Global Dairy Trade Price Index Falls 3.9%, But Most Product Prices Rise

The price index on this week’s semi-monthly Global Dairy Trade (GDT) dairy commodity auction declined 3.9 percent from the previous auction, held two weeks ago.

That was the fourth consecutive decrease in the GDT price index. Prior to these four declines, the index had increased in two consecutive auctions.
In this week’s auction, which featured 165 participating bidders and 116 winning bidders, prices were higher for Cheddar cheese, butter, anhydrous milkfat, rennet casein and lactose and lower for skim milk powder and whole milk powder.

Buttermilk powder wasn’t offered on this week’s auction, and an average price was not available for sweet whey powder.

Global Dairy Trade explained that the GDT price index is the average of the percentage change in prices for each specification, weighted by the quantity of each specification sold.

GDT provides a change in GDT price index from the previous event for all products, plus an equivalent for each product group and each product group/contract period combination.

The price index gives a more accurate reflection of the price movements between auctions, GDT explained.

If you compare the average prices between two adjacent auctions and calculate the percentage change, this can differ from the change in the GDT price index for the same period, GDT noted. The difference reflects the different methods of calculation.

Most market commentators and analysts prefer the price index as a calculation to describe the overall movement of prices between auctions as it avoids the bias that can arise as a result of changes in sold quantity, GDT said.

In 2019, the main milk powders, whole milk powder and skim milk powder, accounted for 79 percent of the quantity traded on GDT’s auction (more specifically, whole milk powder accounted for 55 percent of the quantity traded, and skim milk powder for 24 percent), which helps explain why the GDT price index declined this week even though the majority of product price indices increases.

Results from this week’s GDT auction, with comparisons to the auction held two weeks ago, were as follows:

Cheddar cheese: The average winning price was $4,398 per metric ton ($1.99 per pound), up 2.6 percent. Average winning prices were: Contract 1 (April), $4,500 per ton, up 5 percent; Contract 2 (May), $4,390 per ton, up 2.9 percent; Contract 3 (June), $4,380 per ton, up 3.5 percent; and Contract 4 (July), $4,330 per ton, down 1 percent.

Skim milk powder: The average winning price was $2,527 per ton ($1.15 per pound), down 8.1 percent. Average winning prices were: Contract 1, $2,961 per ton, up 7.5 percent; Contract 2, $2,495 per ton, down 8.2 percent; Contract 3, $2,565 per ton, down 7.7 percent; Contract 4, $2,531 per ton, down 9.6 percent; and Contract 5 (August), $2,607 per ton, down 8.2 percent.

Whole milk powder: The average winning price was $2,797 per ton ($1.27 per pound), down 4.2 percent. Average winning prices were: Contract 1, $2,830 per ton, down 3.1 percent; Contract 2, $2,758 per ton, down 4.7 percent; Contract 3, $2,789 per ton, down 4.7 percent; Contract 4, $2,862 per ton, down 3.9 percent; and Contract 5, $2,812 per ton, down 4.2 percent.

Butter: The average winning price was $4,144 per ton ($1.88 per pound), up...

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