Executive Summary

Dairy product prices declined during the GDT event held Sep 4^th. Highlights from the most recent auction include:

• The GDT Price Index declined 0.7% at the Sep 4^th event, finishing at a three and a half year low. The GDT Price Index has declined over 11 of the past 14 events through the Sep 4^th auction.
• Declines in prices within the Sep 4^th event were led by butter, followed by whole milk powder. Butter prices declined to a three and a half year low while whole milk powder prices finished at a 17 month low. Skim milk powder prices rebounded to a three month high throughout the Sep 4^th event, however, while cheddar cheese prices increased off of the seven month low levels experienced throughout the previous auction.
• Total quantities sold for all products at the Sep 4^th event increased 21.1% from the previous event, reaching a three year high.

Additional Report Details

Dairy product prices declined 0.7% within the Global Dairy Trade (GDT) event held Sep 4^th, finishing at a three and a half year low. The GDT Price Index has declined over 11 of the past 14 events through the Sep 4^th auction. 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 also remained lower on a YOY basis for the ninth consecutive event, finishing 12.8% below previous year price levels at the Sep 4^th event. The GDT Price Index remained 6.6% above the three year average price for the first auction of September, however.

Within the latest auction, declines in prices were led by butter (-2.8%), followed by whole milk powder (-2.2%) and lactose (-0.5%). The declines more than offset increases in butter milk powder (+0.1%), anhydrous milkfat (+0.2%), skim milk powder (+2.2%), rennet casein (+3.7%) and cheddar cheese (+4.2%) prices. Sweet whey powder was not offered at the Sep 4^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 Aug 31^st 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 Sep 4^th event of 38,811 MT increased 21.1% from the previous event, reaching a three year high. Total quantities sold finished 15.9% higher on a YOY basis, increasing for just the third time in the past 14 events.

Volumes sold for all products within the first auction of September increased 17.4% from average August volumes sold while also finishing 14.8% above last year’s average volumes sold for the month of September, reaching a four year seasonal high for the month of September.

U.S. butter prices finished at a premium to GDT winning prices at the Sep 4^th event as GDT butter prices declined to a three and a half year low. U.S. spot butter prices are currently trading at a 17.2% premium to GDT prices while CME futures prices traded at an 18.3% premium to GDT prices from Oct ’18 – Mar ’19. 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 finished at a slight premium to GDT winning prices at the Sep 4^th event, despite GDT cheddar cheese prices rebounding from recently experienced seven month low levels. U.S. spot cheddar cheese prices are currently trading at a 0.1% discount to GDT prices however CME futures prices traded at a 0.3% premium to GDT prices from Oct ’18 – Feb ’19. Cheddar cheese was not sold at the GDT auction for Contract 6 (Mar ’19).

U.S. NFDM futures prices also finished at a slight premium to GDT winning prices at the Sep 4^th event, despite GDT SMP prices rebounding to a three month high. U.S. spot NFDM prices are currently trading at a 5.5% discount to GDT prices however CME futures prices traded at a 0.4% premium to GDT prices from Oct ’18 – Mar ’19.