Executive Summary

Dairy product prices declined slightly during the GDT auction held Mar 15^th. Highlights from the most recent auction include:

• The GDT Price Index declined 0.9% at the Mar 15^th event, finishing slightly below the 14 year high level experienced throughout the previous auction. The decline in the GDT Price Index was the first experienced throughout the past six auctions.
• Declines in prices within the Mar 15^th event were led by whole milk powder, followed by butter and lactose. Whole milk powder prices remained at the second highest level experienced throughout the past eight years, however, while butter prices remained at the second highest level on record. Skim milk powder prices increased to an eight year high level throughout the Mar 15^th event while anhydrous milkfat and cheddar cheese prices each reached record high levels.
• Total quantities sold for all products at the Mar 15^th event declined seasonally to a seven month low level while finishing 13.1% below previous year levels. The YOY decline in total quantities sold for all products was the third experienced throughout the past four auctions.

Additional Report Details

Dairy product prices declined 0.9% within the Global Dairy Trade (GDT) event held Mar 15^th, finishing slightly below the 14 year high level experienced throughout the previous auction. The decline in the GDT Price Index was the first experienced throughout the past six auctions. 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 21.9% above previous year price levels at the Mar 15^th auction, remaining at a record high seasonal level. The GDT Price Index finished 43.8% above the three year average price for the second auction of March, remaining above three year average figures for the 33^rd consecutive event.

Within the latest auction, declines in prices were led by whole milk powder (-2.1%), followed by butter (-1.8%) and lactose (-0.6%). The declines more than offset increases in skim milk powder (+1.6%), anhydrous milkfat (+0.4%) and cheddar cheese (+0.3%) prices. Butter milk powder and sweet whey powder were not sold at the Mar 15^th event. Whole milk powder and skim milk powder combined to account for 79% of all products traded within GDT events throughout the 2021 calendar year.

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 14^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 Mar 15^th event declined seasonally to a seven month low level, finishing 7.4% below the previous event and 13.1% below previous year figures. Total quantities sold have finished below previous year levels over three of the past four auctions. Total quantities sold typically reach seasonal high levels throughout the month of November, prior to declining throughout the next several months.

Volumes sold for all products within the March auctions declined 13.6% from average February volumes while finishing 7.4% below last year’s average volumes sold for the month of March. The Mar ’22 YOY decline in volumes sold was the first experienced throughout the past three months.

U.S. butter prices remained at a discount to GDT winning prices at the Mar 15^th event when accounting for differences in butterfat levels as GDT butter prices remained at the second highest level on record. U.S. spot butter prices are currently trading at an 11.2% discount to GDT prices while CME futures prices traded at a 12.8% discount to GDT prices from Apr ’22 – Aug ’22. Butter was not sold for Contract Period 6 (Sep ’22).

U.S. cheddar cheese prices remained at a discount to GDT winning prices at the Mar 15^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 27.5% discount to GDT prices while CME futures prices traded at a 21.9% discount to GDT prices from Apr ’22 – Sep ’22. Cheddar cheese was not sold for Contract Period 5 (Aug ’22).

U.S. nonfat dry milk futures prices remained at a discount to GDT skim milk powder winning prices at the Mar 15^th event when accounting for differences in protein values as GDT skim milk powder prices reached an eight year high level. U.S. spot nonfat dry milk prices are currently trading at a 13.1% discount to GDT skim milk powder prices while CME futures prices traded at a 12.9% discount to GDT skim milk powder prices from Apr ’22 – Aug ’22. Skim milk powder was not sold for Contract Period 6 (Sep ’22).

GDT equivalent Class III and Class IV milk prices reached values of $31.30/cwt and $29.12/cwt, respectively, throughout the March auctions based on GDT butter, cheddar cheese and skim milk powder prices. The GDT equivalent Class III and Class IV prices each reached record high levels.

U.S. Class III milk prices are currently trading at the largest discount on record to GDT equivalent Class III milk prices (-$9.25/cwt). U.S. Class IV milk prices are currently trading at a ten month large discount to GDT equivalent Class IV milk prices (-$4.38/cwt).