Executive Summary

Dairy product prices continued to decline during the GDT event held Jul 20^th. Highlights from the most recent auction include:

• The GDT Price Index declined 2.9% at the Jul 20^th event, finishing lower for the eighth time in the past nine auctions and reaching a five month low level. The GDT Price Index remained at an eight year high seasonal level for the second auction of July, however.
• Declines in prices within the Jul 20^th event were led by lactose, followed by skim milk powder, whole milk powder, butter and anhydrous milkfat. Whole milk powder prices declined to a five month low level throughout the Jul 20^th event while skim milk powder and butter prices each declined to seven month low levels. Cheddar cheese prices rebounded slightly from the six month low level experienced throughout the previous auction.
• Total quantities sold for all products at the Jul 20^th event remained below previous year levels for the second consecutive week, down 6.6%. Jul ’21 volumes sold for all products reached the lowest seasonal level on record.

Additional Report Details

Dairy product prices declined 2.9% within the Global Dairy Trade (GDT) event held Jul 20^th, finishing lower for the eighth time in the past nine auctions and reaching a five month low level. The GDT Price Index finished 12.5% below the seven year high level experienced throughout the first auction of Mar ’21. 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 18.8% above previous year price levels at the Jul 20^th auction, reaching an eight year high seasonal level. The GDT Price Index finished 18.4% above the three year average price for the second auction of July, finishing above three year average figures for the 17^th consecutive event.

Within the latest auction, declines in prices were led by lactose (-8.9%), followed by skim milk powder (-5.2%), whole milk powder (-3.8%), butter (-0.8%) and anhydrous milkfat (-0.3%). Cheddar cheese prices finished 1.3% higher throughout the Jul 20^th event while butter milk powder and sweet whey powder were 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 Jul 19^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 Jul 20^th event declined by 7.7% from the previous event while finishing 6.6% below previous year figures. The weekly YOY decline in total quantities sold for all products was the second 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 July auctions increased 5.3% from average June volumes sold but finished 6.0% below last year’s average volumes sold for the month of July. Jul ’21 volumes sold for all products reached the lowest seasonal level on record.

U.S. butter prices remained at a discount to GDT winning prices at the Jul 20^th event when accounting for differences in butterfat levels, despite GDT butter prices declining to a seven month low level. U.S. spot butter prices are currently trading at a 12.4% discount to GDT prices while CME futures prices traded at a 9.9% discount to GDT prices from Aug ’21 – Jan ’22.

U.S. cheddar cheese prices remained at a discount to GDT winning prices at the Jul 20^th event as GDT cheddar cheese prices rebounded from the six month low level experienced throughout the previous auction. U.S. spot cheddar cheese prices are currently trading at a 16.0% discount to GDT prices while CME futures prices traded at a 2.0% discount to GDT prices from Sep ’21 – Jan ’22. Cheddar cheese was not sold for Contract Period 1.

U.S. nonfat dry milk futures prices remained at a discount to GDT skim milk powder winning prices at the Jul 20^th event when accounting for differences in protein values, despite GDT skim milk powder prices declining to a seven month low level. U.S. spot nonfat dry milk prices are currently trading at a 9.2% discount to GDT skim milk powder prices while CME futures prices traded at a 7.6% discount to GDT skim milk powder prices from Sep ’21 – Jan ’22. Skim milk powder was not sold for Contract Period 1.