Executive Summary

Dairy product prices declined to a six month low during the GDT event held Jul 3^rd. Highlights from the most recent auction include:

• The GDT Price Index declined for the eighth time in the past ten auctions during the Jul 3^rd event, finishing down 5.0% to a six month low. The decline was the largest experienced throughout the past 16 months on a percentage basis.
• Declines in prices within the Jul 3^rd event were led by whole milk powder, followed by skim milk powder, cheddar cheese, butter and anhydrous milkfat. Whole milk powder prices declined to a six month low while skim milk powder, cheddar cheese and butter prices all declined to three month lows throughout the Jul 3^rd event.
• Total quantities sold for all products at the Jul 3^rd event increased 22.6% from the previous event, finishing at a 13 auction high. Total quantities sold within the first auction of July remained 4.0% below last year’s average volumes sold for the month of July and 13.5% below the previous three year average July quantities sold, however.

Additional Report Details

Dairy product prices declined for the eighth time in the past ten auctions within the Global Dairy Trade (GDT) event held Jul 3^rd as the GDT Price Index finished 5.0% below the previous event, reaching a six month low. The decline was the largest experienced throughout the past 16 months on a percentage basis. 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 also remained lower on a YOY basis for the fifth consecutive event, finishing 8.7% below previous year price levels at the Jul 3^rd event. The GDT Price Index remained 23.0% above the three year average price for the first auction of July, however.

Within the latest auction, declines in prices were led by whole milk powder (-7.3%), followed by skim milk powder (-4.6%), cheddar cheese (-4.3%), butter (-4.0%) and anhydrous milkfat (-1.7%). The declines more than offset increases in rennet casein (+3.6%) and butter milk powder (+6.4%) prices. Lactose and sweet whey powder were not offered at the Jul 3^rd 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 Jul 2^nd 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 Jul 3^rd event of 26,519 MT increased 22.6% from the previous event, finishing at a 13 auction high. Total quantities sold remained lower on a YOY basis for the ninth time in the past ten months, however, finishing down 7.2%.

Volumes sold for all products within the first auction of July increased 22.7% from average June volumes sold but remained 4.0% below last year’s average volumes sold for the month of July. Volume sold for all products within the first auction of July finished 13.5% below the previous three year average July quantities sold.

U.S. butter prices remained at a discount to GDT winning prices at the Jul 3^rd event despite GDT butter prices declining to a three month low. U.S. spot butter prices are currently trading at a 5.6% discount to GDT prices while CME futures prices traded at a 2.3% discount to GDT prices from Aug ’18 – Jan ’19. 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 and into 2017.

U.S. cheddar cheese futures prices also finished at a discount to GDT winning prices at the Jul 3^rd event, despite GDT cheddar cheese prices declining to a three month low. U.S. spot cheddar cheese prices are currently trading at a 15.1% discount to GDT prices while CME futures prices traded at a 1.5% discount to GDT prices from Sep ’18 – Dec ’18. Cheddar cheese was not sold at the GDT auction for Contract 1 (Aug ’18) and Contract 6 (Jan ’19).

U.S. NFDM futures prices also remained at a discount to GDT winning prices at the Jul 3^rd event, despite GDT SMP prices declining to a three month low. U.S. spot NFDM prices are currently trading at a 17.2% discount to GDT prices while CME futures prices traded at a 7.7% discount to GDT prices from Sep ’18 – Jan ’19. SMP was not sold at the GDT auction for Contract 1 (Aug ’18).