Fonterra, New Zealand’s Exchange and the European Energy Exchange will each take ownership stakes in Global Dairy Trade.
Subject to the approval of boards, clearance from European or any other relevant competition law authorities, and finalisation of transaction documentation, the partnership is expected to be completed mid-2022, with Fonterra, NZX and EEX each holding an equal one-third shareholding in the global dairy auction platform.
Fonterra chief executive Miles Hurrell said the move to a broader ownership structure marked the next step in the evolution of Global Dairy Trade, further enhancing the standing of GDT as an independent, neutral and transparent price discovery platform.
“This is good news for our farmer owners, unit holders and all dairy industry participants and is expected to lead to greater volumes being traded on GDT,” Mr Hurrell said.
“It will bring more participants and transactions, stimulating further growth of risk management contracts available on financial trading platforms.
“We all know that dairy is one of the most volatile traded commodities. This partnership is another step in helping to manage this risk for everyone — from the farmer through to the customer at the end of the supply chain.
“A more liquid dairy trading environment allows for the growth of financial tools which can be used by all participants to better manage price volatility.
“Our focus has been about securing the best partners, and NZX and EEX share our vision for a stronger, more liquid auction platform that benefits all involved.
“We are also closely aligned on future possibilities for GDT as the world’s most trusted reference point for dairy commodity prices.”
NZX chief executive Mark Peterson said the price discovery that GDT provided the international dairy industry was crucial for dealing with volatility and its associated risks.
“We see the expansion of the physical trading environment as both further strengthening existing financial contracts and enabling the creation of new tools and opportunities for dairy processors and end-users,” Mr Peterson said.
“These offer clear benefits for New Zealand dairy farmers and customers around the world.”
EEX chief strategy officer Tobias Paulun said “becoming a shareholder of Global Dairy Trade is perfectly in line with the EEX strategy of taking asset classes, which we already successfully serve, to a global dimension”.
“With our experience in operating Europe’s leading trading platform for dairy futures, but also with multiple spot contracts in the energy space, we believe that we can be of value supporting GDT’s growth vision,” Dr Paulun said.
GDT director Eric Hansen said GDT was excited by the addition of NZX and EEX as shareholders alongside Fonterra.
“The strong alignment of all three shareholding partners to GDT’s purpose of credible price discovery will support initiatives to increase liquidity on GDT, attract new supply from prominent dairy producing regions, and will strengthen GDT’s linkages to financial trading platforms,” Dr Hansen said.