Behind the Market | GDT Trading Event 415

The GDT Price Index increased 3.0% at GDT Trading Event 415 (TE415), with higher prices across both major supplier regions. The increase was more pronounced in Oceania, where prices rose 3.1%, compared with 2.7% in Europe.

Product Group movements were varied, with Whole Milk Powder (WMP), Skim Milk Powder (SMP), Cheddar, Mozzarella and Lactose moving higher, while Butter, Anhydrous Milk Fat (AMF) and Butter Milk Powder (BMP) declined.

A total of 39,806 MT of dairy products was sold to 111 winning bidders across 18 bidding rounds. Participation reached 166 bidders, with 85 of the 102 Traded Products seeing excess demand at their starting prices.

Average price accuracy across the Trading Event was 1.6%, indicating a moderate gap between the final price, where demand was at or below available supply, and the pre-final price, where demand was still in excess. The smaller this gap, the more precisely the auction identifies the final price.

Out of 102 offered Traded Products, 85 saw announced prices increase during the auction. The overall rollback share in the quantity sold was 26%, suggesting strong demand responses at prices close to the winning prices.

Cheddar recorded the largest Product Group increase at 8.6%, followed by WMP (+5.9%) and Mozzarella (+5.8%). This contrasted with declines in milkfat prices, with Butter falling 4.7% and AMF declining 3.2%.

The regional results reveal a more varied picture. Prices for all European-origin product groups offered in this Trading Event moved higher, while movements in Oceania were more mixed. Oceania-origin WMP and SMP rose 5.9% and 3.4% respectively, while BMP prices fell substantially.

Price movements in Oceania were also more pronounced overall. Every Oceania-origin Product Group saw an absolute price change of more than 3%, while most European Product Groups recorded absolute price movements of less than 3%.

The exceptions in Europe were BMP and Mozzarella, which increased 4.2% and 5.8% respectively. The Oceania-origin movements in powder prices were higher than those indicated by the futures market, while milk fat prices were lower than futures market expectations. 

Average regional prices showed different relationships across the three major Product Groups. Oceania-origin SMP prices were around 4.3% below Europe-origin SMP, while Oceania-origin Butter prices were approximately 3.1% higher. WMP remained more widely separated, with average Oceania-origin prices around 8.9% below those from Europe.

Looking at these prices against their historical relationships provides a different perspective. For SMP, Oceania prices were around 4.5% below where they would typically sit in relation to Europe-origin SMP. This deviation narrowed from 5.8% in the previous Trading Event.

Butter showed a different pattern. Although average Oceania prices remained 3.1% higher than those in Europe, they were around 16.8% below where their historical relationship with Europe would typically place them. This deviation widened from 10.1% in the previous event.

WMP moved further above its historical relative level, with Oceania prices around 7.0% higher than where they would typically sit in relation to Europe, compared with 1.0% in the previous Trading Event. This was despite Oceania's average WMP prices remaining below those in Europe. 

Across supplier regions, price accuracy averaged 0.8% for Europe, 2.0% for Oceania and 1.2% for America. At Product Group level, Oceania-origin Cheddar recorded a wider gap of 4.2%, compared with 1.9% for Oceania-origin WMP and SMP.

Rollbacks were a notable feature of the event, accounting for around 25.8% of the total quantity sold. A rollback means the winning price corresponds to the second-highest announced price. The proportion was particularly notable for Oceania-origin WMP, where rollbacks accounted for around 24.9% of that Product Group's quantity sold.

The final bidding rounds also provided a clear example of how demand can shift within a Product Group as relative prices change. While bidding activity for other Product Groups had effectively ceased, Cheddar continued to attract bidding in the final rounds, with aggregate demand shifting between contract periods.

This pattern illustrates how price discovery can continue for individual Product Groups even after bidding activity has largely concluded elsewhere in the auction. As relative prices changed, demand continued to adjust between available Cheddar offerings until final prices were established.