Executive Summary

Dairy product prices continued to increase during the GDT event held Sep 21^st. Highlights from the most recent auction include:

• The GDT Price Index increased 1.0% at the Sep 21^st event, reaching a three month high level and an eight year high seasonal level for the second auction of September. The GDT Price Index remained 8.8% below the seven year high level experienced throughout the first auction of Mar ’21, however.
• Increases in prices within the Sep 21^st event were led by whole milk powder, followed by lactose and skim milk powder. Skim milk powder prices rebounded to a three month high level throughout the Sep 21^st event, however butter and cheddar cheese prices each declined from four month high levels experienced throughout the previous event.
• Total quantities sold for all products at the Sep 21^st event remained below previous year levels for the sixth consecutive week, down 27.6%. Sep ’21 quantities sold for all products reached the lowest seasonal level on record.

Additional Report Details

Dairy product prices increased 1.0% within the Global Dairy Trade (GDT) event held Sep 21^st, rebounding to a three month high level. The increase in the GDT Price Index was the third experienced in a row, however the GDT Price Index remained 8.8% 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 29.5% above previous year price levels at the Sep 21^st auction, remaining at an eight year high seasonal level. The GDT Price Index finished 28.2% above the three year average price for the second auction of September, remaining above three year average figures for the 21^st consecutive event.

Within the latest auction, increases in prices were led by whole milk powder (+2.2%), followed by lactose (+1.3%) and skim milk powder (+0.9%). Anhydrous milkfat prices finished unchanged from the previous auction while cheddar cheese (-1.2%) and butter (-1.9%) prices finished lower. Butter milk powder and sweet whey powder were not sold at the Sep 21^st 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 20^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 Sep 21^st event declined 2.5% from the previous event while finishing 27.6% below previous year figures. The weekly YOY decline in total quantities sold for all products was the sixth experienced in a row. 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 September auctions increased 6.3% from average August volumes but remained 28.6% below last year’s average volumes sold for the month of September. Sep ’21 volumes sold for all products reached 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 21^st event when accounting for differences in butterfat levels, despite GDT butter prices declining from the four month high level experienced throughout the previous auction. U.S. spot butter prices are currently trading at a 17.5% discount to GDT prices while CME futures prices traded at a 16.3% 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 21^st event, despite GDT cheddar cheese prices declining from the four month high level experienced throughout the previous auction. U.S. spot cheddar cheese prices are currently trading at a 14.2% discount to GDT prices while CME futures prices traded at a 10.6% 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 21^st event when accounting for differences in protein values as GDT skim milk powder prices rebounded to a three month high level. U.S. spot nonfat dry milk prices are currently trading at a 12.4% discount to GDT skim milk powder prices while CME futures prices traded at a 12.5% discount to GDT skim milk powder prices from Oct ’21 – Feb ’22. Skim milk powder was not sold for Contract Period 6.