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US dairy giant to join Fonterra's dairy auction platform

A major US dairy player is joining Fonterra’s Global Dairy Trade auction platform.

A major US dairy player is joining Fonterra’s Global Dairy Trade auction platform as the site opens up to outside sellers.

Dairy America will start selling skim milk products on Global Dairy Trade from October 4, and expand its offerings over time.

In a statement, the companies said the agreement would see the single largest US provider of milk powder joining the single largest provider of globally-trade dairy products.

“Global Dairy Trade’s open trading platform provides us with the opportunity to establish our export business independently and have access to worldwide bidding demand on our first day of business," says DairyAmerica chief executive Rich Lewis.

He says going forward, the company will manage a "significant" proportion of its export business through the website rather than through distributor and reseller agreements.

“Today’s announcement marks a ‘coming of age’ for DairyAmerica’s export business, and is a recognition that exports are an increasingly important growth opportunity for our member companies, which represent approximately 45 per cent of all nonfat dry milk and skim milk powder produced in the USA.”

DairyAmerica was established in 1995 and currently represents four major US producer-owned dairy co-operatives. Members include Agri-Mark, Inc., California Dairies Inc., O-AT-KA Milk Producers, Inc., and United Dairymen of Arizona. It markets all of the non-fat dry milk, skim, whole milk and buttermilk powder produced by its members.

In March, Fonterra announced plans to expand Global Dairy Trade in March to allow other companies to sell their products on the platform.

Gary Romano, Fonterra's managing director of trade and operations, at the time said it was always envisaged that other sellers would eventually come on board.

Global Dairy Trade's general manager Paul Grave says market rules under which all parties will operate were finalised and 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."

On Tuesday, global dairy commodity prices fell to their lowest level since December, with the average winning price on Global Dairy Trade falling 5.1 percent to US$3796 a tonne.

It was the third straight fall for auction prices; two weeks prior the average price decreased 6.7 percent.

Global Dairy Trade was formed in July 2008 as a monthly auction for whole milk powder, and sales to date total US $4 billion. It currently trades around 650,000 metric tonnes of products annually and has about 350 registered bidders from 67 countries.

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