NZX finally puts start date on dairy futures trade

NZX finally puts start date on dairy futures trading

By Paul McBeth

Aug. 26 (BusinessDesk) – NZX Ltd., which operates the stock exchange, will launch dairy futures trading four months after it initially flagged a start date.

The global whole milk powder futures contract will begin on Oct. 8, giving it the benefit of seeing the start of Fonterra’s globalDairyTrade fortnightly auctions, which start in September. Last year, chief executive Mark Weldon said he expected to launch the futures market in April or May, and the bourse operator later pushed out the date to June.

Its plans for wider derivatives trading were dented by trans-Tasman rival ASX winning over New Zealand’s power generators for its electricity derivatives market, though Weldon said it would let them focus more on dairy.

“Demand for NZX Global WMP Futures has been very strong, particularly from offshore, and we have timed this launch to ensure all participants are ready to support trading from day one,” Weldon said in a statement. “We are bringing the world a tool that is made in New Zealand, globally relevant, and built in response to global demand, matching the growing demand for the physical WMP commodity itself.”

Fonterra’s online trading platform will act as the reference price for the stock exchange’s contract, and the dairy exporter also sells skim milk and anhydrous milk fat, two other products previously earmarked for derivatives trading on the NZX market. The stock exchange said it will introduce new futures and options products through the rest of this year and into next year.

The futures contract will be traded on the NZX platform and settled by cash, and will be cleared through the new clearing house operated by New Zealand Clearing Ltd.

The shares were unchanged at $1.40 in trading yesterday, and have slumped 41% this year.

(BusinessDesk)