GDT operates GDT Events, a twice-monthly public price discovery auction for generic, large-volume products. It is the leading dairy auction globally, with more than 520 registered bidders from more than 80 countries.
EEX’s offering for European dairy products includes financially settled futures on 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.
Designed for Europe
Over the next 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 an auction mechanism designed for the European market.
Sascha Siegel, head of agricultural commodities at EEX said the 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.
Eric Hansen, director of GDT, said EEX is the only European market operator recording a significant number of dairy futures contracts, and that the initiative is an important part of GDT’s own growth strategy.
Hansen told DairyReporter the announcement is intended to inform interested parties that EEX and GDT are at the early stages of evaluating the possibility of designing an auction system for the European dairy market.
"We are undertaking this evaluation because each major dairy market has its own needs, and remaining relevant means we have to regularly look at ways of innovating the auction design and our operating model to better meet our customers’ needs," Hansen said.
Including major companies
Hansen said EEX and GDT will begin a consultation process in the next few weeks that will include all major buyer and seller companies and cooperatives interested to meet with EEX and GDT.
Hansen said a key purpose of the consultation is to discuss with interested parties the benefits that a joint EEX/GDT offering may provide to them.
"Initial discussions with potential customers indicates there may be significant advantage in providing a local base with distinct European characteristics," Hansen said.
"The potential new auction mechanism also would provide another business channel for exports, as well as potentially creating underlying data for new risk management instruments."
In the US, Hansen said, GDT is aiming to launch its first multi-seller pool for generic lactose products later this year. The European initiative represents a continuation of this strategy.
GDT is a wholly-owned subsidiary of New Zealand-based Fonterra Cooperative Group Limited, and is the world’s leader in global dairy trading.
GDT Events is a twice-monthly public price discovery auction for generic, large-volume products. It is the leading dairy auction globally, with more than 520 registered bidders from more than 80 countries.
GDT Marketplace is a 24/7 e-commerce trading platform enabling the trade of any dairy product, at any time, in any quantity. GDT also provides an information subscription service known as GDT Insight.