European Union dairy producers will soon have a new fluid milk futures market. European market news publisher Mondovisione confirms The Exchange Council of the European Energy Exchange (EEX) voted December 7th in Vienna to proceed with a liquid milk futures market in early 2018.
EEX will be the first European exchange to offer a liquid milk product for trading. The contract size will be 25,000 kgs and the future will be settled financially against a liquid milk index which is currently being developed by EEX. The EEX already markets skimmed milk powder, butter, and whey powder but not cheese.
“Generally liquid milk can already be hedged synthetically at EEX by trading butter and skimmed milk powder contracts. With the introduction of liquid milk futures we will offer an additional direct price hedging tool, in particular for dairies whose output is not focused on butter and powder as well as milk producers”, explains Sascha Siegel, Head of Agricultural Commodities at EEX.
The trading volumes of risk management instruments on dairy products ( butter, skimmed milk powder and whey powder) in particular has grown continuously. At 82,050 tonnes of product equivalent (corresponding to 16,410 contracts), EEX achieved a new annual record on the derivatives market for dairy products. Since the beginning of 2017, 92,700 tonnes have been traded at EEX – and, hence, more than in the entire year 2016.
The European Energy Exchange (EEX) is the leading energy exchange in Europe which develops, operates and connects secure, liquid and transparent markets for energy and related products. As part of EEX Group, a group of companies serving international commodity markets, EEX offers contracts on Power, Emission Allowances and Coal as well as Freight and Agricultural Products. EEX is part of Deutsche Börse Group.
Milk futures have been a part of risk management in the United States since they were added to the Chicago Mercantile Exchange in 1996.