Executive Summary

Dairy product prices finished unchanged from the previous event during the GDT auction held Oct 5^th. Highlights from the most recent auction include:

• The GDT Price Index finished unchanged at the Oct 5^th event, remaining at a three month high level and an eight year high seasonal level for the first auction of October. The GDT Price Index remained 8.8% below the seven year high level experienced throughout the first auction of Mar ’21, however.
• Increases in prices within the Oct 5^th event were widespread across products offered with the exception of whole milk powder. Skim milk powder prices reached a three month high level throughout the Oct 5^th event while butter and cheddar cheese prices each rebounded from declines experienced throughout the previous event. A 0.4% decline in whole milk powder prices offset the increases in prices experienced across the other products.
• Total quantities sold for all products at the Oct 5^th event remained below previous year levels for the seventh consecutive week, down 18.3%. Oct ’21 quantities sold for all products are on pace to reach the lowest seasonal level on record.

Additional Report Details

Dairy product prices finished unchanged within the Global Dairy Trade (GDT) event held Oct 5^th, remaining at a three month high level. The GDT Price Index remained 8.8% below the seven year high level experienced throughout the first auction of Mar ’21. 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 finished 26.8% above previous year price levels at the Oct 5^th auction, remaining at an eight year high seasonal level. The GDT Price Index finished 27.9% above the three year average price for the first auction of October, remaining above three year average figures for the 22^nd consecutive event.

Within the latest auction, increases in prices were led by butter milk powder (+9.7%), followed by cheddar cheese (+0.7%), skim milk powder (+0.5%), lactose (+0.4%), anhydrous milkfat (+0.4%) and butter (+0.4%). Whole milk powder prices finished 0.4% lower throughout the most recent auction, offsetting the increases in prices experienced across the other products. Sweet whey powder was not sold at the Oct 5^th 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 skim milk powder (SMP) has been adjusted to 35% protein content (equivalent to U.S. nonfat dry milk) in the $/lb columns below. CME spot and average futures prices are based on Oct 4^th 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 Oct 5^th event increased 17.1% from the previous event but remained 18.3% below previous year figures. The weekly YOY decline in total quantities sold for all products was the seventh experienced in a row. Total quantities sold typically reach seasonal low levels throughout the month of May, prior to increasing seasonally throughout the next several months.

Volumes sold for all products within the first auction of October increased 15.7% from average September volumes but remained 17.8% below last year’s average volumes sold for the month of October. Oct ’21 volumes sold for all products are on pace to reach the lowest seasonal level on record. There has been speculation that the recently experienced reduced quantities sold are due to the removal of an aggressive bidder within the GDT auctions, which is presumably acquiring their product outside of the auction platform.

U.S. butter prices remained at a discount to GDT winning prices at the Oct 5^th event when accounting for differences in butterfat levels as GDT butter prices rebounded slightly from the previous auction. U.S. spot butter prices are currently trading at a 21.7% discount to GDT prices while CME futures prices traded at a 17.8% discount to GDT prices from Nov ’21 – Apr ’22.

U.S. cheddar cheese prices remained at a discount to GDT winning prices at the Oct 5^th event as GDT cheddar cheese prices rebounded slightly from the previous auction. U.S. spot cheddar cheese prices are currently trading at an 8.0% discount to GDT prices while CME futures prices traded at an 8.7% discount to GDT prices from Nov ’21 – Apr ’22.

U.S. nonfat dry milk futures prices remained at a discount to GDT skim milk powder winning prices at the Oct 5^th event when accounting for differences in protein values as GDT skim milk powder prices rebounded to a three month high level. U.S. spot nonfat dry milk prices are currently trading at a 9.6% discount to GDT skim milk powder prices while CME futures prices traded at a 10.3% discount to GDT skim milk powder prices from Nov ’21 – Mar ’22. Skim milk powder was not sold for Contract Period 6.