Global Dairy Trade Results Update – 8/18/20
Executive Summary
Dairy product prices continued to decline during the GDT event held Aug 18th. Highlights from the most recent auction include:
The GDT Price Index finished 7.0% below previous year price levels at the Aug 18th auction, declining on a YOY basis for the 12th time in the past 13 events. The GDT Price Index finished 7.3% below the three year average price for the second auction of August, finishing below three year average figures for the 14th consecutive event.
Within the latest auction, declines in prices were led by cheddar cheese (-3.6%), followed by lactose (-3.3%), anhydrous milkfat (-2.9%), whole milk powder (-2.2%) and butter (-2.0%). The declines more than offset an increase in skim milk powder (+1.1%) prices. Butter milk powder and sweet whey powder were not sold at the Aug 18th 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 17th 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 18th event declined 4.2% from the previous event while finishing 8.9% lower on a YOY basis. The YOY decline in total quantities sold was the third experienced in a row. Total quantities sold typically reach seasonal low levels throughout the months of April and May, prior to rebounding seasonally throughout the next several months.
Volumes sold for all products within the August auctions increased 28.9% from average July volumes sold but remained 7.7% below last year’s average volumes sold for the month of August. Volumes sold for all products finished 4.2% below three year average seasonal figures, declining to an 11 year low seasonal level, overall.
U.S. butter prices remained at a premium to GDT winning prices at the Aug 18th event, as GDT butter prices declined to a four year low level. U.S. spot butter prices are currently trading at a 3.3% premium to GDT prices while CME futures prices traded at a 13.7% 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 18th event, as GDT cheddar cheese prices declined to a 19 month low level. U.S. spot cheddar cheese prices are currently trading at a 4.9% premium to GDT prices while CME futures prices traded at a 13.5% 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 18th event, as GDT SMP prices rebounded slightly from the previous month. U.S. spot NFDM prices are currently trading at a 19.5% discount to GDT SMP prices while CME futures prices traded at a 14.7% 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 1.7% at the Aug 18th event, finishing lower for the third consecutive auction.
- Declines in prices within the Aug 18th event were led by cheddar cheese, while whole milk powder and butter prices also declined from the previous month levels. Butter prices declined to a four year low level throughout the Aug 18th event while cheddar cheese prices declined to a 19 month low level. Skim milk powder prices rebounded slightly from the previous auction throughout the Aug 18th event.
- Total quantities sold for all products at the Aug 18th event remained lower on a YOY basis for the third consecutive auction, finishing down 8.9%. Volumes sold for all products within the August auctions reached an 11 year low seasonal level.
The GDT Price Index finished 7.0% below previous year price levels at the Aug 18th auction, declining on a YOY basis for the 12th time in the past 13 events. The GDT Price Index finished 7.3% below the three year average price for the second auction of August, finishing below three year average figures for the 14th consecutive event.
Within the latest auction, declines in prices were led by cheddar cheese (-3.6%), followed by lactose (-3.3%), anhydrous milkfat (-2.9%), whole milk powder (-2.2%) and butter (-2.0%). The declines more than offset an increase in skim milk powder (+1.1%) prices. Butter milk powder and sweet whey powder were not sold at the Aug 18th 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 17th 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 18th event declined 4.2% from the previous event while finishing 8.9% lower on a YOY basis. The YOY decline in total quantities sold was the third experienced in a row. Total quantities sold typically reach seasonal low levels throughout the months of April and May, prior to rebounding seasonally throughout the next several months.
Volumes sold for all products within the August auctions increased 28.9% from average July volumes sold but remained 7.7% below last year’s average volumes sold for the month of August. Volumes sold for all products finished 4.2% below three year average seasonal figures, declining to an 11 year low seasonal level, overall.
U.S. butter prices remained at a premium to GDT winning prices at the Aug 18th event, as GDT butter prices declined to a four year low level. U.S. spot butter prices are currently trading at a 3.3% premium to GDT prices while CME futures prices traded at a 13.7% 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 18th event, as GDT cheddar cheese prices declined to a 19 month low level. U.S. spot cheddar cheese prices are currently trading at a 4.9% premium to GDT prices while CME futures prices traded at a 13.5% 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 18th event, as GDT SMP prices rebounded slightly from the previous month. U.S. spot NFDM prices are currently trading at a 19.5% discount to GDT SMP prices while CME futures prices traded at a 14.7% discount to GDT SMP prices from Sep ’20 – Jan ’21. SMP was not sold at the GDT auction for Contract 6 (Feb ’21).