Global Dairy Trade Results Update – 3/6/18
Executive Summary
Dairy product prices declined during the GDT event held Mar 6th. Highlights from the most recent auction include:
Despite the decline, the GDT Price Index remained higher on a YOY basis for the third consecutive auction, finishing 9.8% above previous year price levels at the Mar 6th event. The GDT Price Index finished 22.7% above the three year average price for the first auction of March.
Within the latest auction, declines in prices were led by butter milk powder (-4.3%), followed by anhydrous milkfat (-3.2%), butter (-1.0%) and whole milk powder (-0.8%). The declines more than offset increases in cheddar cheese (+1.7%), rennet casein (+2.2%) and skim milk powder (+5.5%) prices. Lactose was not offered at the Mar 6th 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 SMP has been adjusted to 35% protein content (equivalent to U.S. NFDM) in the $/lb columns below. CME spot and average futures prices are based on Mar 5th 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.
U.S. butter prices finished at a discount to GDT winning prices at the Mar 6th event as GDT butter prices remained near the seven auction high experienced during the previous event. U.S. spot butter prices are currently trading at a 5.7% discount to GDT prices while CME futures prices traded at a 1.8% discount to GDT prices from Apr ’18 – Aug ’18. Butter was not sold at the GDT auction for Contract 6 (Sep ’18). U.S. butter prices traded at an 83.3% premium to GDT butter prices over the second half of 2014 and a 53.9% premium to GDT butter prices throughout 2015 prior to prices converging over the second half of 2016 and into 2017.
U.S. cheddar cheese futures prices also finished at a discount to GDT winning prices at the Mar 6th event as GDT cheddar cheese prices increased to a seven auction high. U.S. spot cheddar cheese prices are currently trading at an 11.3% discount to GDT prices while CME futures prices traded at a 6.9% discount to GDT prices from Apr ’18 – Jul ’18. Cheddar cheese was not sold at the GDT auction for Contract 5 (Aug ’18) and Contract 6 (Sep ’18).
U.S. NFDM futures prices also remained at a discount to GDT winning prices at the Mar 6th event as GDT SMP prices increased to a 16 auction high. U.S. spot NFDM prices are currently trading at a 32.1% discount to GDT prices while CME futures prices traded at a 28.6% discount to GDT prices from Apr ’18 – Aug ’18. SMP was not sold at the GDT auction for Contract 6 (Sep ’18).
- The GDT Price Index declined for the second consecutive auction during the Mar 6th event, finishing down 0.6%.
- Declines in prices within the Mar 6th event were led by butter milk powder, followed by anhydrous milkfat, butter and whole milk powder. Anhydrous milkfat prices declined to a 13 auction low however butter and whole milk powder prices remained at the second highest levels experienced throughout the past eight and 19 auctions, respectively. Cheddar cheese and skim milk powder prices increased to seven and 16 auction highs, respectively, during the Mar 6th event.
Despite the decline, the GDT Price Index remained higher on a YOY basis for the third consecutive auction, finishing 9.8% above previous year price levels at the Mar 6th event. The GDT Price Index finished 22.7% above the three year average price for the first auction of March.
Within the latest auction, declines in prices were led by butter milk powder (-4.3%), followed by anhydrous milkfat (-3.2%), butter (-1.0%) and whole milk powder (-0.8%). The declines more than offset increases in cheddar cheese (+1.7%), rennet casein (+2.2%) and skim milk powder (+5.5%) prices. Lactose was not offered at the Mar 6th 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 SMP has been adjusted to 35% protein content (equivalent to U.S. NFDM) in the $/lb columns below. CME spot and average futures prices are based on Mar 5th 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.
U.S. butter prices finished at a discount to GDT winning prices at the Mar 6th event as GDT butter prices remained near the seven auction high experienced during the previous event. U.S. spot butter prices are currently trading at a 5.7% discount to GDT prices while CME futures prices traded at a 1.8% discount to GDT prices from Apr ’18 – Aug ’18. Butter was not sold at the GDT auction for Contract 6 (Sep ’18). U.S. butter prices traded at an 83.3% premium to GDT butter prices over the second half of 2014 and a 53.9% premium to GDT butter prices throughout 2015 prior to prices converging over the second half of 2016 and into 2017.
U.S. cheddar cheese futures prices also finished at a discount to GDT winning prices at the Mar 6th event as GDT cheddar cheese prices increased to a seven auction high. U.S. spot cheddar cheese prices are currently trading at an 11.3% discount to GDT prices while CME futures prices traded at a 6.9% discount to GDT prices from Apr ’18 – Jul ’18. Cheddar cheese was not sold at the GDT auction for Contract 5 (Aug ’18) and Contract 6 (Sep ’18).
U.S. NFDM futures prices also remained at a discount to GDT winning prices at the Mar 6th event as GDT SMP prices increased to a 16 auction high. U.S. spot NFDM prices are currently trading at a 32.1% discount to GDT prices while CME futures prices traded at a 28.6% discount to GDT prices from Apr ’18 – Aug ’18. SMP was not sold at the GDT auction for Contract 6 (Sep ’18).