkfat (+4.0%), whole milk powder (+1.0%) and skim milk powder (+0.1%). The increases more than offset declines in prices experienced within rennet casein (-0.4%), cheddar cheese (-3.7%) and butter milk powder (-7.5%).
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 Feb 6th 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 Feb 7th event of 21,273 MT finished 3.4% below the previous auction, reaching a 17 auction 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 Feb 7th event finished 8.5% below last year’s average volumes sold for the month of February and 23.8% below the previous three year average February quantities sold.
U.S. butter prices continue to remain at a premium to GDT winning prices through the Feb 7th event, despite GDT butter prices increasing by over 70% throughout the past seven months. U.S. spot butter prices are currently trading at a 6.1% premium to GDT prices while CME futures prices are trading at an 8.9% premium to GDT prices from Mar ’17 – Aug ’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 above GDT winning prices as GDT cheddar cheese prices declined from the two and a half year high experienced during the previous event. U.S. spot cheddar cheese prices are currently trading 0.7% below GDT prices however CME futures prices are trading at a 1.7% premium to GDT prices from Mar ’17 – Jul ’17. Cheddar cheese was not sold at the GDT auction for Contract 6 (Aug ’17).
U.S. NFDM spot prices are currently trading 22.8% below GDT prices despite GDT SMP prices remaining largely flat throughout the Feb 7th 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 20.9% average premium to U.S. prices from Mar ’17 – Aug ’17.