.jpg)
NZX Dairy Futures have now passed 5,000 lots traded - a significant milestone in the growth of this global dairy risk management tool.
Volume in September 2011 alone increased 150% over August, and open interest increased by 93% over the same period.
“There is no doubt that NZX Dairy Futures are now very tradable with a growth curve that indicates they will, in time, be as liquid as other global benchmark commodity contracts,” said NZX Derivatives Manager, Kathryn Jaggard.
“These contracts were developed in response to dairy industry demand for a liquid, and globally relevant, risk mitigation tool to manage price volatility. Now that tool is available and many firms are already using it to hedge risk," said Jaggard.
NZX launched its Dairy Futures market with Whole Milk Powder Futures in October last year,followed by Skim Milk Powder and Anhydrous Milk Fat Futures in early 2011.
“We said when we launched Dairy Futures that these markets take time to be recognised,and to grow and develop. It took close to 11 months to reach 2,500 trades for NZX Dairy Futures, and only six weeks for that total to hit 5,000 trades. That’s a remarkable demonstration of global momentum,” said NZX CEO Mark Weldon.
The next stage in the development of the market is the first of a suite of dairy options contracts - WMP Options - going live on 30 November 2011.
“Options contracts complete the dairy derivatives product set, giving greater flexibility in hedging and trading strategies. In particular, they allow participants to limit downside pricerisk without capping the upside," said Jaggard.
