Dairy Skim – GDT Auction 21 March 2023

Dairy Skim is a bite-size episode series where HighGround’s top analysts break down the latest dairy data release. Today, Eric Meyer and Stu Davison discuss today’s Global Dairy Trade Auction. You can view the snapshot report here. Subscribe so that you never miss an episode!

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[00:06] Eric: Happy Spring to those in the Northern Hemisphere and welcome to the Dairy Skim—HighGround’s bite-sized podcast to review one of the dairy industry’s most important reports or events. Today is Tuesday, March 21st and joining me today is Stu Davison, HighGround’s International Insights Consultant, to review the second March Global Dairy Trade auction that took place earlier today. Stu, we’re super sad that you’re leaving Chicago tomorrow to head back home to New Zealand, but also very excited that you will be able to join us back in Chicago late next month for the American Dairy Products Institute Annual Meeting. What’s the headline of today’s GDT event?

[00:46] Stu: Well, another bearish auction, with negative outcomes for all commodities on offer, the GDT Price Index fell 2.6%. As with the previous auction, demand was very weak from the outset, buyers were very unwilling to push prices higher. Whole milk powder prices performed the best of the lot, with prices only falling 1.5% on average, while the big news here is that GDT cheddar prices suffered another large price slide, falling 10.2%. This means cheddar prices have lost  $1,034/t  this month alone—down 20% from February.

[01:22] Eric: How did milk fats perform?

[01:24] Stu: Both butter and AMF prices fell again. Butter was the better of the two—losing only 3%, while AMF prices fell 3.8%. However, looking under the hood of this auction, buyers were again willing to pay a premium for product to ship later in the year, for both fats.

[01:41] Eric: Was the same trend visible in milk powders?

[01:44] Stu: For whole milk powder, ye— with a 5% premium for WMP sold in contract 6 compared to Contact 2. However, the skim milk powder auction had a very different result, with a ceiling price across all five contract periods, sitting around the $2660/t mark, with the skim milk powder GDT index falling 3.5% overall. Marking more bearish news for the skim milk powder market is the fact that the premium between New Zealand and EU medium-heat skim milk powder tightened to just under $20/t; it seems to be one-way traffic for the skim market at this point in time.

[02:20] Eric: What about the from the buyers side, anything of note there?

[02:25] Stu: Very much so. There were significantly less winning bidders from the Southeast Asia/Oceania region at this auction, along with a couple less Middle Eastern buyers. Even with a handful more buyers from north Asia at this auction compared to the last, it would seem that this reluctance to compete from Southeast Asia/Oceania is the key reason for the weak demand at today’s auction.

[02:46] Eric: Cool, Stu. Appreciate those initial insights and I, along with our subscribers, look forward to reading the comprehensive written analysis available to our subscribers on the website later today. Thanks, all, for joining us everyone, we’ll be back with yet another Dairy Skim on Thursday afternoon after the release of the US Cold Storage report, giving the industry February ending stocks for both cheese and butter in the United States. Have a great day!

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