Published On: Wed, Oct 12th, 2011

NZX Dairy Futures Surpasses Another Milestone

More than 5000 lots have traded on the NZX Dairy Futures market. Since the launch of the NZX Dairy Futures Just over a year ago,more than 5000 lots have now been traded.

The majority of the trading activity has been in whole milk powder (WMP) futures contracts. WMP futures contracts now trade daily. In recent weeks there has been increased trading activity across all the dairy futures products on offer. At the close of trade yesterday there were both bids and offers on all products, that is WMP, SMP, and AMF futures for all contract months through to February 2012.

Where will the milk come from? The International Farm Comparison Network (IFCN) recently debated who will produce the additional 200,000 tonnes of milk the world will require by 2025. The IFCN conference saw 90 participants from 65 dairy related companies discuss global milk production issues. The IFCN investigations show 75% of the world’s dairy farms are very small farms which typically have only 1 – 3 cows. These small farms account for 30‐40% of global milk production. Family farms produce 40‐50% of global milk supply with farms sizes for these family operations varying from 10‐300 cows.

Business farms make up less than 1% of the total number of dairy farms but produce 10‐20% of the world’s milk. The IFCN assess the current global milk supply is 700 million tonnes, but they expect there will be demand for 900 million tonnes of milk by 2025. The big question is: Where will this additional milk production come from?

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