GlobalDairyTrade event reflects strong customer demand

globalDairyTrade, Fonterra’s internet-based sales platform, concluded its November trading event this morning (NZT) with the average price for Whole Milk Powder up 13.7%.

The trading manager, CRA International, advised Fonterra that the average price achieved across all contracts for Whole Milk Powder (WMP) was US$3,437 per tonne FAS. This was US$415 per tonne higher than the October event. Prices ranged from US$3,270 per tonne FAS to US$3,715 per tonne FAS.

Nigel Kuzemko, Director Commercial & Strategy, Fonterra Trade & Operations, said demand had been strengthening, along with pricing, in recent months and there was a more positive sentiment in the market. But the size of the lift in pricing this month showed customers demonstrating some urgency in refilling their supply chains.

“This is a reflection of the prices that buyers are prepared to pay on the day to secure product in these contract periods. And we do have a tight supply situation for most products.”

However, Mr Kuzemko said the recovery in consumer demand and the economic situation were still relatively fragile.

The recent move by the Dairy Management Committee of the European Commission to reduce the level of intervention in dairy markets was a positive step which would encourage market stabilisation. “It provides further confirmation of the improving market situation,” Mr Kuzemko said.

Anhydrous Milk Fat (AMF) was traded on globalDairyTrade for the first time. The average price achieved across all contracts was US$4,757 per tonne FAS.

Mr Kuzemko said AMF’s strong start confirmed a shortage of supply.

More than NZ$1 billion of product has now been sold on the globalDairyTrade platform, which was launched in July 2008.

The next globalDairyTrade trading event will be held on 1 December 2009. See www.globalDairyTrade.info for more details.