Fonterra sets rules for global trading platform

Last updated 13:19 09/03/2011

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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.

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.

No company has yet committed to offering product on the sales platform.

The site started with monthly auctions which last year increased to twice monthly.

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.

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