An industry group is at work to fix a broken milk powder price-discovery process that is resulting in damaging volatility, lost competitiveness and eroding global market share.
If you’re in the milk powder business as either a seller or a buyer, how do you know what a load is worth? And how can you hedge against price movements when prices are all over the board, each series has different rules on which transactions are included and each actor may price off a different series?
This isn’t an atypical example and these aren’t inconsequential questions: the NDM/SMP business is valued at nearly $3 billion in the United States and almost $12 billion globally. But our ineffective price discovery system makes it almost impossible to manage volatility and impairs our ability to respond to market signals, extracting costs to everyone in the supply chain.