Global Dairy Trade (GDT) has hosted its first single-product auction as part of a pilot project to increase the frequency of price discovery.
GDT Pulse, which is aiming to enhance liquidity in GDT, will offer auctions on alternate weeks between the larger trading events for a period of 6-12 months.
If the pilot is deemed successful, it is envisaged that the company will invest in platform upgrades to enable scalability of the service offering and the potential for daily auctions.
The smaller auctions offer one specific product to bid on: Fonterra Whole Milk Powder (WMP) Regular, Contract Period 2.
The first event held yesterday (Tuesday, August 9) took just five minutes to complete and saw 33 bidders take part.
There were two rounds of bidding with 15 successful buyers.
938MT of WMP product was sold with an average price of $3,425/MT.
The maximum supply was 1,000MT, while the minimum supply was 900MT.
GDT hosts large trading events for dairy commodities, including butter, skim milk powder (SMP) and cheddar, twice per month.
Following the last auction on Tuesday, August 2, the GDT price index dropped by a further 5%. The index, which now stands at 1,163, has returned to levels last seen during August 2021.
It follows a record high last March when the dairy commodity index peaked at 1,593.
The price index has now suffered four consecutive falls since the auction on June 7; following the previous trading event held on July 19, there was also a 5% decline.
The company is owned and managed as a strategic partnership between the European Energy Exchange (EEX), Fonterra Cooperative Group, and New Zealand’s Exchange (NZX), with equal one-third shareholdings.
