Dairy Futures1. What are futures ?2. Eurex3. NYSE Liffe / Euronext4. NZX dairy futures5. CME
1. What are futures ?1. A futures contract is a legally binding agreement to buy or sella standardised product, on a given date in the future, at agiven place, for a price agreed today2. Through cash settlement or physical delivery3. Dairy futures can work as risk management tools and pricediscovery tools4. Principle: participants enter opposite positions in the physicaland futures markets any loss in one market is offset by aprofit in the other market physical and futures marketprices tend to mirror each other5. Aim = not to make a profit, but to lock in price ahead of time
2. Eurex1. Launched on 31 May 20102. Based in Frankfurt3. Cash settled4. In €/t – unit of trading 5 t5. January, April, July, October6. SMP & butter
3. NYSE Liffe / Euronext1. Launched on 19 October 20102. In London and Paris3. Physical delivery within a 150 km radius of Hamburg,Antwerp or Rotterdam4. In €/t – unit of trading 24 t (= 1 truckload)5. Delivery months: January, March, May, July,September, November6. SMP (butter and whey also planned but not yetavailable)
4. NZX dairy futures1. Launched on 8 October 20102. Listed at the NZ stock exchange3. Cash settled4. In US$/t – unit of trading: 1 t5. Monthly expiry dates6. WMP (regular), SMP (medium heat) and AMF(premium) - NZ, contract 1 in gDT auctions
1. Based in Chicago5. CME2. Cash settled - 2 exceptions: physical delivery for onebutter contract and one SMP contract (see below)3. In US cent/cwt for cash settled butter, Class III & IV milk –in US cent/pound for cheese, physical delivery butter andboth SMP contracts4. Monthly expiry dates5. Butter (9 t cash settled or 18 t physical delivery), Class IIImilk (90 t), Class IV milk (90 t), SMP (20 t physical deliveryor 20 t cash settled), whey powder (20 t), cheese (9 t)6. Characteristic for SMP physical delivery: 6 worldwidedelivery points: Los Angeles, Newark and Seattle (USA),Auckland (NZ), Melbourne (Australia) and Rotterdam (NL)
Links to the websites of the various dairy futuresmarkets:Eurex:http://www.eurexchange.com/trading/products/COM/AGR/overview_en.htmlNYSE Liffe:http://www.euronext.com/landing/liffeLanding-12601-EN.htmlNZX: http://www.nzx.com/markets/derivatives/dairy-derivativesCME: http://www.cmegroup.com/trading/agricultural/internationalskimmed-milk-powder.htmlThank you for your attention !
380353258EU Quotations of Butter and SMP(EU average based on MS communication and weighted by production)229janv 03janv 11oct 10avr 03juil 10juil 03avr 10oct 03janv 04avr 04juil 04oct 04janv 05avr 05juil 05oct 05janv 06avr 06juil 06oct 06janv 07avr 07juil 07oct 07janv 08avr 08juil 08oct 08janv 09avr 09janv 10oct 09juil 09440420400380360340320300280260240220200180160140Avg. EU BUTTER Price Eurex BUTTER IndexAvg. EU SMP Price Eurex SMP Indexin EUR/100 kg .