Fonterra’s trading platform debuts with success

Posted by Editorial on 4th July 2008

The inaugural trading event for Fonterra’s new internet-based sales platform, globalDairyTrade, concluded this morning.

The online trading platform plans by Fonterra were announced in April this year in response to price volatility, 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 in May. “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.”

Trading went through ten bidding rounds and ran for nearly four hours, which was above expectations and reflective of strong customer demand, according to Fonterra. “The level of interest and the result is a vote of confidence from our customers in the new sales platform. It is early days yet, and we expect some bumps along the way, but this is a very positive start,” Mr Wickham proclaimed.

More than 80 per cent of Fonterra’s largest commodity whole-milk powder customers had signed up as registered users of globalDairyTrade as of a month ago.

globalDairyTrade represents a significant change in the way Fonterra sells some of its commodity products, and is a first in international dairy trade. Over the next 12 months Fonterra expects to sell around $NZ 1 billion of whole milk powder on the trading platform, with volumes growing over time and the introduction of other commodity groups likely in coming years.