Fonterra recieved a lot of flack when they launched their global dairy trade auction 3 years ago. The success of this selling system has prompted a plan to include competitors to offer their products via the trading platform.
Transparency of price allows everyone to get early market signals, and allows all in the product chain to plan ahead with some assurance.
In todays volatile financial climate, risk management is important, and transparency of price and volumes offered allows market information to show future direction.
Do you see this selling system as part of Fonterra's financial success, or would that have happened anyway?
International dairy companies appear to be lining up to join Fonterra's online dairy products sales platform, globalDairyTrade, after slating its impact on markets when it was launched three years ago reports Stuff. The New Zealand dairy giant has, since gDT's inception, been keen to get other companies on board to improve price discovery and market risk management. Now it has come out with a set of draft rules for participation, to which European, Australian and US dairy processors have had input.
Among them are Arla Foods and FrieslandCampina, Californian Dairies and DairyAmerica, and Murray Goulburn from Australia. Some of these companies were vocal critics of gDT's launch during the global financial crisis, claiming it was further dragging down world commodity prices.
Prices fetched on the auction are now considered a global price barometer. Total sales since 2008 are US$3.2 billion. Fonterra's trade and operations managing director Gary Romano says having other sellers on gDT will add more volume and lead to even more reliable price discovery. "At the same time, it has the potential to attract more buyers, given the platform will offer products from different goegraphies, enabling better risk management."
Meanwhile Fonterra says it is expanding its product offer on gDT, from May 17, offering milk protein concentrate and rennet casein, as well as milk powders and anhydrous milk fat. Fonterra currently trades around 600,000 metric tonnes of product a year on gDT and has more than 300 registered buyers from 58 countries.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.