Executive Summary

Dairy product prices continued to increase during the GDT event held Sep 7^th. Highlights from the most recent auction include:

• The GDT Price Index increased 4.0% at the Sep 7^th event, finishing higher for the second consecutive auction. The GDT Price Index finished at an eight year high seasonal level for the first auction of September.
• Increases in prices within the Sep 7^th event were widespread across products offered and led by skim milk powder, followed by lactose, butter, cheddar cheese, whole milk powder, anhydrous milkfat and butter milk powder. Anhydrous milkfat, butter and cheddar cheese prices all reached four month high levels throughout the Sep 7^th event while skim milk powder prices finished higher for the third consecutive event. Whole milk powder prices rebounded from the six month low level experienced throughout the previous event.
• Total quantities sold for all products at the Sep 7^th event remained below previous year levels for the fifth consecutive week, down 29.6%. The Sep 7^th YOY decline in total quantities sold was the largest experienced throughout the past five years. Sep ’21 quantities sold for all products are on pace to reach the lowest seasonal level on record.

Additional Report Details

Dairy product prices increased 4.0% within the Global Dairy Trade (GDT) event held Sep 7^th, rebounding to a five auction high level. The increase in the GDT Price Index was the second experienced in a row, however the GDT Price Index remained 9.7% below the seven year high level experienced throughout the first auction of Mar ’21. 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 32.9% above previous year price levels at the Sep 7^th auction, remaining at an eight year high seasonal level. The GDT Price Index finished 28.7% above the three year average price for the first auction of September, remaining above three year average figures for the 20^th consecutive event.

Within the latest auction, increases in prices were widespread across products offered and led by skim milk powder (+7.3%), followed by lactose (+6.4%), butter (+3.7%), cheddar cheese (+3.6%), whole milk powder (+3.3%), anhydrous milkfat (+3.1%) and butter milk powder (+3.0%). Sweet whey powder was not sold at the Sep 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 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 Sep 3^rd 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 7^th event increased 11.3% from the previous event but remained 29.6% below previous year figures. The weekly YOY decline in total quantities sold for all products was the fifth experienced in a row and the largest experienced throughout the past five years. Total quantities sold typically reach seasonal low levels throughout the month of May, prior to increasing seasonally throughout the next several months.

Volumes sold for all products within the first auction of September increased 7.6% from average August volumes but remained 27.7% below last year’s average volumes sold for the month of September. Sep ’21 volumes sold for all products are on pace to reach the lowest seasonal level on record. There has been speculation that the recently experienced reduced quantities sold are due to the removal of an aggressive bidder within the GDT auctions, which is presumably acquiring their product outside of the auction platform.

U.S. butter prices remained at a discount to GDT winning prices at the Sep 7^th event when accounting for differences in butterfat levels as GDT butter prices rebounded to a four month high level. U.S. spot butter prices are currently trading at a 17.9% discount to GDT prices while CME futures prices traded at an 18.3% discount to GDT prices from Oct ’21 – Mar ’22.

U.S. cheddar cheese prices remained at a discount to GDT winning prices at the Sep 7^th event as GDT cheddar cheese prices rebounded to a four month high level. U.S. spot cheddar cheese prices are currently trading at a 20.3% discount to GDT prices while CME futures prices traded at an 11.3% discount to GDT prices from Oct ’21 – Mar ’22.

U.S. nonfat dry milk futures prices remained at a discount to GDT skim milk powder winning prices at the Sep 7^th event when accounting for differences in protein values as GDT skim milk powder prices finished higher for the third consecutive auction. U.S. spot nonfat dry milk prices are currently trading at a 12.3% discount to GDT skim milk powder prices while CME futures prices traded at a 12.4% discount to GDT skim milk powder prices from Oct ’21 – Feb ’22. Skim milk powder was not sold for Contract Period 6.