Executive Summary

Dairy product prices finished flat during the GDT event held Aug 7^th. Highlights from the most recent auction include:

• The GDT Price Index finishing flat at the Aug 7^th event, remaining at a seven month low level. The GDT Price Index had declined over nine of the past 11 months, prior to finishing flat at the most recent event.
• Increases in prices within the Aug 7^th event were led by rennet casein, followed by cheddar cheese, anhydrous milkfat and whole milk powder. Cheddar cheese and whole milk powder prices each finished slightly above recently experienced six month lows. Declines in prices were led by butter milk powder, followed by butter and skim milk powder. Butter prices declined to a seven month low while skim milk powder prices remained near recently experienced three month lows.
• Total quantities sold for all products at the Aug 7^th event increased 33.9% from the previous event, finishing at an eight month high. Total quantities sold increased seasonally while also finishing 4.8% above last year’s average volumes sold for the month of August. Volumes sold remained 7.5% below the previous three year average August quantities sold, however.

Additional Report Details

Dairy product prices finished flat within the Global Dairy Trade (GDT) event held Aug 7^th, remaining at a seven month low level. The GDT Price Index had declined over nine of the past 11 months, prior to finishing flat at the most recent 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 seventh consecutive event, finishing 9.0% below previous year price levels at the Aug 7^th event. The GDT Price Index remained 25.6% above the three year average price for the first auction of August, however.

Within the latest auction, increases in prices were led by rennet casein (+8.0%), followed by cheddar cheese (+1.3%), anhydrous milkfat (+1.2%) and whole milk powder (+0.1%). The increases offset declines in skim milk powder (-0.3%), butter (-3.2%) and butter milk powder (-5.9%) prices. Lactose and sweet whey powder were not offered at the Aug 7^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 6^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 Aug 7^th event of 34,076 MT increased 33.9% from the previous event, finishing at an eight month high. Total quantities sold increased on a YOY basis for the first time in the past three auctions, finishing up 4.0%.

Volumes sold for all products within the first auction of August increased 31.1% from average July volumes sold while also finishing 4.8% above last year’s average volumes sold for the month of August. Volume sold for all products within the first auction of August remained 7.5% below the previous three year average August quantities sold, however.

U.S. butter prices finished at a premium to GDT winning prices at the Aug 7^th event as GDT butter prices declined to a seven month low. U.S. spot butter prices are currently trading at an 8.5% premium to GDT prices while CME futures prices traded at a 9.9% premium to GDT prices from Sep ’18 – Feb ’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 remained at a discount to GDT winning prices at the Aug 7^th event as GDT cheddar cheese prices rebounded from recently experienced six month lows. U.S. spot cheddar cheese prices are currently trading at a 10.6% discount to GDT prices while CME futures prices traded at a 3.4% discount to GDT prices from Sep ’18 – Jan ’19. Cheddar cheese was not sold at the GDT auction for Contract 6 (Feb ’19).

U.S. NFDM futures prices also remained at a discount to GDT winning prices at the Aug 7^th event, despite GDT SMP prices remaining near recently experienced three month lows. U.S. spot NFDM prices are currently trading at a 9.9% discount to GDT prices while CME futures prices traded at a 3.9% discount to GDT prices from Sep ’18 – Feb ’19.