Fonterra Cooperative Group's online auction platform GlobalDairyTrade is looking at a tie-up with the European Energy Exchange to extend the dairy offering available in the region.

The two operators have signed a letter of intent to investigate whether they should set up a joint venture establishing and operating an auction mechanism for dairy products originating in Europe, they said in a statement.

The companies will talk to buyers and sellers about joint price discovery through an auction designed for Europe.

"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," GDT director Eric Hansen said. "This initiative forms an important part of our ongoing growth strategy."

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Fonterra's GDT operates a twice-monthly auction with more than 520 registered bidders from more than 80 countries sourcing product from India's Amul, Europe's Arla and the Danish Arla Food Ingredients, and New Zealand's Fonterra. Products sold include skim and whole milk powders, anhydrous milk fats, rennet casein, butter milk powder, butter and cheddar.

EEX is part of the Deutsche Borse Group and largely focuses on energy and commodity products.

It launched financially settled futures on skim milk powder, butter and whey powder in 2015 and has continued to report record volumes of those products since then.

EEX head of agricultural commodities Sascha Siegel said the proposed deal with GDT offers a new channel for businesses to export and could generate underlying data for new risk management tools.

New Zealand stock market operator NZX uses Fonterra's GDT auctions to set reference prices for its own suite of dairy derivatives.