Fonterra to open up auction

BY TINA LAW IN CHICAGO
Last updated 07:06 27/08/2009
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Richard Baron
COMING SOON: Fonterra is planning to open its global dairy trade auction to other companies but will not say when.

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Fonterra is planning to open its global dairy trade auction to other companies but will not say when.

Fonterra United States president and chief operating officer Martin Bates said there was a lot of interest about how other dairy companies could benefit from using the auction and many were watching the auctions closely.

He would not say when other companies were likely to join or who they might be.

Brad Miller, vice-president of CRA International, the firm that set up and runs the auction for Fonterra, said it would be good for the marketplace to have other sellers trading their product on Fonterra's Global Dairy Trade system.

Fonterra started auctioning whole milk powder in July last year. The process has been heavily criticised and blamed for deflating the international milk price.

The auction was instigated at the same time that international demand for milk fell away.

However, John Wilson, marketing and industry affairs senior vice-president at Dairy Farmers of America (DFA), said the price was what the market was willing to pay and it was difficult to point fingers at any one thing that caused the price to drop.

DFA is the biggest dairy co- operative in the United States, with 10,200 farmer members.

Wilson did concede that the timing of the auction was not the greatest, but he did not think it necessarily contributed to the drop in price.

"It was a change, something different from New Zealand. Any time you have change and the prices go south it's going to be blamed for things," Wilson said.

Miller said in some sense there was no better time to start the auction than when the markets were volatile because some structured trading vehicles were needed in place to provide equality.

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