NZX Head of Markets Mark Peterson said that in the context of how long viable futures markets took to develop, the New Zealand milk price futures and options products had made a strong start.
After futures launched on May 27 and options on June 30, the exchange had seen some milestones passed, including 200, then 300 lots traded.
On Friday July 8 the total lots traded added up to 1.1m kg MS and on Thursday July 14 that number had grown to 2.274m. Each lot covered 6000kg of a farmer’s milk production.
The average price for a 2016-17 season contract has been $4.53/kg MS and for the following season $5.60.
AgriHQ dairy markets analyst Susan Kilsby, who works for NZX, said dairy farmers were finding the $4.53 milk futures price attractive when compared with Fonterra’s forecast of $4.25.
“They are also getting to grips with the details of the market, setting up an account with a broker and locking in prices for some of their milk production.
She pointed to more than 300 “open interest” positions, which were live hedges of milk price providing risk management in difficult times for farmers.
