Global Dairy Trade Results Update – 2/21/17
Executive Summary
Dairy product prices declined for the first time in three auctions during the GDT event held Feb 21st. Highlights from the most recent auction include:
The GDT Price Index remained 60.0% above the previous year price levels at the Feb 21st event and 0.2% above the three year average price for the second auction of February, despite the most recent decline. The GDT Price Index has increased on a YOY basis throughout the past 18 events.
Within the latest auction, declines in prices were led by butter milk powder (-12.9%), followed by rennet casein (-5.8%), cheddar cheese (-5.3%), skim milk powder (-3.8%), whole milk powder (-3.7%) and anhydrous milkfat (-1.3%). The declines more than offset increases in prices experienced within butter (+0.2%) and lactose (+6.8%).
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 17th 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 21st event of 20,479 MT finished 3.7% below the previous auction, reaching an 18 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 February auctions finished 10.2% below last year’s average volumes sold for the month of February and 25.2% 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 21st event, despite GDT butter prices increasing by over 70% throughout the past seven months. U.S. spot butter prices are currently trading at a 6.0% premium to GDT prices while CME futures prices are trading at an 8.8% premium to GDT prices from Mar ’17 – Jul ’17. Butter was not sold at the GDT auction for Contract 6 (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 remained above GDT winning prices as GDT cheddar cheese prices declined to a seven auction low at the Feb 21st event. U.S. spot cheddar cheese prices are currently trading 0.5% below GDT prices however CME futures prices are trading at a 5.4% 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 27.6% below GDT prices despite GDT SMP prices declining to a five auction low at the Feb 21st event. U.S. NFDM prices are expected to remain at a significant discount to GDT SMP prices throughout future months, as GDT prices are trading at a 31.5% average premium to U.S. prices from Mar ’17 – Jul ’17. SMP was not sold at the GDT auction for Contract 6 (Aug ’17).
- The GDT Price Index declined to a seven auction low at the Feb 21st event, finishing 3.2% below the previous auction.
- Butter prices increased over the ninth consecutive auction at the Feb 21st event however whole milk powder, skim milk powder and cheddar cheese prices declined throughout the event. Whole milk powder prices declined to an eight auction low while skim milk powder and cheddar cheese prices finished at five and seven auction lows, respectively.
- Total quantities sold for all products at the Feb 21st event declined 3.7% from the previous auction, reaching an 18 auction low. Total quantities sold within the February auctions finished 10.2% below last year’s average volumes sold for the month of February.
The GDT Price Index remained 60.0% above the previous year price levels at the Feb 21st event and 0.2% above the three year average price for the second auction of February, despite the most recent decline. The GDT Price Index has increased on a YOY basis throughout the past 18 events.
Within the latest auction, declines in prices were led by butter milk powder (-12.9%), followed by rennet casein (-5.8%), cheddar cheese (-5.3%), skim milk powder (-3.8%), whole milk powder (-3.7%) and anhydrous milkfat (-1.3%). The declines more than offset increases in prices experienced within butter (+0.2%) and lactose (+6.8%).
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 17th 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 21st event of 20,479 MT finished 3.7% below the previous auction, reaching an 18 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 February auctions finished 10.2% below last year’s average volumes sold for the month of February and 25.2% 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 21st event, despite GDT butter prices increasing by over 70% throughout the past seven months. U.S. spot butter prices are currently trading at a 6.0% premium to GDT prices while CME futures prices are trading at an 8.8% premium to GDT prices from Mar ’17 – Jul ’17. Butter was not sold at the GDT auction for Contract 6 (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 remained above GDT winning prices as GDT cheddar cheese prices declined to a seven auction low at the Feb 21st event. U.S. spot cheddar cheese prices are currently trading 0.5% below GDT prices however CME futures prices are trading at a 5.4% 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 27.6% below GDT prices despite GDT SMP prices declining to a five auction low at the Feb 21st event. U.S. NFDM prices are expected to remain at a significant discount to GDT SMP prices throughout future months, as GDT prices are trading at a 31.5% average premium to U.S. prices from Mar ’17 – Jul ’17. SMP was not sold at the GDT auction for Contract 6 (Aug ’17).