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NZX to launch milk powder futures contract

Wed Jun 3, 2009 10:42pm EDT

Stocks

   

WELLINGTON, June 4 (Reuters) - New Zealand stock exchange operator NZX Ltd (NZX.NZ) will offer a market for trading whole milk powder (WMP) futures, the company said on Thursday.

New Zealand supplies around 40 percent of the global whole milk powder market and market volatility had led to demand for a risk management tool similar to other commodity markets.

"It's a natural fit for New Zealand to host the trading of milk derivative contracts, and to meet the global demand for risk management tools in the dairy industry," NZX Head of Traded Products Fiona Mackenzie said in a statement.

New Zealand dairy co-operative Fonterra, which controls about a third of the world's dairy exports, said on June 3 WMP prices fell 12 percent in its latest Internet based auction, hit by lower demand and market uncertainty, reversing two months of gains. [ID:nWEL469396] NZX said it would consult with farmers and market participants regarding the details of its proposed cash settled futures contract, with trading expected to start by the end of the year.

Fonterra, a co-operative owned by nearly 11,000 farmers, is New Zealand's biggest company and generates more than 7 percent of the country's gross domestic product, with annual sales of around NZ$17 billion. ($10.8 billion) ($1=NZ$1.58) (Reporting by Adrian Bathgate)



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