fbpx
Print this page
Thursday, 14 April 2016 10:55

Farmers like NZX futures trading

Written by 
Federated Farmers Dairy chairman Andrew Hoggard. Federated Farmers Dairy chairman Andrew Hoggard.

Dairy farmers are welcoming the launch of milk price futures and options contracts.

Federated Farmers Dairy chairman Andrew Hoggard says the contracts won't be for everyone, but this will give NZ dairy farmers a risk management tool that makes their businesses less susceptible to large price fluctuations.

"It will put us on a more level playing field with most of our international competitors who already have this sort of tool available to them," says Hoggard.

"Price volatility within a season is extremely difficult to address because production is based on a biological system, so having certainty about the price you will receive at the end of the season will remove a lot of pressure for dairy farmers."

Hoggard urged dairy farmers interested in the NZX milk price and futures options contracts to get professional advice.

"While it will provide farmers with certainty on price there's always someone on the downside when futures are traded. Farmers must get sound independent advice so that they're aware of how this approach changes their risk profile and what this might look like for them at the end of the season."
NZX has formal approval from the Financial Markets Authority and the Reserve Bank of New Zealand for its proposed futuers trading, expected to launch next month.

NZX head of markets Mark Peterson says this is a milestone in commodity risk management for NZ's agricultural sector.

"With 95% of their product sold overseas, NZ dairy farmers are highly exposed to the global dairy market. They have few tools available to help them manage milk price risk which leaves farmers at a disadvantage to their overseas counterparts in the US or Europe, who have access to a wide range of risk management tools.

"Although futures and options contracts will not be suited to everyone, they are a key step towards building a meaningful risk management culture."

Once the contracts are available for trading on NZX's derivatives market, all parties will be required to trade through an NZX broker.

More like this

New freshwater farm plans 'practical and affordable'

OPINION: Entering Parliament back in 2023, I wanted to help put the fun back in farming. After six years of Labour, rural New Zealand was tired of the relentless waves of red tape and compliance, draining joy from people who just want to work the land.

Dr Mike Joy says sorry, escapes censure

Academic Dr Mike Joy and his employer, Victoria University of Wellington have apologised for his comments suggesting that dairy industry CEOs should be hanged for contributing towards nitrate poisoning of waterways.

Farmer anger over Joy's social media post

A comment by outspoken academic Dr Mike Joy suggesting that dairy industry leaders should be hanged for nitrate contamination of drinking/groundwater has enraged farmers.

Poultry industry, Govt sign landmark biosecurity deal

The Government has struck a deal with New Zealand's poultry industry, agreeing how they will jointly prepare for and respond to exotic poultry diseases, including any possible outbreak of high pathogenicity avian influenza (HPAI).

Witchunt?

OPINION: Newsroom is running a series of articles looking into the influence of lobbying and has kicked it off with agriculture.

Featured

Fencing excellence celebrated

The Fencing Contractors Association of New Zealand (FCANZ) celebrated the best of the best at the 2025 Fencing Industry Awards, providing the opportunity to honour both rising talent and industry stalwarts.

B+LNZ launches AI assistant for farmers

Beef + Lamb New Zealand has launched an AI-powered digital assistant to help farmers using the B+LNZ Knowledge Hub to create tailored answers and resources for their farming businesses.

National

Machinery & Products

JDLink Boost for NZ farms

Connectivity is widely recognised as one of the biggest challenges facing farmers, but it is now being overcome through the…

New generation Defender HD11

The all-new 2026 Can-Am Defender HD11 looks likely to raise the bar in the highly competitive side-by-side category.