Six months after the transfer of agricultural products to the European Energy Exchange (EEX) the exchange registered a significant volume record on its dairy future markets. This is also the highest daily volume ever traded on a futures market for dairy products in Europe.
On 23 October 2015 a total of 324 contracts were traded on the dairy future market, corresponding to a volume of 1,620 tons. 108 contracts were traded in Butter Futures (equivalent to 540 tons) while 216 contracts were traded in Skimmed Milk Powder Futures (equivalent to 1,080 tons).
As of 11 May 2015 EEX has been offering agricultural futures on butter, skimmed milk powder, whey powder, processing potatoes, hogs and piglets for exchange trading. Previously, these products were listed at Eurex Exchange. The previous daily record in the Eurex dairy markets amounted to 224 contracts (equivalent to 1,120 tons), registered on 5 August 2014.
“Price volatility in national and international markets for dairy products have started to pose significant challenges to the European agricultural and food production sector alike. On-exchange risk management instruments such as the EEX Futures on Butter, Skimmed Milk Powder and Whey Powder play an increasingly important role to manage price risks”, says Sascha Siegel, Head of Agricultural Commodities at EEX.
"Fridays record trade volumes were as a result of a Synthetic Milk Hedge, where hedging an index of Butter and SMP was used to hedge the fluctuations in the price of milk”, comments Charlie Hyland, Commodity Risk Manager at INTL FC Stone, a trading participant in the EEX dairy market. "The volume highlights the fact that there is sufficient liquidity available on the EEX to enable market participants hedge a significant amount of physical price risk”.
The European Energy Exchange (EEX) is the leading energy exchange in Europe. It develops, operates and connects secure, liquid and transparent markets for energy and commodity products. At EEX, contracts on Power, Coal and Emission Allowances as well as Freight and Agricultural Products are traded or registered for clearing. Alongside EEX, EPEX SPOT (incl. APX-Belpex), Powernext, Cleartrade Exchange (CLTX) and Gaspoint Nordic are also part of EEX Group. Clearing and settlement of trading transactions are provided by the clearing house European Commodity Clearing (ECC).
