Editorial | IDM
Global Dairy Trade
will stay THE benchmark
4-5 2017 | international-dairy.com · 3
The internet auction platform aims at growth
Roland Sossna
Editor IDM
International Dairy Magazine
sossna@blmedien.de
international-dairy.com
Global Dairy Trade has not been setting, but – let’s say benchmarking the worldwide prices for dairy commodities
for almost a decade. From a relative small start with only Fonterra behind it selling WMP only,
Global Dairy Trade has developed into a platform that trades eight commodity items from a handful
of manufacturers that belong quite naturally to the biggest exporters of milk products in the world.
In 2016, Global Dairy Trade has sold an astonishing 636,000 tons of product, generating sales of more than 1.7
billion US dollars. During the past few auctions, the amount of product traded was always higher than 20,000
tons. But although there is butter, cheese (Cheddar) and a few other products in the portfolio, in terms of
volume, the by – far biggest items in all these auction events are WMP and SMP. And most probably will always
be. This means that the average price calculated across all the commodity sales, which is so prominently displayed
whenever one of the fortnightly auctions is closed, does in no way reflect what one might call market
reality. This thesis also applies if one takes a look at worldwide dairy trade that is about a 14 times bigger than
what Global Dairy Trade is moving. Most of the products are directly traded between manufacturers and their
customers. The reason for this is quite simple. Global Dairy Trade can only sell standardised produce while
customer-specific made products cannot be traded at a more or less anonymous internet auction.
Nevertheless, there is still much in store for Global Dairy Trade. To overcome the problem posed by minimum
quantity requirements, Global Dairy Trade now aims at pooling the offering of smaller players in kind
of a multi-seller bundle. This should attract more sellers to join the auction platform. The auction itself
promises that this will “enable greater confidentiality of commercially sensitive information”. This, of
course, has yet to be seen. It seems hardly conceivable that the addition of a number of small offerings
to the overall offering will provide more transparency. But transparency is not good for a market that is
exposed to speculation, anyway. In my opinion, Global Dairy Trade is a good thing and it should be established
if the industry had not yet done so. But it always will stay a benchmark for pricing and should never
determine the price levels in domestic markets, thinks Roland Sossna.