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Findings from review of SMP UHT product in TE207

18 March 2018

Global Dairy Trade has found that the prices achieved for Skim Milk Powder Ultra High Temperature (SMP UHT) in Trading Event 207 reflected multiple bidders’ strong needs to secure higher quantities of product than were offered in the Trading Event.

This key finding follows a review initiated in consultation with the GDT Events Oversight Board to investigate the factors leading to price outcomes for SMP UHT product in contract periods 1, 2 and 3 in Trading Event 207. The review looked at the observed differences in winning prices for the SMP UHT product, relative to the SMP Medium Heat product in the relevant contract periods.

Eric Hansen, Director of Global Dairy Trade, said the review was a prudent step to provide continued assurance to market participants.

“Based on reports from the Trading Manager, our detailed analysis of Trading Event data, and feedback received from the relevant buyers and sellers, the principal cause of the difference in winning prices at this auction was persistently strong demand by multiple bidders for UHT against a consistent supply.”

“GDT has also received feedback that contract execution will progress as normal between the successful buyers and the seller.”

Bill Shields, GDT Events Oversight Board Chairman, said that all trading platforms and marketplaces can be subject to unexpected volatility in prices when there are changes in underlying demand and supply relativities.

“The structure and operation of the GDT Events trading platform is designed to ensure that the price level for each product, and differences in prices across products, are determined by the interactions of supply and demand, in order to achieve effective price discovery over time.”

Read the full Summary of Findings here.

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