Executive Summary

Dairy product prices increased during the GDT auction held Oct 19^th. Highlights from the most recent auction include:

• The GDT Price Index increased 2.2% at the Oct 19^th event, reaching a four month high level and an eight year high seasonal level for the second auction of October. The GDT Price Index remained 6.8% below the seven year high level experienced throughout the first auction of Mar ’21, however.
• Increases in prices within the Oct 19^th event were widespread across products offered. Butter, anhydrous milkfat and cheddar cheese prices all reached six month high levels throughout the Oct 19^th event, while whole milk powder and skim milk powder prices reached three and four month high levels, respectively.
• Total quantities sold for all products at the Oct 19^th event remained below previous year levels for the eighth consecutive week, down 19.7%. Oct ’21 quantities sold for all products reached the lowest seasonal level on record.

Additional Report Details

Dairy product prices increased 2.2% within the Global Dairy Trade (GDT) event held Oct 19^th, rebounding to a four month high level. The increase in the GDT Price Index was the fourth experienced throughout the past five events, however the GDT Price Index remained 6.8% 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 29.0% above previous year price levels at the Oct 19^th auction, remaining at an eight year high seasonal level. The GDT Price Index finished 30.5% above the three year average price for the second auction of October, remaining above three year average figures for the 23^rd consecutive event.

Within the latest auction, increases in prices were widespread across products offered and led by lactose (+5.9%), followed by butter (+4.7%), cheddar cheese (+2.9%), skim milk powder (+2.5%), anhydrous milkfat (+2.5%) and whole milk powder (+1.5%). Butter milk powder and sweet whey powder were not sold at the Oct 19^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 Oct 18^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 Oct 19^th event declined 2.9% from the previous event while finishing 19.7% below previous year figures. The weekly YOY decline in total quantities sold for all products was the eighth 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 October auctions increased 14.0% from average September volumes but remained 19.0% below last year’s average volumes sold for the month of October. Oct ’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 Oct 19^th event when accounting for differences in butterfat levels as GDT butter prices reached a six month high level. U.S. spot butter prices are currently trading at a 20.4% discount to GDT prices while CME futures prices traded at a 20.3% discount to GDT prices from Nov ’21 – Mar ’22. Butter was not sold for Contract Period 6.

U.S. cheddar cheese prices remained at a discount to GDT winning prices at the Oct 19^th event as GDT cheddar cheese prices reached a six month high level. U.S. spot cheddar cheese prices are currently trading at a 12.1% discount to GDT prices while CME futures prices traded at a 10.8% discount to GDT prices from Nov ’21 – Apr ’22.

U.S. nonfat dry milk futures prices remained at a discount to GDT skim milk powder winning prices at the Oct 19^th event when accounting for differences in protein values as GDT skim milk powder prices reached a four month high level. U.S. spot nonfat dry milk prices are currently trading at a 3.0% discount to GDT skim milk powder prices while CME futures prices traded at a 6.2% discount to GDT skim milk powder prices from Nov ’21 – Mar ’22. Skim milk powder was not sold for Contract Period 6.