Spot market design crucial for success of dairy futures markets.
A well-functioning spot market is crucial for the success of futures markets. Different spot market designs affect how well futures contracts can be used for hedging. In the US, nonfat dry milk spot market indices don't work well with futures contracts, while in New Zealand, whole milk powder futures are effective. Spot market design elements like timeliness, market-based measurement, forward-spot separation, and inclusiveness play a key role in determining the success of futures markets.