Global Dairy Trade seeks European deal

A new auction mechanism for dairy cows is on the cards

Global Dairy Trade has signed a letter of intent with the European Energy Exchange to evaluate a new auction mechanism for dairy products in Europe.

GDT, a wholly-owned subsidiary of Fonterra, operates GDT Events, a twice-monthly auction for generic, large-volume products.

It has more than 520 registered bidders from more than 80 countries.

EEX develops, operates and connects markets for energy and commodity products.
Its offering for European dairy products includes financially settled futures on skimmed milk powder, butter and whey powder.

Since the launch of agricultural financial products in May 2015, the EEX derivatives market for dairy products had continuously recorded record volumes and shown steady growth.

Over the coming months, EEX and GDT would 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 that market.

GDT director Eric Hansen said EEX was ''highly respected'' and the only European market operator recording a significant number of dairy futures contracts.