US company to sell products on Fonterra online platform

Fonterra has expanded GlobalDairyTrade to allow other dairy companies to sell their products on...
Fonterra has expanded GlobalDairyTrade to allow other dairy companies to sell their products on the online dairy commodity trading platform; pictured, dairy cattle grazing at Clydevale. Photo from <i>ODT</i> Files.
United States dairy company DairyAmerica will begin selling dairy products on Fonterra's online auction site GlobalDairyTrade from October 4.

The company's participation has been described as a significant development in what was already the world's foremost online dairy commodity trading platform.

In March, Fonterra announced it was expanding GlobalDairyTrade to allow other dairy companies to sell their products on the platform.

DairyAmerica was one of the international dairy companies that worked with Fonterra to develop draft market rules to enable that to happen. The rules were published last week.

"These rules lay the foundation for other new sellers to join GlobalDairyTrade and we expect that this will happen over the next year," GlobalDairyTrade general manager Paul Grave said in a statement.

In future, DairyAmerica would be managing a "significant proportion" of its export business through GlobalDairyTrade, rather than through distributor and reseller arrangements, DairyAmerica chief executive Rich Lewis said.

The announcement was recognition exports were an increasingly important growth opportunity for its member companies, which represented about 45% of all non-fat dry milk and skim milk powder produced in the United States, Mr Lewis said.

GlobalDairyTrade was established in 2008 and sales to date total $US4 billion ($NZ4.7 billion).

It trades about 650,000 metric tonnes of products annually and has about 350 bidders from 67 countries.

The first products to be offered by DairyAmerica will be skim milk powder products suitable for import into a large number of countries.

DairyAmerica Inc was established in 1995 as a federated marketing company. Members include Agri-Mark Inc, California Dairies Inc and O-AT-KA Milk Producers Inc.

It markets 100% of the non-fat dry milk, skim milk powder, whole milk powder and buttermilk powder produced by its members and sold into both the US and international markets.

Slumping dairy prices on international commodities markets should be seen as a warning to the Reserve Bank that weaker global growth would hurt New Zealand exporters, a financial commentator said.

Bernard Doyle, of JB Were's investment strategy group, said "the usual lag between global growth and New Zealand commodity prices suggests we should expect falling New Zealand export prices by the end of the year, but we won't have to wait that long - dairy prices are already falling", NZPA reported.

The GlobalDairyTrade auction had posted three consecutive price falls in the fortnightly auctions and the "trade-weighted" spot dairy price had fallen 13% since June and was 20% off its March high.

"So we aren't guessing about the impact of a weaker world on New Zealand exporters; we're already starting to see it," Mr Doyle said.

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