Executive Summary

Dairy product prices declined slightly during the GDT auction held Dec 21^st. Highlights from the most recent auction include:

• The GDT Price Index declined 1.5% at the Dec 21^st event, finishing below the seven and a half year high level experienced throughout the previous auction but remaining at an eight year high seasonal level. The decline in the GDT Price Index was the first experienced throughout the past nine events.
• A decline in whole milk powder prices more than offset increases in prices across all other products offered within the Dec 21^st event. Whole milk powder prices declined from the six month high level experienced throughout the previous month. Butter and anhydrous milkfat prices each reached four year high levels throughout the Dec 21^st event while skim milk powder prices reached a seven year high level. Cheddar cheese prices continued to reach new record high levels.
• Total quantities sold for all products at the Dec 21^st event remained below previous year levels for the 12^th consecutive auction, down 3.0%. Dec ’21 quantities sold for all products reached a four year low seasonal level.

Additional Report Details

Dairy product prices declined 1.5% within the Global Dairy Trade (GDT) event held Dec 21^st, finishing below the seven and a half year high level experienced throughout the previous auction. The decline in the GDT Price Index was the first experienced throughout the past nine 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 remained 29.9% above previous year price levels at the Dec 21^st auction, reaching an eight year high seasonal level. The GDT Price Index finished 36.9% above the three year average price for the second auction of December, remaining above three year average figures for the 27^th consecutive event.

Within the latest auction, a decline in whole milk powder prices (-3.3%) more than offset increases in prices across all other products offered. Increases in prices were led by lactose (+3.7%), followed by butter (1.0%), anhydrous milkfat (+0.9%), skim milk powder (+0.6%) and cheddar cheese (+0.5%). Butter milk powder and sweet whey powder were not sold at the Dec 21^st 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 Dec 20^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 Dec 21^st event declined 2.3% from the 11 month high level experienced throughout the previous event while finishing 4.2% below previous year figures. The YOY decline in total quantities sold for all products was the 12^th 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 December auctions increased 1.9% from average November volumes but remained 3.6% below last year’s average volumes sold for the month of December. Dec ’21 volumes sold for all products reached a four 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 Dec 21^st event when accounting for differences in butterfat levels as GDT butter prices reached a four year high level. U.S. spot butter prices are currently trading at a 19.2% discount to GDT prices while CME futures prices traded at a 19.8% discount to GDT prices from Jan ’22 – May ’22. Butter was not sold for Contract Period 6.

U.S. cheddar cheese prices remained at a discount to GDT winning prices at the Dec 21^st event as GDT cheddar cheese prices continued to reach new record high levels. U.S. spot cheddar cheese prices are currently trading at a 26.7% discount to GDT prices while CME futures prices traded at a 22.1% discount to GDT prices from Jan ’22 – Jun ’22.

U.S. nonfat dry milk futures prices remained at a discount to GDT skim milk powder winning prices at the Dec 21^st 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 4.1% discount to GDT skim milk powder prices while CME futures prices traded at an 8.3% discount to GDT skim milk powder prices from Jan ’22 – May ’22. Skim milk powder was not sold for Contract Period 6.