NZX plans to launch skim milk powder option contract - NZ Herald

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NZX, the financial markets operator, plans to launch a global skim milk powder option contract in December in response to customer demand.

The Wellington-based company said trading volumes in its skim milk powder futures market are up 113 per cent this year as interest in its suite of dairy risk management tools increases. The new contract will add to the NZX's existing futures contracts for whole milk powder, skim milk powder, anhydrous milk fat and butter, and its whole milk powder options.

"NZX is continually looking to expand its product offering in response to customer feedback, the addition of a global skim milk powder option contract will provide traders in our global market with another tool to help manage volatility in dairy commodity prices," said NZX head of derivatives Nick Morris.

The skim milk powder option contract is expected to be launched on December 4 and will be settled to the underlying NZX skim milk powder futures contract. An options contract gives the holder the right to buy or sell an asset without an obligation to do so.

New Zealand is the world's biggest dairy exporter, selling about $13.1 billion of milk powder, butter and cheese overseas in the year through September. NZX launched the dairy derivatives market in October 2010 with the aim of becoming the global hub for trading tied to the country's biggest export commodity.