The Cream Group was applied to Fonterra’s AMF and butter products for contract periods 4, 5 & 6 for the first time in today’s Trading Event TE165.
The grouping of cream products worked successfully to allocate supply to the strongest demand within the constraints of total available milkfat quantities and supply ranges for each product.
For contract periods 4 and 5, demand for AMF was more price sensitive than for Butter. This resulted in lower sales of AMF, offset by higher sales of Butter, than would have occurred without the Cream Group.
Conversely, for contract period 6, demand resulted in lower sales of Butter and higher sales of AMF. Grouping of Cream products enables these adjustments, providing a better match of supply to demand.
A full reconciliation of Cream Group sold quantities by contract period is available within the GDT Insight Market Pack. See more information to subscribe to this pack here.
More information on how the Cream Group works is available here.