Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


NZX eyes US investors thirsty for dairy derivatives

NZX eyes US investors thirsty for dairy derivatives

By Suze Metherell

Feb. 3 (BusinessDesk) – NZX, New Zealand’s market operator, has taken another step towards expanding its dairy derivatives market into the US with approval to allow direct access for American customers.

NZX is now a registered Foreign Board of Trade under the US Commodity Exchange Act, allowing US investors’ direct access to trade in New Zealand dairy derivatives. Whole milk powder options and futures, skim milk powder and anhydrous milk fat futures have traded on the NZX since October 2010.

New Zealand is the world’s biggest dairy exporter, with exports of milk powder, butter and cheese climbing about 17 percent to $13.4 billion last year. Trading of NZX dairy futures, though fast growing, is still relatively small, with 36,748 lots changing hands in 2013, up 52 percent, and open interest positions as at Dec. 31 of 9,070, up 316 percent.

“In the scheme of things it’s doing very well,” Kathryn Jaggard, NZX head of derivatives, told BusinessDesk. “It takes two, five, 10 years to become fully mature.”

She said the market operator has “a five-year view” on getting to a level of good liquidity. “We are in a good position, currently around 200 lots a day. We’d certainly like to get 500 lots a day, and 1,000 in the future.”

So far, NZX’s derivatives are faring relatively well. Just 20 skim milk powder futures contracts have traded on the London Futures Exchange since they were launched in October 2010, she said. The Chicago Mercantile Exchange delisted its skim milk powder contracts in 2010.

Last year the NZX extended its derivative market’s trading hours to cater for international customers.

Jaggard said it was a great opportunity for New Zealand to become not only the leader in dairy exports but also the financial hub of dairy trade.

Futures are typically used to help smooth out price volatility, functioning as a binding contract to buy or sell a product at a fixed price at a certain point in time. The NZX contracts are for cash settlement.

Over the past year global demand for dairy has grown, particularly in Asia where growing populations and wealth has seen a thirst for milk and dairy products. In the last GlobalDairyTrade auction on Jan. 21 prices for skim milk powder gained 32 percent from the start of last year, to US$4,698 a tonne. Whole milk powder rose 55 percent to US$4,943 and anhydrous milk fat was up 55 percent to US$5,641 a tonne.

Shares of NZX rose 1.6 percent to $1.28 today.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Errors Found: Electricity Authority Dumps Transmission Pricing Modelling

The Electricity Authority is ditching the cost-benefit analysis at the heart of its controversial attempt to find a new way to divide up costs for the national grid after finding an expanding range of serious computational errors in the work by Australian consultancy Oakley Greenwood. More>>

ALSO:

New Record: Migrant Arrivals At 129,500 A Year

Annual net migration has been steadily increasing since 2012. "This was mainly due to the rising number of migrant arrivals to New Zealand," population statistics senior manager Peter Dolan said. "Fewer migrant departures also contributed to the increase in net migration." More>>

ALSO:

Launched: NASA's Super Pressure Balloon Takes Flight From NZ

NASA successfully launched its football-stadium-sized, heavy-lift super pressure balloon (SPB) from Wanaka, New Zealand, at10:50 a.m. Tuesday, April 25 (6:50 p.m. April 24 in U.S. Eastern Time), on a mission designed to run 100 or more days floating at 110,000 feet (33.5 km) about the globe in the southern hemisphere's mid-latitude band. More>>

ALSO:

Trade Agreements: TPP Minus US Starting To Gain Ground

The Japanese government is picking up the pace on reviving the Trans-Pacific Partnership trade and investment deal, with talks scheduled next month among the 11 countries left in the pact after the withdrawal by the US after the election of president Donald Trump. More>>

ALSO:

PACER:

Prices Up 2.2%: Annual Inflation Highest In Over Five Years

"Rising petrol prices along with the annual rise in cigarette and tobacco tax lifted inflation," prices senior manager Jason Attewell said. "Petrol prices in New Zealand are closely linked to global oil prices, and cigarettes and tobacco taxes rise in the March quarter each year". More>>

ALSO:

Undertaxed? NZ Income Tax Rate Second Lowest Among Developed Nations

New Zealand workers pay the second smallest portion of their income to the government among developed nations and less than half the average ratio of their Organisation for Economic Cooperation and Development peers. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news