NZX plans to offer a market for trading whole milk powder futures.
New Zealand supplies around 40 percent of the global whole milk powder market and market volatility had led to demand for a risk management tool similar to other commodity markets.
“It’s a natural fit for New Zealand to host the trading of milk derivative contracts, and to meet the global demand for risk management tools in the dairy industry,” NZX Head of Traded Products Fiona Mackenzie said in a statement.
Last month it was rural media, this month it’s rural produce.
It might be a good move for shareholders, I don’t think it will have any benefits for farmers and wonder if it’s another example of what Cactus Kate calls: “making hay from a collection of other land-owners’ paddocks while the sun is still shining”.
Although, the sun isn’t shining on dairying at the moment.
I need to think more about this, but in one sense it may make sense.
NZ is in a position to deliver the physical product should it be necessary.
I would not condemn the idea out of hand. Note the diversity of contracts on the Chicago Mercantile Exchange, eg pork bellies
Yes HP, I wonder too about who will benefit. That was a very thought provoking series of posts by Cactus Kate. Is it possible for a director of Fonterra to be based in Hong Kong?
Mark Weldon has been very quiet as of late. Perhaps out of the country?
Futures for milk powder would be a good idea if it has equitable impact on both the farmer and the consumer. The consumer price is a sensitive issue when it comes to developing countries who depend on powdered milk to provide nourishment for most of the young children and any escallation in price takes MP off the menu. Till domestic supplies of fresh milk improve in such countries they will depend on milk powder.