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Lots traded in NZX Dairy Futures have now passed the magical 10,000 mark.
Even more significant is the fact that 50% of these trades have occurred in the last six weeks.
“Volume grew gradually over the 12 months since NZX Whole Milk Powder (WMP) Futures were launched in October 2010, hitting 5,000 lots traded almost bang on the one-year anniversary of the start of trading,” said NZX Head of Derivatives Kathryn Jaggard.
“The next 5,000 lots have come much more quickly, helped along by a recent surge in the number of lots traded in Anhydrous Milk Fat (AMF) Futures (launched in February 2011), showing the market is broadening and deepening," said Jaggard.
NZX Dairy Futures are developing well and have been strongly supported since go-live in 2010 by global futures firms and NZX Trading and Clearing Participants FCStone and BNP Paribas. Earlier this year NZX Derivatives Participant OMFinancial joined the market, with the most recent addition being leading, top tier NZX Participant, FirstNZ Capital.
Average daily volume across all three contracts is now nearing 150 lots, meaning NZX Dairy Futures are well on the way to becoming a truly liquid and global derivatives market.
“The growth in dairy futures trading on the NZX platform, in just over one year, has been nothing short of impressive. The consistent increase in both volume and open interest for a number of consecutive months supports the long held belief that there is a fundamental need and desire by global dairy participants to hedge their commodity risk exposure,” said Robert Chesler, Vice President Foods Division, FCStone, LLC.
“This need is clearly present and I am confident it will translate into continued growth of the NZX Dairy Futures and Options markets by global participants with risk exposure tied to globally traded dairy products,” said Chesler.
Participation continues to grow on a worldwide scale as demand builds with a number of global dairy industry players joining the market.
“The Interfood Group has quickly embraced the NZX Futures market as a tool that will eventually provide a meaningful way to hedge our dairy commodity risk. We understand that it will take time to evolve, but if you look at nearly all other major agricultural products they all have a functioning futures and options market to support their risk management – we see no reason why dairy should be any different in the long term,” said Rob Nelson, Commercial Director, Interfood Australia Pty Ltd.
“"New Zealand is a recognised leader in global dairying. The position NZX is carving out with the leading dairy futures products creates for New Zealand the possibility of a broad based dairy complex across both fundamental and financial markets. Getting to that point - as Chicago has with grain - is the long term goal for NZX, and we are well on the way to getting there,” said NZX CEO Mark Weldon.
“For NZX as a company, Dairy Futures are key to our strategy. It is a globally relevant product that is attracting participation from all around the globe to our markets. The growth potential remains significant, and is something the entire organisation is very excited about," said Weldon.
In addition to the existing suite of Dairy Futures contracts, NZX WMP Options will start trading on 30 November 2011.
