Executive Summary

Dairy product prices continued to increase during the GDT auction held Nov 2^nd. Highlights from the most recent auction include:

• The GDT Price Index increased 4.3% at the Nov 2^nd event, reaching an eight month high level and an eight year high seasonal level for the first auction of November.
• Increases in prices within the Nov 2^nd event were widespread across products offered with the exception of butter milk powder. Whole milk powder prices increased to a four month high level throughout the Nov 2^nd event while butter prices reached a six month high level. Anhydrous milkfat prices reached a three and a half year high level while skim milk powder and cheddar cheese each reached seven year high levels.
• Total quantities sold for all products at the Nov 2^nd event remained below previous year levels for the ninth consecutive week, down 15.5%. Nov ’21 quantities sold for all products are on pace to reach a five year low seasonal level.

Additional Report Details

Dairy product prices increased 4.3% within the Global Dairy Trade (GDT) event held Nov 2^nd, reaching an eight month high level and finishing just 2.8% below the seven year high level experienced throughout the first auction of Mar ’21. The increase in the GDT Price Index was the fifth experienced throughout the past six events. 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 37.3% above previous year price levels at the Nov 2^nd auction, remaining at an eight year high seasonal level. The GDT Price Index finished 36.1% above the three year average price for the first auction of November, remaining above three year average figures for the 24^th consecutive event.

Within the latest auction, increases in prices were widespread across products offered with the exception of butter milk powder. Increases in prices were led by cheddar cheese (+14.1%), followed by skim milk powder (+6.6%), butter (+4.7%), anhydrous milkfat (+4.2%), whole milk powder (+2.7%) and lactose (+1.6%). Butter milk powder prices declined 3.8% throughout the Nov 2^nd event while sweet whey powder was not sold.

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 Nov 1^st 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 Nov 2^nd event increased 7.5% from the previous event but remained 15.5% below previous year figures. The weekly YOY decline in total quantities sold for all products was the ninth 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 November increased 5.9% from average October volumes but remained 15.4% below last year’s average volumes sold for the month of November. Nov ’21 volumes sold for all products are on pace to reach a five year low seasonal level. 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 Nov 2^nd event when accounting for differences in butterfat levels as GDT butter prices reached a six month high level. U.S. spot butter prices are currently trading at a 17.6% discount to GDT prices while CME futures prices traded at a 19.9% discount to GDT prices from Dec ’21 – Apr ’22. Butter was not sold for Contract Period 6.

U.S. cheddar cheese prices remained at a discount to GDT winning prices at the Nov 2^nd event as GDT cheddar cheese prices reached a seven year high level. U.S. spot cheddar cheese prices are currently trading at a 25.3% discount to GDT prices while CME futures prices traded at a 21.2% discount to GDT prices from Dec ’21 – May ’22.

U.S. nonfat dry milk futures prices remained at a discount to GDT skim milk powder winning prices at the Nov 2^nd event when accounting for differences in protein values as GDT skim milk powder prices reached a seven year high level. U.S. spot nonfat dry milk prices are currently trading at an 8.2% discount to GDT skim milk powder prices while CME futures prices traded at a 10.7% discount to GDT skim milk powder prices from Dec ’21 – Apr ’22. Skim milk powder was not sold for Contract Period 6.