Executive Summary

Dairy product prices increased sharply during the GDT event held Mar 2^nd. Highlights from the most recent auction include:

• The GDT Price Index increased 15.0% at the Mar 2^nd event, finishing higher for the 11^th time in the past 12 auctions and reaching a seven year high level. The increase in the GDT Price Index was the largest experienced throughout the past five years.
• Increases in prices within the Mar 2^nd event were widespread across products offered with the exception of butter milk powder. Whole milk powder prices reached a seven year high level throughout the Mar 2^nd event while skim milk powder prices reached a six and a half year high level and butter prices reached a three year high level. Cheddar cheese and anhydrous milkfat prices reached ten and 21 month high levels, respectively, throughout the Mar 2^nd event.
• Total quantities sold for all products at the Mar 2^nd event remained lower on a YOY basis for the 16^th consecutive auction, finishing down 0.1%. The YOY decline in total quantities sold for all products was the smallest experienced throughout the past 16 auctions, however.

Additional Report Details

Dairy product prices increased 15.0% within the Global Dairy Trade (GDT) event held Mar 2^nd, finishing higher for the 11^th time in the past 12 auctions and reaching a seven year high level. The increase in the GDT Price Index was the largest experienced throughout the past five years. 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 39.1% above previous year price levels at the Mar 2^nd auction, reaching a seven year high seasonal level. The GDT Price Index finished 31.7% above the three year average price for the first auction of March, finishing above three year average figures for the eighth consecutive event.

Within the latest auction, increases in prices were widespread across products offered with the exception of butter milk powder. Increases in prices were led by whole milk powder (+21.0%), followed by butter (+13.7%), anhydrous milkfat (+7.4%), lactose (+4.9%), skim milk powder (+3.5%) and cheddar cheese (+1.3%). Butter milk powder prices finished slightly lower (-0.3%) while sweet whey powder was not sold at the Mar 2^nd 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 Mar 1^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 Mar 2^nd event declined 4.9% from the previous event, reaching a seven month low level. Total quantities sold for all products finished 0.1% below previous year figures, declining on a YOY basis for the 16^th consecutive auction. The YOY decline in total quantities sold for all products was the smallest experienced throughout the past 16 auctions, however. 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 first auction of March declined 8.1% from average February volumes sold but remained 2.7% above last year’s average volumes sold for the month of March. Mar ’21 volumes sold for all products are on pace to reach a seven year high seasonal level but are expected to continue to decline seasonally throughout the second auction of the month.

U.S. butter prices remained at a discount to GDT winning prices at the Mar 2^nd event when accounting for differences in butterfat levels as GDT butter prices reached a three year high level. U.S. spot butter prices are currently trading at a 43.0% discount to GDT prices while CME futures prices traded at a 32.5% discount to GDT prices from Apr ’21 – Aug ’21. Butter was not sold at the GDT auction for Contract 6 (Sep ’21).

U.S. cheddar cheese prices remained at a discount to GDT winning prices at the Mar 2^nd event as GDT cheddar cheese prices reached a ten month high level. U.S. spot cheddar cheese prices are currently trading at a 21.8% discount to GDT prices while CME futures prices traded at an 8.5% discount to GDT prices from Apr ’21 – Jul ’21. Cheddar cheese was not sold at the GDT auction for Contract 5 (Aug ’21) and Contract 6 (Sep ’21).

U.S. nonfat dry milk futures prices remained at a discount to GDT skim milk powder winning prices at the Mar 2^nd 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 26.5% discount to GDT skim milk powder prices while CME futures prices traded at a 23.2% discount to GDT skim milk powder prices from Apr ’21 – Aug ’21. Skim milk powder was not sold at the GDT auction for Contract 6 (Sep ’21).