The Country 02/07/25: Anna Palairet talks to Jamie Mackay

Fonterra’s chief operating officer reviews last night’s GDT Auction (down 4.1%, WMP down 5.1%). So, is the $10 forecast milk price for the 25/26 season under threat?

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Episode Transcript

Speaker 1 (00:00):
She is the chief operating officer for Fonterra. Anna Pelleray
joins us on the country to look at last night's
Global Dairy Trade auction. Well, the futures market was picking
a four percent drop and that's exactly what we got
across the board. Whole milk powder was with Anna down
five point one percent. Was it a surprise to you.

Speaker 2 (00:19):
Oh, cure Jamie, thanks for having me on today. We
probably not. I think you're right, the futures market did
predict this going out. I think the results fairly consistent
with market expectations. Milkers starting to flow around the country
and so a lot more going on to the GDT. Sure,

(00:40):
a bit of a decline, but you know, not unexpected
and very very early in the season yet.

Speaker 1 (00:46):
Yeah, ok, it is early in the season. And I
think back a couple of years. Was it to August
twenty twenty three when we had that huge drop in
the GDT auction and we were suddenly talking about a
six dollar milk price and things can and turned very quickly.
How much of this was due to the really strong
finish to the New Zealand season. Like May, milk production

(01:08):
was off the radar almost.

Speaker 2 (01:10):
Eight percent I think yeah and yeah, I mean what
a great result in may sort of a perfect combination
of those climatic conditions, the milk price encouragement and also
ability to get that through in process and onto the market.
So sure those volumes are continuing and that does have
an impact, but we love every drop of milk, so

(01:34):
just wonderful to see that flowing through. I think the
other thing that's interesting now is a strong demand out
of China, and China hasn't come back forty but really
great to see over half the bits on the genicy
auction last night. We're Chinese based and some significant volumes
going into that market, So really positive there.

Speaker 1 (01:55):
On the other side. And I don't want to be
the eternal pessimist, but we do have a bad thing
for the country. This currency is appreciating against the US dollar.
I think we got up or nudged sixty one cents,
So that's got to affect things too.

Speaker 2 (02:10):
Yes, it does. I mean a lot of things happening
out of the US at the moment, and I think
that's a wonderful thing about the cooperative and the support,
the risk support we can provide farmers that when the
world is a little bit volatile, as we're certainly seeing
coming out of that market that the cop is able
to support our finance with a bit more consistency.

Speaker 1 (02:34):
Oh, you'll have lots of currency hedged anyhow, anna correct?
Right there, you go, get in while it's low. The
other thing is your ten dollars forecast milk price. Once again,
don't want to be a pessimist, but is this under
threat now or is it just too early to tell?

Speaker 2 (02:51):
Well? I think it is too early. As I said,
the volatility was signaled. We've got that wide range in there,
there's you know where It's the sort of thing we
look for all the time. Farmers will certainly be the
first to know. But at the moment, the ten dollars
is an appropriate place.

Speaker 1 (03:10):
Let's just finish with a couple of positive stories. Geopolitically,
the words in a challenging place at the moment. But
do you think the worst is behind us in the
Persian golf?

Speaker 2 (03:20):
Well, I certainly wouldn't want to be someone a commentator
on what's happening in geopolitics at the moment. I mean,
what an interesting time. But I think, following on from
my last comments, what we're seeing is real stability in
terms of our shipping movements we have we don't see
any change currently for movements into that part of the world,

(03:43):
and we have great business continuity plans set up through
strong partners with with our shipping providers and with Caltahia
are the shipping consolidators. So that's given what's going on
in that part of the world that is in a
relatively good place.

Speaker 1 (04:00):
Yep, Kotahi doing a great job. Finally, the grass feed
standard in China, what's this all about.

Speaker 2 (04:07):
Yeah, well, it was fantastic to see that announced at
Field Days recently and great positive buy through there. This
was another really positive thing when we think about what's
most impactful for China or also other Southeast Asian markets,
government assurance and standards you know, really resonate with buyers

(04:30):
in that part of the world. So really positive for
New Zealand to be able to capitalize on the competitive
advantage that we already have and to tell that story
in a more standard way.

Speaker 1 (04:43):
So it was great to see Hannah Pelleri, chief Operating
Officer for Fonterra. Thanks for your time today. Great to
meet you in person at Field Days. By the way,
Thank you

Speaker 2 (04:52):
Jamie, Thanks very much.