January 8, 2010

Fonterra's online dairy sales reach milestone

Sales on Fonterra's internet-based trading platform, globalDairyTrade, have reached US$1 billion over the 19 trading events since launch in July 2008.

The milestone reinforces globalDairyTrade's establishment as the global market place that provides reliable market reference price for dairy products.

With the recent addition of Anhydrous Milk Fat, and Skim Milk Powder commencing early in 2010, Fonterra's annual sales on the platform will exceed 400,000 tonnes of product, or around 20% of Fonterra's 2008-09 production.

Kelvin Wickham, Fonterra managing director, Global Trade, said the market-based pricing globalDairyTrade offers would facilitate the creation of a futures market for dairy products like those that exist for other commodities.

The New Zealand Exchange (NZX) has confirmed globalDairyTrade Contract Period 1 will be the settlement price for its Whole Milk Powder futures contract, which will begin trading in the first half of this year.

globalDairyTrade manager Paul Grave said participation in the monthly trading events had exceeded expectations.

globalDairyTrade now has over 250 registered bidders from 56 countries and it is not uncommon to have over 100 bidders participating in an event, which is a good level of liquidity in the relatively small dairy market, said Grave.

Fonterra is open to other sellers participating on the trading platform.

Having other sellers participating would give an added level of liquidity and therefore, credibility, said Wickham.