Euronext will offer derivatives for butter, skimmed milk powder and whey powder, with the launch scheduled for the spring, it said on Thursday.
The EU, the world’s top dairy producer, is scrapping milk production quotas from April 2015 in response to growing global demand for dairy products, a move expected to lead to an increase in EU output and greater volatility in prices.
«We want to respond to the hedging needs of the sector in the post-quota period and also create a price benchmark for Europe, something that does not exist today,» Nicholas Kennedy, head of business development for commodities at Euronext, told Reuters.
Euronext had launched an EU skimmed milk powder contract in 2010 but suspended it in July due to a lack of liquidity. Germany’s Eurex exchange quotes butter, skimmed milk powder and whey powder derivatives, but traded volumes are thin.
The major global benchmark for dairy prices is set at twice-weekly auctions launched in 2008 by the world’s largest dairy exporter, New Zealand’s Fonterra Co-Operative Group .
Euronext said it would hold a roadshow and training events to inform the industry about the benefits of hedging.
Its new dairy contracts will be denominated in euros and be linked to physical delivery to warehouses in a 150 kilometre radius around the ports of Rotterdam, Hamburg and Antwerp, Kennedy said.
The first delivery month to trade will be very close to the launch date, he said, adding Euronext would offer at least a one-year trading horizon.
The exchange is targetting commodities as a growth area after its spin-off from Intercontinental Exchange this year.
It plans to develop products with China’s Dalian Commodity Exchange and has also overhauled its flagship wheat futures <0#BL2:> in response to controversy over quality and delivery terms.
Source: Reuters
