News Center
Jun 14, 2013

Eurex

Performance of dairy derivatives segment grew further in H1

Significant increase in Eurex’s dairy derivatives trading volume/ Eurex Exchange reinforces market leadership in European dairy futures

The international derivatives market Eurex Exchange has seen a significant increase in trading activities in its dairy derivatives segment since the beginning of the year. The total 2012 volume was recently exceeded; more than 980 contracts have been traded year-to-date (2012: 908 contracts). The contract volume traded in 2013 so far is equivalent to a nominal volume of around 4,900 tonnes of goods.

This positive development is primarily due to the rise in trading volume of butter futures. A rising interest is also observed in European whey powder futures, which were introduced in 2012. The exchange of futures for physicals (EFP) trading functionality was also used for the first time at the beginning of June for a butter future transaction. An EFP transaction involves a certain volume of goods being exchanged for a certain number of futures contracts. The counterparties are usually two market participants with opposing hedge positions that each want to close. The advantage for the parties is that both benefit from standardised clearing as in an exchange transaction, for example from reduced credit and counterparty risk.

The Eurex offering currently comprises six agricultural futures on butter, skimmed milk powder and whey powder, European processing potatoes, hogs and piglets. All futures are based on recognized reference prices from the relevant cash markets and are settled in cash.

The Eurex Exchange agricultural derivatives are aimed at a broad group of clients, including farmers and farming cooperatives, trading companies, dairies, slaughterhouses and the processing industry. The exchange-listed derivatives give these user groups transparent and liquid hedging instruments against standard market price fluctuations. Exchange-listed agricultural derivatives also eliminate the counterparty risk on the OTC market because these contracts are centrally cleared via Eurex Clearing.

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