Fonterra sees online trading rising

Fonterra is to launch an online trading platform, globalDairyTrade, in the next six weeks after saying that more than 80% of its big powder customers have signed up for internet trading.

The move to internet-based trading was announced in April, as a response to increased price volatility in international markets. Fonterra was unable to take full advantage of soaring commodity prices last summer because a lot of its production had been committed in advance sales at lower prices.
Historically, Fonterra has mostly negotiated directly with customers with contracts often lasting up to a year, but that system cannot react quickly to the dramatic changes seen in international dairy markets.
“The markets have changed and fundamentally changed in terms of the supply and demand dynamics that are out there,” says Fonterra managing director of global trading Kelvin Wickham. “Prices will move up and down, often unpredictably, in response to supply and demand shocks.”
The internet platform had been designed to help Fonterra customers manage price exposure in such a market, but would be effective in any market conditions.
Customers will tender for commodity products each month through globalDairyTrade, and the cooperative expected about $1 billion (