In the world commodity markets where risk profiles are being carefully managed, the NZX global dairy trade futures market, planned to open on October the 8th, could be popular.
The first whole milk powder futures market in the world would help processors, manufacturers and other users, manage volatility.
Companies can lock in prices for 18 months ahead, which are to be settled in cash.
NZX plans to open SMP and AHF trades sometime in the future.
The long-delayed global dairy futures market run by the NZX is set to start in a little over a month on October 8 reports The NZ Herald. The global whole milk powder futures market - the first available worldwide for this product - would allow the dairy sector organisations, including processors, manufacturers and dairy trading firms, to manage price volatility. With futures contracts, companies can lock in prices in the multibillion-dollar whole milk powder market up to 18 months in advance.
NZX derivatives manager Kathryn Jaggard said farmers would also benefit from a view of market sentiment out into the future. The platform had the support of FCStone, one of the largest dairy futures brokers in the world, Rice Dairy, a Chicago-based dairy commodities broker, and significant mid to large whole milk powder buyers, dairy trading firms and Australasian producers, said Jaggard.
The whole milk powder futures will be settled in cash, rather than delivery of product, making it simpler for participants. The NZX plans to add a range of futures and options products to the market through 2010 and 2011, including skimmed milk and anhydrous milk fat futures. Jaggard said there were huge opportunities for NZ in not only the dairy market but the associated financial community.
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