Dairy America joins Fonterra auction site

International dairy company DairyAmerica will begin selling its products on Fonterra's online auction site GlobalDairyTrade in October.

The company's participation has been described as a significant development in what was already the world's main 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 market rules to enable that to happen. The final 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.

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

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

GlobalDairyTrade was established in 2008 and sales to date total US$4 billion.

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

The first offerings from DairyAmerica will be skim milk powder products suitable for import into a large number of countries.

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

It markets all 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.

It is the largest US supplier of these products.

The deal comes as international commodities markets are starting to come down.

The slump should be seen as a warning for the Reserve Bank that weaker global growth will hurt New Zealand exporters, says a financial commentator.

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

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

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

- Otago Daily Times, NZPA