In its latest auction of its cranberry concentrate on January 28, Ocean Spray’s Ingredient Technology Group (Lakeville-Middleboro, MA) says it saw an average price increase of 17%.
In its latest auction of its cranberry concentrate on January 28, Ocean Spray’s Ingredient Technology Group (Lakeville-Middleboro, MA) says it saw an average price increase of 17% across three contracts, compared to closing prices from the company’s auction in October last year.
Closing prices at the January auction were $19.50/gallon for the first contract delivery period (three months), $20/gallon for the second delivery period (six months), and $21/gallon for the third delivery period (six months). In total, the company sold 143,800 gallons of concentrate to a total of 14 companies.
“Rising concentrate prices likely reflect the current state of supply and demand,” said Mike Stamatakos, vice president, agricultural supply and development, for Ocean Spray. “Based on Cranberry Marketing Committee data, demand for cranberry ingredients is up, while the 2010 crop was smaller than either of the two prior crops.”
The company also announced future enhancements to the auction process that are intended to provide participants with more transparent information regarding opening prices and quantities:
• To remove speculation regarding how the opening price is set, the opening prices for future auctions will be set automatically at 85% of the previous auction’s closing prices. Potential participants will therefore know opening prices for the next auction as soon as the results of an auction are published. The 85% protocol has been successfully used in international dairy industry auctions run by trading manager, CRA.
• To reinforce Ocean Spray’s commitment to supply cranberry concentrate reliably and consistently to its industrial customers, the company will issue a yearly schedule of trading events and the total amount of cranberry concentrate expected to be offered over the upcoming 12-month period. This annual offering schedule will be published in early February to allow participants to plan ahead for their cranberry concentrate needs.
Based on its new protocol for establishing opening prices (i.e., 85% of the prior closing prices), the opening prices per gallon for the next auction will be:
• $16.58 for contract 1 (85% of $19.50)
• $17.00 for contract 2 (85% of $20.00)
• $17.85 for contract 3 (85% of $21.00)
“We want to make the buying process for cranberry concentrate as efficient, transparent and consistent as possible,” Stamatakos commented. “We believe the changes will give participants more information in advance of the auction to assist them in their buying decisions. Also, by using the 85% 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.”