Executive Summary

Dairy product prices continued to increase during the GDT auction held Feb 15^th. Highlights from the most recent auction include:

• The GDT Price Index increased 4.2% at the Feb 15^th event, reaching an eight and a half year high level. The GDT Price Index has finished higher over 11 of the past 13 auctions.
• Increases in prices within the Feb 15^th event were widespread across products offered for the third consecutive auction. Butter and cheddar cheese prices each continued to reach new record high levels throughout the Feb 15^th event while anhydrous milkfat prices reached a four year high level. Whole milk powder and skim milk powder prices each reached seven and a half year highs.
• Total quantities sold for all products at the Feb 15^th event finished 3.1% above previous year levels, remaining higher for the third time in the past four auctions.

Additional Report Details

Dairy product prices increased 4.2% within the Global Dairy Trade (GDT) event held Feb 15^th, reaching an eight and a half year high level. The GDT Price Index has finished higher over 11 of the past 13 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 29.5% above previous year price levels at the Feb 15^th auction, reaching a record high seasonal level. The GDT Price Index finished 43.6% above the three year average price for the second auction of February, remaining above three year average figures for the 31^st consecutive event.

Within the latest auction, increases in prices were widespread across products offered and led by skim milk powder (+6.0%), followed by butter (+5.1%), whole milk powder (+4.2%), cheddar cheese (+3.5%), lactose (+3.4%) and anhydrous milkfat (+1.2%). Butter milk powder and sweet whey powder were not sold at the Feb 15^th event. Widespread increases in product prices have been exhibited throughout three consecutive auctions.

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 Feb 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 Feb 15^th event declined seasonally to a five month low level, finishing 2.6% below the previous event but remaining 3.1% above previous year figures. The YOY increase in total quantities sold was the third experienced throughout the past four auctions. 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 February auctions declined 8.4% from average January volumes but remained 1.1% above last year’s average volumes sold for the month of February. The Feb ’22 YOY increase in volumes sold was the second experienced in a row.

U.S. butter prices remained at a discount to GDT winning prices at the Feb 15^th event when accounting for differences in butterfat levels as GDT butter prices continued to reach new record high levels. U.S. spot butter prices are currently trading at a 5.9% discount to GDT prices while CME futures prices traded at an 11.9% discount to GDT prices from Mar ’22 – Jul ’22. Butter was not sold for Contract Period 6.

U.S. cheddar cheese prices remained at a discount to GDT winning prices at the Feb 15^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 27.6% discount to GDT prices while CME futures prices traded at a 21.7% discount to GDT prices from Mar ’22 – Jun ’22. Cheddar cheese was not sold for Contract Period 5 and Contract Period 6.

U.S. nonfat dry milk futures prices remained at a discount to GDT skim milk powder winning prices at the Feb 15^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 5.3% discount to GDT skim milk powder prices while CME futures prices traded at a 7.9% discount to GDT skim milk powder prices from Mar ’22 – Jul ’22. Skim milk powder was not sold for Contract Period 6.