Financial director at brokerage firm OMF, Nigel Brunel said he believed the new contracts would get support from Fonterra, as the new contract had already drawn strong interest from international trading houses.

Unlike the current NZ X dairy derivatives market, which is priced in US $ on a per tonne basis as a facility for the big manufacturers and customers, the milk futures contracts will be priced in NZ $ on a KG of milk solids basis and will be aimed at farmers, brokers and banks.

Like Irish farmers, NZ farmers export nearly all their dairy produce on the world market where they are exposed to all the volatility that we are seeing over the last ten years.

The present Fonterra milk price is $3.90/kg milk solids (17.8 c/l) while their average cost of production $5.25/kg milk solids (24 c/l).