Ocean Spray has held its first online auction for its cranberry concentrate and claims it attracted “very strong participation”, with 34 buyers taking part out of the 37 who had registered.
Ocean Spray’s Ingredient Technology Group first announced that it would launch online auctions for its concentrate ingredient in April, when it said that the online approach would help to safeguard its customers against commodity fluctuations by allowing easier tracking of supply and pricing.
The company said that it sold a total of 230,000 gallons of its concentrate at the auction on Wednesday at a clearing price of $33 per gallon for the first contract delivery period (6 months following the auction) and $34 per gallon for the second contract delivery period (the subsequent 6 months).
Michael Stamatakos, Vice President, Agricultural Supply and Development at Ocean Spray said: “We are pleased with the outcome of this first auction. We believe the auction is a trusted and reliable method of facilitating commodity sales that will allow Ocean Spray to continue to deliver quality cranberry concentrate through an open and efficient process.”
The next auction date will be announced on www.cranberryauction.info in the coming weeks, the company said.
How it works
The auction process was developed with the Boston-based, independent auction manager CRA International. To qualify as a bidder, customers have to register as a user and provide relevant customer data. All bidders need to have credit pre-approval 30 days prior to the auction.
The CRA independent trading manager confirms the starting price five calendar days before bidding begins.
At the start of bidding, each bidder enters the volumes desired at the starting prices with the minimum volume set at 1,900 US gallons.
The trading manager closes the first bidding round after a pre-specified period of time.
For each successive bidding round, the manager raises the prices in response to excess demand (if any) and bidders re-submit volumes at the new prices.
This continues for successive rounds until the total bid volume falls to the level of volume available for purchase.
Shortly after the close of the auction, the trading manager confirms the volumes the bidders have won and the corresponding price.
All winning bidders pay the same base price for the same contract period.