A European market in dairy futures is set for launch in the first half of 2010 on the NYSE Liffe derivatives exchange in a bid to mitigate against the volatility in dairy prices.
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Ian Dudden, director of commodity derivatives on the NYSE Liffe exchange, told a UK dairy conference that futures markets in skimmed milk powder, butter and whey would go live next year.
A recent characteristic of the global dairy market has been the extreme volatility in dairy commodity prices, which reached highs in 2007 and early 2008 on the back of soaring demand for dairy in developing markets but have since plummeted in recent months amid the worldwide economic downturn.
Dudden told the Dairy UK annual conference in Warwick that dairy futures could help industry players hedge against swings in dairy prices, which have hit farmers and processors throughout the sector.
He added that it was likely that futures markets in all three commodities would be launched simultaneously, although the plans have yet to be finalised.
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By GlobalDataDudden refuted the suggestion, however, that, with the recent marked volatility in the prices of dairy commodities showing signs of easing that the NYSE had mis-timed its plans to launch the futures markets.
“The reality is that there is likely to be sufficient volatility to make these products valid,” Dudden said.
