Fonterra doubles milk powder auctions

Fonterra adds second auction to monthly dairy commodities sale.

It is interesting to remind ourselves when Fonterra launched their globalDairyTrade auction site, it was greeted with howls of protest.

Many believed that this new transparency in the market would force prices down, and would be detrimental to goals of long term price growth.

History has proved the doomsayers wrong, and while some would argue the success is only due a time of bouyant dary commodities, most would herald its success.

With an expansion of auction offers to twice monthly, Fonterra is predicting nearly a quarter of its products will be sold via this system.

Fonterra has announced that from September 2010 the globalDairyTrade trading manager, CRA International (CRA), will increase the frequency of trading events to twice a month.

Kelvin Wickham, Fonterra Managing Director Global Trade, said the increase in frequency was a significant milestone that highlighted globalDairyTrade’s success as an online trading platform and as a credible price discovery mechanism.

“This will add more depth and credibility and even more transparency around pricing trends,” Mr Wickham said.

“With a more frequent pricing signal, market participants will be able to have even more confidence they have up-to-date information on the current balance of supply and demand.”

Brad Miller, head of CRA’s Auctions & Competitive Bidding Practice, said, “globalDairyTrade has grown to 280 qualified bidders from 56 countries, an increase from 107 at inception.

There are now between 100 and 140 active bidders participating in each event and around 65% of bidders joining the event win product.

Fonterra also announced that beginning with the 3 August 2010 trading event it will be adding one new product, Buttermilk Powder, and two new specifications of existing products – High Heat/ Heat Stable Skim Milk Powder and Anhydrous Milk Fat in 1000 kilogram bulk packs - to globalDairyTrade.