Executive Summary

Dairy product prices increased slightly during the GDT auction held Jan 4^th. Highlights from the most recent auction include:

• The GDT Price Index increased 0.3% at the Jan 4^th event, finishing higher for the eighth time in the past ten auctions but remaining slightly below the seven and a half year high level experienced throughout the first auction of December.
• Cheddar cheese prices increased most significantly within the Jan 4^th event, reaching a record high level for the fourth consecutive event. Skim milk powder prices increased to a seven and a half year high level while butter prices reached a four year high. Whole milk prices finished unchanged from the previous auction while anhydrous milkfat prices declined from the four year high level experienced throughout the final auction of December.
• Total quantities sold for all products at the Jan 4^th event finished 1.2% above previous year levels, increasing on a YOY basis for the first time in the past 13 auctions. Jan ’22 quantities sold for all products are on pace to finish above previous year levels for the first time in the past six months.

Additional Report Details

Dairy product prices increased 0.3% within the Global Dairy Trade (GDT) event held Jan 4^th, finishing higher for the eighth time in the past ten auctions but remaining slightly below the seven and a half year high level experienced throughout the first auction of December. 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 25.4% above previous year price levels at the Jan 4^th auction, reaching an eight year high seasonal level. The GDT Price Index finished 33.1% above the three year average price for the first auction of January, remaining above three year average figures for the 28^th consecutive event.

Within the latest auction, increases in prices were led by cheddar cheese (+4.9%), followed by skim milk powder (+1.0%), butter milk powder (+1.0%) and butter (+0.3%). Anhydrous milkfat prices finished 0.7% below the previous auction. Whole milk powder prices were unchanged from the previous auction while lactose and sweet whey powder were not sold at the Jan 4^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 Jan 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 Jan 4^th event increased 1.0% from the previous event while finishing 1.2% above previous year figures. The YOY increase in total quantities sold for all products was the first experienced throughout the past 13 auctions. 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 January declined 0.2% from average December volumes but remained 2.4% above last year’s average volumes sold for the month of January. The Jan ’22 YOY increase in volumes sold for all products would be the first experienced throughout the past six months. 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 Jan 4^th event when accounting for differences in butterfat levels as GDT butter prices reached a four year high level. U.S. spot butter prices are currently trading at a 4.1% discount to GDT prices while CME futures prices traded at an 11.4% discount to GDT prices from Feb ’22 – Jun ’22. Butter was not sold for Contract Period 6.

U.S. cheddar cheese prices remained at a discount to GDT winning prices at the Jan 4^th event as GDT cheddar cheese prices continued to reach new record high levels. U.S. spot cheddar cheese prices are currently trading at a 25.8% discount to GDT prices while CME futures prices traded at a 22.1% discount to GDT prices from Feb ’22 – Jun ’22. Cheddar cheese was not sold for Contract Period 6.

U.S. nonfat dry milk futures prices remained at a discount to GDT skim milk powder winning prices at the Jan 4^th event when accounting for differences in protein values as GDT skim milk powder prices reached a seven and a half year high level. U.S. spot nonfat dry milk prices are currently trading at a 6.6% discount to GDT skim milk powder prices while CME futures prices traded at a 10.0% discount to GDT skim milk powder prices from Feb ’22 – Jun ’22. Skim milk powder was not sold for Contract Period 6.