Executive Summary

Dairy product prices continued to increase during the GDT auction held Jan 18^th. Highlights from the most recent auction include:

• The GDT Price Index increased 4.6% at the Jan 18^th event, reaching a seven and a half year high level. The GDT Price Index has finished higher over nine of the past 11 auctions.
• Increases in prices within the Jan 18^th event were widespread across products offered and led by whole milk powder. Whole milk powder prices increased to an eight month high level throughout the Jan 18^th event while skim milk powder prices reached a seven and a half year high level. Anhydrous milkfat prices remained near recently experienced four year high levels while butter and cheddar cheese prices each reached record high levels.
• Total quantities sold for all products at the Jan 18^th event finished 3.5% above previous year levels, increasing on a YOY basis for the second consecutive auction. Jan ’22 total quantities sold for all products finished above previous year levels for the first time in the past six months.

Additional Report Details

Dairy product prices increased 4.6% within the Global Dairy Trade (GDT) event held Jan 18^th, reaching a seven and a half year high level. The GDT Price Index has finished higher over nine of the past 11 auctions. 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 25.2% above previous year price levels at the Jan 18^th auction, reaching an eight year high seasonal level. The GDT Price Index finished 34.4% above the three year average price for the second auction of January, remaining above three year average figures for the 29^th consecutive event.

Within the latest auction, increases in prices were widespread across products offered and led by whole milk powder (+5.6%), followed by skim milk powder (+5.0%), butter (+5.0%), cheddar cheese (+1.1%) and anhydrous milkfat (+0.6%). Lactose, butter milk powder and sweet whey powder were not sold at the Jan 18^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 Jan 14^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 Jan 18^th event declined 0.1% from the previous event but remained 3.5% above previous year figures. The YOY increase in total quantities sold for all products was the second experienced in a row. Total quantities sold for all products had finished below previous year levels over 12 consecutive auctions through the end of the 2021 calendar year, prior to finishing higher over the two most recent events. Total quantities sold typically reach seasonal high levels throughout the month of November, prior to declining throughout the next several months.

Volumes sold for all products within the January auctions declined 0.2% from average December volumes but remained 2.4% above last year’s average volumes sold for the month of January. The Jan ’22 YOY increase in volumes sold for all products was the first experienced throughout the past six months. 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 Jan 18^th event when accounting for differences in butterfat levels as GDT butter prices reached a record high level. U.S. spot butter prices are currently trading at a 0.1% discount to GDT prices while CME futures prices traded at an 11.7% discount to GDT prices from Feb ’22 – Jun ’22. Butter was not sold for Contract Period 6.

U.S. cheddar cheese prices remained at a discount to GDT winning prices at the Jan 18^th event as GDT cheddar cheese prices continued to reach new record high levels. U.S. spot cheddar cheese prices are currently trading at a 22.9% discount to GDT prices while CME futures prices traded at a 19.4% discount to GDT prices from Feb ’22 – Jun ’22. Cheddar cheese was not sold for Contract Period 6.

U.S. nonfat dry milk futures prices remained at a discount to GDT skim milk powder winning prices at the Jan 18^th event when accounting for differences in protein values as GDT skim milk powder prices reached a seven and a half year high level. U.S. spot nonfat dry milk prices are currently trading at a 1.9% discount to GDT skim milk powder prices while CME futures prices traded at a 5.1% discount to GDT skim milk powder prices from Feb ’22 – Jun ’22. Skim milk powder was not sold for Contract Period 6.