Gdt introduction

GlobalDairyTrade

Confidential to GlobalDairyTrade Holdings Limited. This document should not be relied upon by any party as being consistent with the GDT Market Rules which take precedence.

February 2015

Topics


1. Introduction to GDT

- What is GDT?

- Who participates?

2. How the auction works

3. What information does GDT publish?

The starting point: volatility presents new challenges

Dairy is not alone when it comes to volatility

GDT connects sellers and buyers from around the world

700 bidders across 90 countries…to provide a credible

reference price for globally traded dairy commodities

GDT discovers the true current market price.

GDT Prices

Product Mix

Global Sales

Value-Add

Dairy Futures

Milk Price

Why is a credible market price important?

Earnings TAF

Capital Structure

Milk Price

GDT is at the heart of Fonterra’s strategy

7

Significant growth since 2008

8GDT’s global seller pool Supply

700 bidders from 90 markets create a globally competitive market place

Confidential to Global Dairy Holdings Limited. This document should not be relied upon by any party as being consistent with the GDT Market Rules which take precedence.

United Kingdom

United States

Ireland

Canada

Germany

Saudi Arabia

Algeria

Russia

Mongolia

China

Austria

South Korea

Japan

Spain

Belarus

North Korea

France

Netherlands

Poland

Denmark

Pakistan

Afghanistan

Libya

Egypt

Belgium

Turkey

Jordan

Kuwait

Lebanon

Malta

Syria

Ukraine

Lithuania

Nepal

Morocco

Czech Rep.

Bhutan

Bahrain

ArmeniaAzerbaijan

New ZealandAustralia

India

Brazil

Ethiopia

Yemen

Oman

UAE

Senegal

ZimbabweAngola

SingaporeMalaysia

Venezuela

Trinidad & Tobago

Thailand

Taiwan

Philippines

Mexico

Peru

Guatemala

Costa Rica

Panama

Jamaica

Indonesia

Dominican Rep.

VietnamEl Salvador

Nigeria

Myanmar

Bangladesh

Seychelles

Chile

Sri Lanka

Haiti

Sudan

Hong Kong

DjiboutiGambia

Tanzania

Cameroon

Mauritius

Suriname

Cayman Islands

Benin

Honduras

Ivory Coast

Guyana

Demand

What Products?

Base Dairy Commodities:

• Whole Milk Powder

• Skim Milk Powder

• AMF

• Butter

• Cheddar

• BMP

• Sweet Whey Powder

• Rennet Casein

• Lactose

How much is GDT transacting?

40,000 MT product sold each trading

event

2,500 full shipping

containers

1 fully laden container ship

~ 1 million MT of product sold on GDT last 12 months


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How GDT auctions work



How does GlobalDairyTrade work?T

OTA

L B

IDS

RE

CE

IVE

D

PRICE ANNOUNCED EACH ROUND

This is offer price – this increases during the event

This is the quantity of bids received – this decreases as price increases Sellers set the quantity

they wish to sell

Quantity on Offer


How does GlobalDairyTrade work?T

OTA

L B

IDS

RE

CE

IVE

D


Volume on Offer

$3000 $3300 $2200 $2250 $2300 $2325 $2350

And the starting price

Bidders bid the total volume that they wish to purchase at the starting price

EXCESS DEMAND

When total demand from all bidders exceeds volume on offer so the price is increased


How does GlobalDairyTrade work?

$3000

TO

TAL

BID

S R

EC

EIV

ED


Volume on Offer

$3000 $2250 $2300 $2325 $2350

Bidders re-bid at the new, higher, price

Demand still exceeds volume on offer so price is increased again

EXCESS DEMAND

$3500$3300$3300



$3000

TO

TAL

BID

S R

EC

EIV

ED


Volume on Offer

$3300 $3600 $3675 $3725 $2350

Bidders re-bid at the new higher price

$3500

The price continues to increase and each round bidders re-bid at the new higher price

PRICE INCREASES

DEMAND DECREASES


$3725


$3000

TO

TAL

BID

S R

EC

EIV

ED


Volume on Offer

$3300 $3600 $3675 $3750

The price is increased until the amount bidders are willing to purchase equals the amount sellers want to sell

$3500

THIS IS THE PRICE THAT ALL BIDDERS PAY


Trading Event 78 – volume vs. price (WMP)

Offer Quantity


Sales can be spread over six contract periods

May August November

Contract 1:

Contract 2:

Contract 3:

Jun

Jul

Aug

Contract 4:Sep

Key:Shipment LagShipment Period

Contract 5:

Contract 6:

Oct

Nov

May Trading Events (1 May and 15 May)

…and across 8 product groups

• WMP• SMP• AMF• Whey Powder• BMP• Butter• Cheese• Ren Cas• Lactose

Confidential to Fonterra Co-operative Group

What does GDT publish and who is looking?

The results are published immediately


GDT price index

GDT price index sensitivity

Product group results

Who views GDT results?

• Dairy industry

- Sellers

- Buyers

- Commentators

• Financial sector

- Futures

- FX traders

- Commodity traders

• Media & Economists

- Leading economists

- Leading media outlets

- Industry publications

•7,000 subscribers to emailed results

•10,000 website visitors per auction

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GDT integrity vital to its success

Kuwait Danish Dairies

Inner Mongolia Kindairy Trade co

Sellers

Bidders

Advisory board established in 2011

Auctions run by independent trading company

Auctions governed by market rules

Relied upon by stock exchange

Thank you


Gdt introduction

Food

Transcript of Gdt introduction