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NZX is pleased to announce that the launch of milk price futures contracts will occur on 27 May 2016. The launch of the related milk price options contracts will be announced in June following the futures contracts launch.
These contracts are designed to address growing demand from producers and purchasers of milk products wishing to manage risk relating to price fluctuations. For example, both contracts can help New Zealand dairy farmers to mitigate the financial risks associated with a variable milk price.
The path to launch has included consultation with a range of dairy industry participants and NZX Derivatives Market stakeholders, as well as formal approval of the contracts by the Financial Markets Authority and the Reserve Bank of New Zealand.
NZX Head of Markets Mark Peterson commented: “We are committed to building markets for the long term, and the launch of milk price futures and options contracts is no exception. We will continue to focus our efforts on growing market participation and trading activity, and educating interested parties on the benefits of commodity risk management tools.”
“As expected with new derivatives products, we expect that liquidity in the market will build slowly at first.”
“With 95% of their product sold overseas, New Zealand dairy farmers are highly exposed to the global dairy market. The new futures and options contracts will help to level the playing field with their overseas counterparts in the US or Europe, who have access to a wide range of risk management tools.”
Once the futures and options contracts are available for trading on NZX’s dairy derivatives market, all users of these contracts will be required to trade through an NZX Derivatives Participant (a broker). To view a list of accredited NZX Derivatives Participants, please visit: www.nzxfutures.com/access
Derivatives contracts carry risk and operate differently to fixed price schemes offered by milk processors. NZX encourages parties wanting to enter into these contracts to seek advice from an authorised financial adviser as to whether derivatives contracts are appropriate for their individual circumstances.
To view the final contract specifications, learn more about NZX’s Derivatives Market and download an introductory guide to milk price futures and options contracts, please visit: nzx.com/derivatives
Quote vendor codes, exchange fees, starting prices, the final margin circular and all other details pertaining to the first trading day will be released to the market in the coming days.
NZX and participating brokers will be holding educational seminars throughout the NZ National Agricultural Fieldays to be held 15-18 June 2016. To receive updates on the seminars, please register here: nzx.com/derivatives
