Fonterra welcomes dairy futures plan

The country's largest dairy exporter has welcomed the pending launch by the New Zealand Stock Exchange of a dairy futures market, saying it wants such a risk management tool.

Fonterra's globalDairyTrade manager Paul Grave said that when Fonterra established the internet-based monthly globalDairyTrade auction, one goal was to have a system in which derivatives could determine a market price.

"We would see it as a positive that they have chosen our index," he said.

The exchange confirmed this week it hoped to have a dairy futures market operating by June, initially for whole milk powder, but extending to other dairy products.

The future's settlement price would be set by Fonterra's monthly globalDairyTrade auction.

Fonterra has started trading anhydrous milk fat and plans to add skim milk powder to the monthly auction.

Both were products into which futures trading could be extended, he said.

Mr Grave said producers and customers had wanted for some time a futures trading platform and a price reference point.

Dairy markets were likely to become more volatile because of the weather, exchange rates, herd retirement, the availability of fresh milk, subsidies and the price of grain and oil.

The New Zealand-United States exchange rate alone had moved NZ5c in three weeks, he said.

 

Add a Comment

drivesouth-pow-classic-2.png

 

Advertisement

postanote_header_620_x_80.png

postanote_620_x_25.jpg

Our journalists are your neighbours

We are the South's eyes and ears in crucial council meetings, at court hearings, on the sidelines of sporting events and on the frontline of breaking news.

As our region faces uncharted waters in the wake of a global pandemic, Otago Daily Times continues to bring you local stories that matter.

We employ local journalists and photographers to tell your stories, as other outlets cut local coverage in favour of stories told out of Auckland, Wellington and Christchurch.

You can help us continue to bring you local news you can trust by becoming a supporter.

Become a Supporter