Understanding the European Futures Markets on Dairy Products: a Multi-Product Perspective Guillaume Bagnarosa, Rennes School of Business Jean Cordier, AgroCampus Ouest Alexandre Gohin, INRAE Alexandre.Gohin@inrae.fr Revised version submitted to the IAAE conference 2021 Abstract The European Union has radically reformed its milk policy in the last decades by reducing price support levels and removing production quotas. European dairy operators are now facing volatile milk and dairy prices but can participate in new futures markets. However the liquidity on these markets remains limited so far. This paper develops an original economic framework to understand this apparent puzzle. To implement this framework we first statistically reveal the productive responses of European dairy processors under the milk quota regime with trending dairy prices. Then we find that the production flexibility of dairy processors and the milk price mechanisms are important factors hampering the liquidity of futures market on dairy products. We finally argue that both European dairy processors and milk producers can benefit from efficient futures dairy markets, by expanding their business and saving costs on milk price negotiations. JEL Code : Q11, Q14, Q18 Keywords : Futures, Dairy Prices, Europe, risk hedging JEL Code : Q11, Q14, Q18 Keywords : Futures, Dairy Prices, Europe