Global Dairy Trade Results Update – 8/21/18
Executive Summary
Dairy product prices declined during the GDT event held Aug 21st. Highlights from the most recent auction include:
The GDT Price Index also remained lower on a YOY basis for the eighth consecutive event, finishing 11.9% below previous year price levels at the Aug 21st event. The GDT Price Index remained 13.0% above the three year average price for the second auction of August, however.
Within the latest auction, declines in prices were led by butter (-8.5%), followed by anhydrous milkfat (-6.9%), cheddar cheese (-4.7%), whole milk powder (-2.1%) and skim milk powder (-1.3%). The declines more than offset an increase in rennet casein (+2.8%) prices. Lactose, butter milk powder and sweet whey powder were not offered at the Aug 21st 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 Aug 20th 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 Aug 21st event of 32,041 MT declined 6.0% from the eight month high experienced during the previous event. Total quantities sold finished 0.7% lower on a YOY basis, declining for the 11th time in the past 13 events.
Volumes sold for all products within the August auctions increased 27.2% from average July volumes sold while also finishing 1.7% above last year’s average volumes sold for the month of August. Volume sold for all products within the August auctions remained 10.3% below the previous three year average August quantities sold, however.
U.S. butter prices finished at a premium to GDT winning prices at the Aug 21st event as GDT butter prices declined to a 19 month low. U.S. spot butter prices are currently trading at an 18.6% premium to GDT prices while CME futures prices traded at an 18.3% premium to GDT prices from Sep ’18 – Feb ’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 premium to GDT winning prices at the Aug 21st event as GDT cheddar cheese prices declined to a seven month low. U.S. spot cheddar cheese prices are currently trading at a 6.0% discount to GDT prices however CME futures prices traded at a 1.5% premium to GDT prices from Sep ’18 – Jan ’19. Cheddar cheese was not sold at the GDT auction for Contract 6 (Feb ’19).
U.S. NFDM futures prices remained at a discount to GDT winning prices at the Aug 21st event, despite GDT SMP prices remaining near recently experienced three month lows. U.S. spot NFDM prices are currently trading at an 8.9% discount to GDT prices while CME futures prices traded at a 2.3% discount to GDT prices from Sep ’18 – Feb ’19.
- The GDT Price Index declined 3.6% at the Aug 21st event, finishing at an eight month low. The GDT Price Index has declined over ten of the past 13 events through the Aug 21st auction.
- Declines in prices within the Aug 21st event were led by butter, followed by anhydrous milkfat, cheddar cheese, whole milk powder and skim milk powder. Butter and anhydrous milkfat prices declined to 19 and 21 month lows, respectively, while cheddar cheese prices declined to a seven month low and whole milk powder prices declined to an eight month low. Skim milk powder prices remained near recently experienced three month lows throughout the Aug 21st event.
- Total quantities sold for all products at the Aug 21st event declined 6.0% from the eight month high experienced during the previous event while remaining lower on a YOY basis for the 11th time in the past 13 events, finishing down 0.7%.
The GDT Price Index also remained lower on a YOY basis for the eighth consecutive event, finishing 11.9% below previous year price levels at the Aug 21st event. The GDT Price Index remained 13.0% above the three year average price for the second auction of August, however.
Within the latest auction, declines in prices were led by butter (-8.5%), followed by anhydrous milkfat (-6.9%), cheddar cheese (-4.7%), whole milk powder (-2.1%) and skim milk powder (-1.3%). The declines more than offset an increase in rennet casein (+2.8%) prices. Lactose, butter milk powder and sweet whey powder were not offered at the Aug 21st 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 Aug 20th 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 Aug 21st event of 32,041 MT declined 6.0% from the eight month high experienced during the previous event. Total quantities sold finished 0.7% lower on a YOY basis, declining for the 11th time in the past 13 events.
Volumes sold for all products within the August auctions increased 27.2% from average July volumes sold while also finishing 1.7% above last year’s average volumes sold for the month of August. Volume sold for all products within the August auctions remained 10.3% below the previous three year average August quantities sold, however.
U.S. butter prices finished at a premium to GDT winning prices at the Aug 21st event as GDT butter prices declined to a 19 month low. U.S. spot butter prices are currently trading at an 18.6% premium to GDT prices while CME futures prices traded at an 18.3% premium to GDT prices from Sep ’18 – Feb ’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 premium to GDT winning prices at the Aug 21st event as GDT cheddar cheese prices declined to a seven month low. U.S. spot cheddar cheese prices are currently trading at a 6.0% discount to GDT prices however CME futures prices traded at a 1.5% premium to GDT prices from Sep ’18 – Jan ’19. Cheddar cheese was not sold at the GDT auction for Contract 6 (Feb ’19).
U.S. NFDM futures prices remained at a discount to GDT winning prices at the Aug 21st event, despite GDT SMP prices remaining near recently experienced three month lows. U.S. spot NFDM prices are currently trading at an 8.9% discount to GDT prices while CME futures prices traded at a 2.3% discount to GDT prices from Sep ’18 – Feb ’19.