EEX will become the first exchange in Europe to offer such a product. So far, EEX offers trading with futures on butter, skimmed milk powder and whey powder.
The contract volume is 25,000kg. For the financial settlement of the new product EEX uses the EEX European Liquid Milk Index, which is equally composed of milk prices from Germany, the Netherlands, Denmark and Ireland. The prices are based on the European Commission’s “Milk Market Observatory” in accordance with (EU) No. 2017/1185 Article 12 (a) – Annex II.4(a).
Meeting market needs
Sascha Siegel, head of agricultural commodities at EEX, said with the expansion of the product range EEX is meeting the needs of the European dairy markets and enabling customers to hedge against price risks with even higher precision.
“The development of butter, skimmed milk and whey powder prices over the last years has shown that the European dairy markets are subject to significant price tensions. We are convinced that the new product is an attractive supplement to risk management in the agricultural markets,” Siegel said.
EEX has offered trading in agricultural products since May 2015. In 2017, 137,820 tonnes of commodity equivalent were traded on the EEX dairy derivatives market. As a result, the volume increased by 68% compared to the previous year (2016: 82,050 tonnes of commodity equivalent).
EEX develops, operates and connects secure, liquid and transparent markets for energy and related products. EEX is part of Deutsche Börse Group.