Executive Summary

Dairy product prices increased during the GDT event held May 15^th. Highlights from the most recent auction include:

• The GDT Price Index increased for the second time in the past three auctions during the May 15^th event, finishing up 1.9%.
• Increases in prices within the May 15^th event were led by anhydrous milkfat, followed by cheddar cheese, skim milk powder, butter and whole milk powder. Cheddar cheese prices increased to an 11 month high throughout the event while butter prices finished at a seven month high.
• Total quantities sold for all products at the May 15^th event declined 6.9% from the five week high experienced during the previous auction. Total quantities sold within the May auctions finished 14.1% below last year’s average volumes sold for the month of May and 17.2% below the previous three year average May quantities sold.

Additional Report Details

Dairy product prices increased for the second time in the past three auctions within the Global Dairy Trade (GDT) event held May 15^th as the GDT Price Index finished 1.9% above the previous event. 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 remained lower on a YOY basis for the second consecutive event, finishing 2.0% below previous year price levels at the May 15^th event. The GDT Price Index remained 29.2% above the three year average price for the second auction of May, however.

Within the latest auction, increases in prices were led by anhydrous milkfat (+5.8%), followed by cheddar cheese (+4.4%), skim milk powder (+3.0%), butter (+2.4%) and whole milk powder (+0.2%). The gains more than offset declines in lactose (-3.5%) and rennet casein (-6.1%) prices. Butter milk powder and sweet whey powder were not offered at the May 15^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 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 May 14^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 May 15^th event of 18,161 MT declined 6.9% from the five week high experienced during the previous auction. The decline in total quantities sold was the eighth experienced throughout the past ten auctions.

Volumes sold for all products within the May auctions increased 3.2% from average April volumes sold but remained 14.1% below last year’s average volumes sold for the month of May. Volume sold for all products within the May auctions finished 17.2% below the previous three year average May quantities sold.

U.S. butter prices finished at a discount to GDT winning prices at the May 15^th event as GDT butter prices increased to a seven month high. U.S. spot butter prices are currently trading at a 3.8% discount to GDT prices while CME futures prices traded at a 5.0% discount to GDT prices from Jun ’18 – Oct ’18. Butter was not sold at the GDT auction for Contract 6 (Nov ’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 May 15^th event, as GDT cheddar cheese prices increased to an 11 month high. U.S. spot cheddar cheese prices are currently trading at a 4.1% discount to GDT prices while CME futures prices traded at a 9.0% discount to GDT prices from Jun ’18 – Oct ’18. Cheddar cheese was not sold at the GDT auction for Contract 3 (Aug ’18) and Contract 6 (Nov ’18).

U.S. NFDM futures prices also remained at a discount to GDT winning prices at the May 15^th event, as GDT SMP prices increased to a five auction high. U.S. spot NFDM prices are currently trading at a 1.8% discount to GDT prices while CME futures prices traded at a 9.1% discount to GDT prices from Jun ’18 – Oct ’18. SMP was not sold at the GDT auction for Contract 6 (Nov ’18).