This paper investigates hedging and cross-hedging internationally traded milk derivative
products with internationally traded commodities, recently launched New Zealand dairy
futures, New Zealand agricultural products, and mature United States dairy market futures.
The contribution of the paper is twofold. First, we show that international dairy commodities
are a distinct commodities subgroup, as changes in prices of dairy products are uncorrelated
with other worldwide traded commodities. Second, we show that New Zealand Stock
Exchange dairy futures are an effective tool for hedging exposure to smaller size trades and
may not necessarily be of large positions as required by cooperatives and multinationals