GDT changes aim to improve auction transparency

Published 5 October 15

Fonterra has opted into a new protocol established by Global Dairy Trade (GDT) as part of its aim to further improve the transparency of its online auction. Recent GDT price increases appear to have added fuel to discussions within the industry about whether alterations to volumes offered on the auction have helped lift its prices.

GDT’s new protocol enables sellers to publish normal guideline ranges for their supply volume forecasts and, if forecasts go outside these ranges, then sellers must publish an explanation. Fonterra has agreed to follow this procedure and the change is effective from the next auction on 6 October 2015.

In addition, GDT has amended its market rules to make data available on sold quantities, bidder participation by region and real-time demand/supply ratios during each auction. However, these figures will only be available through a subscription service, starting in early 2016.

GDT also intends to increase the auction’s liquidity by combining product groups to create larger pools of demand and supply. Initially, it intends to offer a milkfat group that combines butter and AMF (anhydrous milk fat), available in early 2016.