Global Dairy Trade (GDT) is to rollout a pilot project from next month involving smaller single product auctions in a bid to increase price discovery.
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GDT currently hosts trading events for dairy commodities, including butter, skim milk powder (SMP) and cheddar, twice per month.

The company is owned and managed as a strategic partnership between the European Energy Exchange (EEX), Fonterra Cooperative Group, and New Zealand’s Exchange (NZX), with equal one-third shareholdings.

The new ‘GDT Pulse’ events aims to enhance liquidity in GDT by providing price discovery on a more frequent basis. The first auction is scheduled to take place on August 9.

“GDT events will continue to be the large volume, high liquidity events”, the company said. The next large trading event is due to be held on August 2.


Initially, GDT Pulse will offer auctions on alternate weeks between the larger trading events for a period of 6-12 months.

The auctions will offer one product specification to bid on: Fonterra Whole Milk Powder (WMP) Regular, Contract Period 2.

GDT explained that this will ensure a short total duration of 15–30 minutes, providing convenience for bidders.

The pilot scheme will allow the company to assess whether there is a credible level of participation, if credible prices are published and if trade in the dairy futures market increased.

“Prices discovered through the GDT Pulse auctions will be complementary to the price discovery provided by GDT events,” it said.

After the pilot period, the company will assess the merit of smaller auctions and the future potential for more frequent price discovery.

If the pilot is deemed successful, it is envisaged that GDT will invest in platform upgrades to enable scalability of the service offering and the potential for daily auctions.

A pair of Illinois dairy leaders advocated for reforms to the pricing formulas in the 11 Federal Milk Marketing Orders Sept. 15.

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