News

2018.04.24

L’INTERFORM has successfully executed a hedging strategy through financial derivatives on milk products for one of the largest dairy farms in Germany

 

L’INTERFORM is providing financial risk management advice to a German dairy coop that produces over 450 million kg of milk annually. Executing a “synthetic hedge” for a liquid milk strategy based on the butter and skim milk powder future contracts currently traded on the European Energy Exchange (EEX) for the farmers of the said coop, L’INTERFORM has leveraged its proprietary research to counsel our client to protect against volatility of the farmgate price.

A synthetic hedge is based on two financial derivatives that account for the main components of value in milk, i.e., milk fat (butter) and milk protein (skim milk powder).

This transaction was ideated by L’INTERFORM and executed on the EEX in partnership with Kaack Terminhandel.