The result in GDT #288 was another mostly negative outcome, the index dropping 2.9% for the 7th consecutive fall since the first event of April. This was however an eagerly awaited after the large reductions announced last week in WMP offerings over coming months.
SMP suffered another moderate fall with the pressure of weaker US and EU markets, dropping US$155/t or 5.0% on average to US$2,971/t. Fonterra MH C2 lost US$235/t to US$2,940/t, yet European SMP again did a lot better to lose only US$125/t (in simple average). The NZ premium over EU product was pared to US$70/t.
WMP lost US$134/t ($1/t more than the last event) on average to US$3,730/t, with consistent losses across C2 to C5. Regular product C2 WMP lost US$140/t to US$3,735/t, but there were slightly heavier losses in later periods. Last week Fonterra advised in a pre-event forecast that it has removed more than 29,000t from events in August 2021 through January 2002 due to stronger sales outside the GDT platform.
Fat prices posted small average losses but the key C2 contracts posted small gains. Butter lost US$39/t to average US$4,419/t, with inconsistent losses across contracts. C2 was the only contract to improve, adding US$20/t while C1 and C3 lost more than US$100/t. AMF lost US$17/t on average to US$5,615/t, which was weighed down by losses in C4 and C5, while C2 added US$31/t. The forward curve has looked similar for the last 3 events, flattening this time near US$5,500/t with the weaker later delivery prices.
Cheddar made a small gain on average (up $73/t to $4,022/t) which smoothed out the forward curve. C2 lost US$35/t to US$4,060/t, but there were large opposite changes in C4 and C5, leaving a spread of only US$93/t across the six contracts.