Fonterra’s GDT explores EEX dairy auction tie-up

05 Sep 2017 --- Fonterra Cooperative Group’s online auction platform Global Dairy Trade (GDT) is looking to join forces with the European Energy Exchange (EEX) to set up and operate an auction mechanism for dairy products originating in Europe. The two companies have signed a Letter of Intent to evaluate the possibility of working together.

Global Dairy Trade operates GDT Events, a twice-monthly public price discovery auction for generic, large-volume products. It is the leading dairy auction globally, featuring over 520 registered bidders from more than 80 countries.

EEX develops, operates and connects secure, liquid and transparent markets for energy and commodity products with contracts in power, coal and emission allowances. It also trades freight and agricultural products or registers them for clearing.

EEX’s offering for European dairy products includes financially settled futures in skimmed milk powder, butter and whey powder.

Since the launch of agricultural products in mid-May 2015, the EEX derivatives market for dairy products has continuously recorded new record volumes and shown steady growth, becoming the leading exchange market for dairy risk management in Europe.
 
In the coming months, EEX and GDT will consult with dairy product buyers and sellers about the possibility of jointly offering price discovery for European dairy products through a credible auction mechanism designed for the European market.
 
“We believe that our proposal can significantly benefit the dairy value chain by providing another business channel for exports, as well as potentially creating underlying data for new risk management instruments. With its expertise in dairy auctions Global Dairy Trade is the ideal partner for such a project,” says Sascha Siegel, Head of Agricultural Commodities at EEX.
 
“EEX is highly respected and the only European market operator recording a significant number of dairy futures contracts. We look forward to exploring the potential for a joint initiative that would enable us to better meet the needs of European buyers and sellers. This initiative forms an important part of our ongoing growth strategy,” adds Eric Hansen, Director of Global Dairy Trade.