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iPredict on dairy returns

August 26th, 2011 at 8:07 am by David Farrar

iPredict has announced:

iPredict’s first contracts forecasting Fonterra’s payout will be launched on the online predictions market at 3.30 pm today and will be available to its 5000 registered online traders plus everyone else who chooses to join up at www.ipredict.co.nz

The initial contracts will ask traders whether Fonterra’s final 2010/11 payout, per kilogram of milk solids, to a 100 percent share-backed farmer (before retentions), will be above $7.90, above $8.00, above $8.10, above $8.20 or above $8.30.  Traders can buy as many of each contract as they like.

On 24 May this year, Fonterra announced the 2010/11 payout was likely to be in the $8.00 to $8.10 range.

“This first set of contracts will give an indication of in which 10 cent increment the final payout is likely to fall,” the Chief Executive of iPredict, Matt Burgess said today.  “We will then add 2.5 cent increment contracts within the favoured 10 cent range to provide dairy farmers and the wider dairy community with an even more accurate forecast.  Forecasting this way will give both a real-time point estimate and a margin of error.”

The stocks went live on Wednesday. At present the stock for more than $8.125/kg is at 63c and more than $8.150/kg is 43c, so the market is pointing towards $8.13 to $8.15.

Related posts:

  1. iPredict
  2. iPredict Fees
  3. Do dairy farmers really only pay 3% tax?
  4. iPredict Election Update #42
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4 Responses to “iPredict on dairy returns”

  1. jims_whare (334) Says:
    August 26th, 2011 at 9:54 am

    I think they are missing an option: If the dollar stays well above 80 cents, and the auction prices keep dropping they need an option for a final payout under $7.90 per kg. Could well happen.

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  2. homepaddock (415) Says:
    August 26th, 2011 at 10:57 am

    These prices are before retentions but even so there will be a lot of very happy dairy farmers if they’re accurate. Sensible ones have budgeted on a more conservative figure.

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  3. ben (2,366) Says:
    August 26th, 2011 at 11:07 am

    jims_whare, taking a short position on “over $7.90″ is the same as buying “under $7.90″, so the option is effectively there.

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  4. side show bob (3,660) Says:
    August 26th, 2011 at 11:57 am

    For what it is worth. There seems to be some disquiet building concerning TAF, trading amongst farmers, Fonterra may decide to keep more in retentions as TAF may not deliver to Fonterra’s hopes. I’m hoping for $8.10, will keep the wife, new carpet, and the bank manager, back in black, happy

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