Global Dairy Trade Results Update – 8/4/20
Executive Summary
Dairy product prices declined during the GDT event held Aug 4th. Highlights from the most recent auction include:
The GDT Price Index finished 5.6% below previous year price levels at the Aug 4th auction, declining on a YOY basis for the 11th time in the past 12 events. The GDT Price Index finished 7.0% below the three year average price for the first auction of August, finishing below three year average figures for the 13th consecutive event.
Within the latest auction, declines in prices were led by whole milk powder (-7.5%), followed by butter milk powder (-6.5%), cheddar cheese (-5.3%), skim milk powder (-4.6%) and butter (-2.8%). The declines more than offset increases in anhydrous milkfat (+3.0%) and lactose (+5.7%) prices. Sweet whey powder was not sold at the Aug 4th 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 Aug 3rd 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 Aug 4th event rebounded 36.3% from the previous event but remained 6.5% lower on a YOY basis. The YOY decline in total quantities sold was the third experienced throughout the past four auctions. Total quantities sold typically reach seasonal low levels throughout the months of April and May, prior to rebounding seasonally throughout next several months.
Volumes sold for all products within the first auction of August increased 31.6% from average July volumes sold but remained 5.7% below last year’s average volumes sold for the month of August. Volumes sold for all products finished 2.2% below three year average seasonal figures, declining to a three year low seasonal level, overall.
U.S. butter prices remained at a premium to GDT winning prices at the Aug 4th event, as GDT butter prices declined to a three and a half year low level. U.S. spot butter prices are currently trading at a 3.9% premium to GDT prices while CME futures prices traded at a 14.6% premium to GDT prices from Sep ’20 – Feb ’21.
U.S. cheddar cheese prices also finished at a premium to GDT winning prices at the Aug 4th event, as GDT cheddar cheese prices declined to a two month low level. U.S. spot cheddar cheese prices are currently trading at a 26.6% premium to GDT prices while CME futures prices traded at a 10.7% premium to GDT prices from Sep ’20 – Feb ’21.
U.S. nonfat dry milk (NFDM) futures prices remained at a discount to GDT SMP winning prices at the Aug 4th event, despite GDT SMP prices declining to a two month low level. U.S. spot NFDM prices are currently trading at a 20.0% discount to GDT SMP prices while CME futures prices traded at a 16.5% discount to GDT SMP prices from Sep ’20 – Jan ’21. SMP was not sold at the GDT auction for Contract 6 (Feb ’21).
- The GDT Price Index declined 5.1% at the Aug 4th event, finishing lower for the second consecutive auction. The decline in the GDT Price Index was the largest experienced throughout the past seven months.
- Declines in prices within the Aug 4th event were led by whole milk powder, while skim milk powder, butter and cheddar cheese prices also declined from the previous month levels. Butter prices declined to a three and a half year low level throughout the Aug 4th event while cheddar cheese and skim milk powder prices each declined to two month low levels.
- Total quantities sold for all products at the Aug 4th event increased seasonally from the previous auction but remained 6.5% lower on a YOY basis. Volumes sold for all products within the first auction of August declined to a three year low seasonal level.
The GDT Price Index finished 5.6% below previous year price levels at the Aug 4th auction, declining on a YOY basis for the 11th time in the past 12 events. The GDT Price Index finished 7.0% below the three year average price for the first auction of August, finishing below three year average figures for the 13th consecutive event.
Within the latest auction, declines in prices were led by whole milk powder (-7.5%), followed by butter milk powder (-6.5%), cheddar cheese (-5.3%), skim milk powder (-4.6%) and butter (-2.8%). The declines more than offset increases in anhydrous milkfat (+3.0%) and lactose (+5.7%) prices. Sweet whey powder was not sold at the Aug 4th 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 Aug 3rd 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 Aug 4th event rebounded 36.3% from the previous event but remained 6.5% lower on a YOY basis. The YOY decline in total quantities sold was the third experienced throughout the past four auctions. Total quantities sold typically reach seasonal low levels throughout the months of April and May, prior to rebounding seasonally throughout next several months.
Volumes sold for all products within the first auction of August increased 31.6% from average July volumes sold but remained 5.7% below last year’s average volumes sold for the month of August. Volumes sold for all products finished 2.2% below three year average seasonal figures, declining to a three year low seasonal level, overall.
U.S. butter prices remained at a premium to GDT winning prices at the Aug 4th event, as GDT butter prices declined to a three and a half year low level. U.S. spot butter prices are currently trading at a 3.9% premium to GDT prices while CME futures prices traded at a 14.6% premium to GDT prices from Sep ’20 – Feb ’21.
U.S. cheddar cheese prices also finished at a premium to GDT winning prices at the Aug 4th event, as GDT cheddar cheese prices declined to a two month low level. U.S. spot cheddar cheese prices are currently trading at a 26.6% premium to GDT prices while CME futures prices traded at a 10.7% premium to GDT prices from Sep ’20 – Feb ’21.
U.S. nonfat dry milk (NFDM) futures prices remained at a discount to GDT SMP winning prices at the Aug 4th event, despite GDT SMP prices declining to a two month low level. U.S. spot NFDM prices are currently trading at a 20.0% discount to GDT SMP prices while CME futures prices traded at a 16.5% discount to GDT SMP prices from Sep ’20 – Jan ’21. SMP was not sold at the GDT auction for Contract 6 (Feb ’21).