Wellington - The New Zealand farmer co-operative Fonterra, which is the world's biggest seller of dairy products, moved on Wednesday to cement its grip on the global market by trading on the internet.

Fonterra, which already controls more than one-third of the international dairy trade, said it would start selling milk powder through an online trading platform called Global Dairy Trade in July.

The move comes after the co-op, which has traditionally negotiated sales with key customers up to a year in advance, dipped out badly last year as it was unable to take advantage of rapidly soaring commodity prices.

World dairy prices rose dramatically and quickly during the year but Fonterra was tied to contracts signed before the rise and had to accept prices at well below the new market rates.

Fonterra said customers would tender for product each month and forecast powder sales of about 1 billion New Zealand dollars (about 780 million US dollars) online in the first year. Other commodities will be added during the year.

A company statement said that once the system was established, it would be opened to its supply partners and potentially its competitors, leading to enhanced price transparency and trading through electronic means in the global dairy market.

"With that, an international dairy futures or derivates market, as exists with other commodities such as oil, sugar and coal may develop," it said.

Chief executive Andrew Ferrier said the co-op expected continued price volatility for the near term as the market evolved with new patterns of supply and demand and fluctuating global stocks.

Fonterra, owned by about 11, 000 farmer-shareholders, is the world's 5th largest dairy company and sold 2.9 million tons of dairy products to 140 countries last year. (dpa)