Executive Summary

Dairy product prices continued to increase during the GDT auction held Nov 16^th. Highlights from the most recent auction include:

• The GDT Price Index increased 1.9% at the Nov 16^th event, reaching an eight month high level and an eight year high seasonal level for the second auction of November. The GDT Price Index finished just 0.9% below the seven year high level experienced throughout the first auction of Mar ’21.
• Increases in prices within the Nov 16^th event were widespread across products offered. Whole milk powder prices increased to a five month high level throughout the Nov 16^th event while butter prices reached a seven month high level. Anhydrous milkfat prices reached a three and a half year high level while skim milk powder prices reached a seven year high level. Cheddar cheese prices reached the highest level on record throughout the Nov 16^th event, exceeding the previous Jan ’14 highs.
• Total quantities sold for all products at the Nov 16^th event remained below previous year levels for the tenth consecutive auction, down 13.9%. Nov ’21 quantities sold for all products reached a five year low seasonal level.

Additional Report Details

Dairy product prices increased 1.9% within the Global Dairy Trade (GDT) event held Nov 16^th, reaching an eight month high level and finishing just 0.9% below the seven year high level experienced throughout the first auction of Mar ’21. The increase in the GDT Price Index was the sixth experienced throughout the past seven 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 37.5% above previous year price levels at the Nov 16^th auction, remaining at an eight year high seasonal level. The GDT Price Index finished 38.4% above the three year average price for the second auction of November, remaining above three year average figures for the 25^th consecutive event.

Within the latest auction, increases in prices were widespread across products offered. Increases in prices were led by butter (+3.5%), followed by cheddar cheese (+2.2%), whole milk powder (+1.9%), lactose (+1.6%), skim milk powder (+1.4%) and anhydrous milkfat (+1.3%). Butter milk powder and sweet whey powder were not sold at the Nov 16^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 Nov 15^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 Nov 16^th event increased 1.6% from the previous event but remained 13.9% below previous year figures. The YOY decline in total quantities sold for all products was the tenth 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 November auctions increased 6.7% from average October volumes but remained 14.7% below last year’s average volumes sold for the month of November. Nov ’21 volumes sold for all products reached 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 16^th event when accounting for differences in butterfat levels as GDT butter prices reached a seven month high level. U.S. spot butter prices are currently trading at a 20.4% discount to GDT prices while CME futures prices traded at a 20.3% 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 16^th event as GDT cheddar cheese prices exceeded the previous record high level experienced during Jan ’14. U.S. spot cheddar cheese prices are currently trading at a 31.3% discount to GDT prices while CME futures prices traded at a 25.3% 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 16^th 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 a 10.0% discount to GDT skim milk powder prices while CME futures prices traded at a 12.6% discount to GDT skim milk powder prices from Dec ’21 – Apr ’22. Skim milk powder was not sold for Contract Period 6.