Executive Summary

Dairy product prices continued to increase during the GDT event held Feb 2^nd. Highlights from the most recent auction include:

• The GDT Price Index increased 1.8% at the Feb 2^nd event, finishing higher for the ninth time in the past ten auctions and reaching a six and a half year high level.
• Increases in prices within the Feb 2^nd event were widespread across products offered with the exception of skim milk powder. Whole milk powder prices reached a four year high level throughout the Feb 2^nd event while butter and anhydrous milkfat prices each reached one and a half year high levels. Cheddar cheese prices reached a nine month high level throughout the Feb 2^nd event while skim milk powder prices remained near recent six year high levels.
• Total quantities sold for all products at the Feb 2^nd event remained lower on a YOY basis for the 14^th consecutive auction, finishing down 1.0%. The YOY decline in total quantities sold was the smallest experienced throughout the 14 month period, however.

Additional Report Details

Dairy product prices increased 1.8% within the Global Dairy Trade (GDT) event held Feb 2^nd, finishing higher for the ninth time in the past ten auctions and reaching a six and a half year high level. 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 12.7% above previous year price levels at the Feb 2^nd auction, reaching a seven year high seasonal level. The GDT Price Index finished 10.8% above the three year average price for the first auction of February, finishing above three year average figures for the sixth consecutive event.

Within the latest auction, increases in prices were widespread across products offered with the exception of skim milk powder. Increases in prices were led by butter milk powder (+10.7%), followed by butter (+6.2%), lactose (+3.8%), whole milk powder (+2.3%), cheddar cheese (+2.3%) and anhydrous milkfat (+1.3%). Skim milk powder prices declined 1.5% from the previous auction while sweet whey powder was not sold at the Feb 2^nd 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 Feb 1^st 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 2^nd event declined 3.0% from the previous event while remaining 1.0% lower on a YOY basis. The YOY decline in total quantities sold was the 14^th experienced in a row but the smallest experienced throughout the 14 month period. Total quantities sold typically reach seasonal high levels throughout the months of October and November, prior to declining seasonally throughout the month of December – May.

Volumes sold for all products within the first auction of February declined 4.2% from average January volumes sold but finished 0.4% above last year’s average volumes sold for the month of February. Feb ’21 volumes sold for all products are on pace to finish 16.2% above three year average seasonal figures, although volumes sold are expected to continue to decline seasonally throughout the second auction of February.

U.S. butter prices remained at a discount to GDT winning prices at the Feb 2^nd event when accounting for differences in butterfat levels as GDT butter prices reached a 20 month high level. U.S. spot butter prices are currently trading at a 45.6% discount to GDT prices while CME futures prices traded at a 27.7% discount to GDT prices from Mar ’21 – Jul ’21. Butter was not sold at the GDT auction for Contract 6 (Aug ’21).

U.S. cheddar cheese prices finished at a discount to GDT winning prices at the Feb 2^nd event as GDT cheddar cheese prices reached a nine month high level. U.S. spot cheddar cheese prices are currently trading at a 21.6% discount to GDT prices however CME futures prices traded at a 10.3% discount to GDT prices from Mar ’21 – Jul ’21. Cheddar cheese was not sold at the GDT auction for Contract 6 (Aug ’21).

U.S. nonfat dry milk futures prices remained at a discount to GDT skim milk powder winning prices at the Feb 2^nd event when accounting for differences in protein values, despite GDT skim milk powder prices declining from the previous auction’s six year high level. U.S. spot nonfat dry milk prices are currently trading at a 22.8% discount to GDT skim milk powder prices while CME futures prices traded at a 22.3% discount to GDT skim milk powder prices from Mar ’21 – Jul ’21. Skim milk powder was not sold at the GDT auction for Contract 6 (Aug ’21).