Executive Summary

Dairy product prices continued to increase during the GDT event held Feb 16^th. Highlights from the most recent auction include:

• The GDT Price Index increased 3.0% at the Feb 16^th event, finishing higher for the tenth time in the past 11 auctions and reaching a six and a half year high level.
• Increases in prices within the Feb 16^th event were widespread across products offered and led by whole milk powder. Whole milk powder and skim milk powder prices each reached six and a half year high levels throughout the Feb 16^th event while anhydrous milkfat and butter prices reached 20 and 21 month high levels, respectively. Cheddar cheese prices reached a ten month high level throughout the Feb 16^th event.
• Total quantities sold for all products at the Feb 16^th event remained lower on a YOY basis for the 15^th consecutive auction, finishing down 4.6%.

Additional Report Details

Dairy product prices increased 3.0% within the Global Dairy Trade (GDT) event held Feb 16^th, finishing higher for the tenth time in the past 11 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 19.5% above previous year price levels at the Feb 16^th auction, reaching a seven year high seasonal level. The GDT Price Index finished 15.1% above the three year average price for the second auction of February, finishing above three year average figures for the seventh consecutive event.

Within the latest auction, increases in prices were widespread across products offered and led by whole milk powder (+4.3%), followed by cheddar cheese (+2.4%), butter (+2.0%), anhydrous milkfat (+1.1%), lactose (+0.4%) and skim milk powder (+0.3%). Butter milk powder and sweet whey powder were not sold at the Feb 16^th 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 12^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 Feb 16^th event declined 6.4% from the previous event, reaching a seven month low level. Total quantities sold for all products finished 4.6% below previous year figures, declining on a YOY basis for the 15^th consecutive auction. Total quantities sold typically reach seasonal high levels throughout the months of October and November, prior to declining seasonally throughout the months of December – May.

Volumes sold for all products within the February auctions declined 7.2% from average January volumes sold while finishing 2.8% below last year’s average volumes sold for the month of February. Feb ’21 volumes sold for all products remained 12.5% above three year average seasonal figures, however.

U.S. butter prices remained at a discount to GDT winning prices at the Feb 16^th event when accounting for differences in butterfat levels as GDT butter prices reached a 21 month high level. U.S. spot butter prices are currently trading at a 38.5% discount to GDT prices while CME futures prices traded at a 26.4% 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 16^th event as GDT cheddar cheese prices reached a ten month high level. U.S. spot cheddar cheese prices are currently trading at a 21.3% discount to GDT prices however CME futures prices traded at a 10.2% discount to GDT prices from Mar ’21 – Jun ’21. Cheddar cheese was not sold at the GDT auction for Contract 5 (Jul ’21) and 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 16^th event when accounting for differences in protein values as GDT skim milk powder prices reached a six and a half year high level. U.S. spot nonfat dry milk prices are currently trading at a 25.7% discount to GDT skim milk powder prices while CME futures prices traded at a 23.5% 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).