Earlier in October, SGX and NZX wrapped up the 11th annual SGX-NZX Global Dairy Seminar at the Singapore Exchange. The event was attended by 165 attendees, including traders, industry leaders, global processors and SGX-NZX Dairy Derivatives participants from all over the world for three days of networking and invaluable insights into the latest market developments in dairy markets. The key takeaways from the 2024 event were:
Global Dairy Supply and Demand Trends
- Strong growth in dairy consumption from 2020 to 2030 is expected, driven by population growth and changing per capita dairy demand, particularly in Southeast Asia (SEA), the largest growth region.
- Global Skim Milk Powder (SMP) trade has surpassed WMP, driven by higher fat prices (Anhydrous Milk Fat, Butter).
- The aging population is shifting the focus from infant to adult formula markets, especially in the U.S., China, and India.
- Protein demand is shifting away from cream stream returns to a desire for higher protein output.
New Zealand Milk Production
- After August’s seasonal drop, export volumes are expected to increase YoY with value stablishing while prices hold
- Overall national pasture growth outlook remains strong, despite regional variance
- With the economy recovering, improving demand and the ongoing free trade agreements and policy reviews, the market should continue to strengthen
Dairy Derivatives and Market Development
- SGX-NZX trading volumes double and open interest increase by 1.5x since migration
- More diverse participation from different regions and participants contributing to tighter spreads
- Strong opportunities in spread trading between SGX-NZX, EEX SMP, and CME NFDM
- Larger focus on index linked pricing going forward
- NZ farmers are still early in managing price risks but are gradually adopting futures and options to hedge downside risks.
China Economy
- Residential property prices are declining in China, and weak imports coupled with strong export growth have created a significant trade surplus.
- Stimulus measures in China have had mixed results, with markets responding positively despite ongoing concerns about consumer confidence and the state of the property market.
To learn more about the SGX-NZX Dairy Derivatives Market, please email derivatives@nzx.com
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