Ocean Spray adopts dairy model for cranberry auctions

By Shane Starling

- Last updated on GMT

Related tags Ocean spray Cranberry

Ocean Spray will kick off its next concentrate auction with prices between $16.58 and $17.85 per gallon
Ocean Spray will kick off its next concentrate auction with prices between $16.58 and $17.85 per gallon
Ocean Spray will change its auction policies to add certainty to opening prices the cranberry leader said after closing its latest cranberry concentrate auction that saw prices rise 17 percent over three selling periods.

It put that rise down to a smaller cranberry crop in 2010 coupled with rising demand.

The auction changes, which bring the system into line with dairy models, would be made at the seventh quarterly auction, expected in April, and reflect a desire by the company to reduce speculation and uncertainty about starting prices.

Opening prices for future auctions would be set at 85 percent of the previous auction’s closing price.

“Potential participants will therefore know opening prices for the next auction as soon as the results of an auction are published,”​ the company said in a statement. “The 85% protocol has been successfully used in international dairy industry auctions run by trading manager, CRA.”

To further add transparency to the process, the company will this month publish a full schedule of its upcoming auctions for the next year.

“We believe the changes will give participants more information in advance of the auction to assist them in their buying decisions,”​ said Mike Stamatakos, Ocean Spray’s vice president of agricultural supply and development.

“Also, by using the 85 percent formula to set opening prices in future auctions, we want to make it clear that these opening prices do not reflect Ocean Spray’s assessment of market pricing but are simply used as the starting point for bidding.”

Last week’s auction involved 14 companies, with Ocean Spray selling 143,800 gallons of concentrate at $19.50/gallon for the first contract delivery period (three months), $20 for the second delivery period (six months), and $21 for the third delivery period (six months).

The concentrates typically find their way into beverages.

Ocean Spray posted global sales of $2bn in 2010, of which $140m was generated from its ingredients division which includes cranberry concentrate, dried cranberries, fruit fusions, powders and purees.

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