Fonterra set to launch online trading platform

Posted by Daniel Palmer on 2nd June 2008

Giant NZ dairy firm Fonterra is just six weeks away from going live with their online trading platform – ‘GlobalDairyTrade’.

The platform plans by Fonterra were announced in April this year in response to price volatility caused by a fundamental change in the marketplace, according to Managing Director of GlobalDairyTrade, Kelvin Wickham. “Everything is pointing to the fact that this volatility is going to continue and that prices will move up and down, often unpredictably in response to supply and demand shocks,” he said. “GlobalDairyTrade has been designed to help Fonterra and its customers manage price exposure in this market, but will be equally effective in any market conditions. Management of commodity price risk is something customers have been asking Fonterra to provide for them.”

Mr Wickham believes that there will be initial worries from their customers about the new system but anticipates that they will be overcome quickly. “We expect some nervousness from our customers when we introduce something new like this, but initial interest has been, on the whole, extremely positive. Over 100 customers have participated in online tutorials in readiness for the July launch”, Mr Wickham stated.

More than 80 percent of Fonterra’s largest commodity whole-milk powder customers have now signed up as registered users of globalDairyTrade.

Customers will tender for commodity products each month through the online platform and Fonterra expects around $1 billion of whole-milk powder to be traded on globalDairyTrade in the first year. Other commodity groups will be added over time.