Demand for risk management tools in the dairy sector has grown significantly through the first half of 2014 and industry participants are looking to NZX’s dairy futures market to meet these needs.
Year to date volume is at 28,203 tonnes, 302.78% ahead of the same period last year. International participants are capitalising on the early trading hours, with the market open from 2:00am NZT. In 2014 a third of all volume has been traded between 2:00am and the previous opening time of 8.00am.
NZX Head of Markets Aaron Jenkins commented: “It’s significant not only to see a boost in trading from Europe and the US, but also increased trading coming from Asia. This increase in activity is thanks to a lot of hard work from our broker firms and participants who have been critical supporters in the growth of this young market.”
“We continue to make a number of improvements to the market to help to grow participation and build confidence. However the biggest driver of volumes is continuing volatility which dairy industry participants need to manage effectively,” he said.
Nigel Brunel, Director Financial Markets at OM Financial Limited, commented: “There is no doubt that the NZX dairy futures market is quickly becoming the market of choice for buyers and sellers in the dairy industry looking to manage risk. OM Financial has long been a supporter of the market and we are delighted to see more participants enjoying the benefits these products offer.”
NZX continues to develop and modify the market’s product set to create the building blocks for a liquid market. In the past year, improvements have included changes to the final settlement price of the contracts, an extension of trading hours, and authorisation from the US regulatory agency, the Commodity Futures Trading Commission (CFTC), as a Foreign Board of Trade under the US Commodity Exchange Act.
