December 1, 2025 • 6 mins
Jarden’s head of derivatives takes a closer look at why the GDT index hasn’t been positive since mid-August.
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Episode Transcript
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Speaker 1 (00:00):
Well, the GDT index has not moved well in a
positive way since early August, and the prices of dairy
products have dropped about thirteen percent. That will no doubt
be raising a little bit of concern for one or
two of You're around the ten dollar farm gate milk
price forecast to look at this in more depth. Mike McIntire,
(00:22):
head of Derivatives at Jardin, I love that word derivatives. Beautiful, beautiful,
beautiful Mike. How are you?
Speaker 2 (00:28):
You have every good things famish on yourself?
Speaker 1 (00:30):
Yeah, and I can't complain sunny day down in the
matter were two today beautiful? Look it'll be you know,
like anything that sort of you know benefits from sun,
which is the old grass and the water. Amazing what
the two of those come up with, isn't it? But
what is what's the main factor sort of playing out
here in terms of these well, what's happened with the
GDT since since August?
Speaker 2 (00:50):
It's really a global issue really, so if we look
at it, Yep, New Zealand progressing very well in terms
of grass growth as you touched on there, So we're
up season to date three point four four percent in
terms of production, but so as the rest of the world.
So the EU in September that their milk was up
four percent. The US has probably been the standout in
terms of growth or up four percent in September and
(01:11):
then close to four percent again in October. And these
are big numbers on big numbers. So we produced twenty
two billion leaders of milk here in New Zealand. The
States is one hundred in Europe is a one hundred
and forty seven one hundred and fifty billion liters. So again,
once you start having big growth on big numbers, unless
you get that domestic population who's looking to acquire the milk,
(01:33):
then obviously it's got to go out into the export markets.
And you know why we might be small in terms
of global production, we're quite meaningful in terms of global trade.
And so where we see competitions from these behemoths, it
really starts impacting on our ability to in top returns.
Speaker 1 (01:47):
Yeah, so what's driving the big lift in production in
the US, for example.
Speaker 2 (01:52):
Just the price, Like initially we've seen a lot of
production go into the States. In terms of new processing facilities,
there's a real focus now in way which you would
see globally around the wood and it's not just a
dairy issue, it's it's you know, in any sort of
way producing product group. But there's been a real focus there.
There's been about nine billion spent in the last couple
(02:14):
of years in terms of new processing plants there, and
in way that's just finance way. You know, once just
a byproductive of dairy in terms of the fat, but
now it's in everything into snacking products and into nutrition,
into a nutrition so you know, it's really been ingratiated
into everything that we consume these days. And so the
milk has been demanded by these new processing plants, and
(02:36):
then as a result, you know, we've seen a bit
of an overflow in other products that where there isn't
the same sort of demand, so lesser proteins like lactose
and skimmel powder, and then also the facts as well,
so we're seeing a lot of butter come out of
that part of the world.
Speaker 1 (02:50):
So what is your long term take, Mike on what's
happening in the US in terms of this increasing production
and in Europe and the likely effect it's like to
like you a had given theres been some remarkable amounts
of money paid for dairy farms as they start to
turn over.
Speaker 2 (03:07):
Inning Z, Well, it's just a commodity cycle. So we've
seen it a million times before them, we'll set it
a million times again. So you know, the cure for
high prices is high prices, and that's just the pain
we're wearing at the moment. You know, we got up
to what ten twenty ten to twenty five in the
futures for the currencies and down to nine fifty. But
if you look a season FOURD, you know, the futures
(03:27):
we're trading yesterday at eight fifty, which is below what
darien Z would say would be the cost of production.
And so I think we need some hopefully other parts
of the world to feel the pain first and reduce
their production as a result. You know, they've got more
levers they can pull in terms of you know, they
introduced feed onto the farm, so you know, hopefully their
requests less of the supplementary feed, be it through the
(03:49):
grains or we've even seen in terms of in the States,
the milk ratio of the cost of feed started to
fall quite quickly as well as grain prices recover. We
saw that big news about so we've been the trade
between the US and the States and corn and wheat
have followed along with it as well, So hopefully it's
the other parts of the world that feel the pain first.
But certainly I think it's as part of any healthy
(04:11):
commodity cycle that we've seen so many times before.
Speaker 1 (04:14):
Right GDT auction overnight. What's your sort of feeling insight into.
Speaker 2 (04:20):
That, well, I hope, and I know hope is not
a strategy. I hope we just continue what we've seen
previously with small negative increments. But I think probably what's
given us the greatest concern is just last week's pulse,
which fell three percent, which was bigger than what the
market was expecting, and as a result, the futures have
reacted to suggest that we're going to get a larger
fulls night now. As I said, I hope that's not
(04:41):
the case, and we really just need one or two
more GDTs to get through before on the downward slide
in terms of the amount of volume that's been placed
on the options. The things I keep an eye out for,
just for people watching is just the performance of the butter,
which has been the hero of the New Zealand commodity cycle.
We've stayed so much high than the rest of the
world in terms of the butter prices and also the
(05:03):
Chinese participation. So they've been very strong this year of
buying over half the options and so hopefully those two
things retain remain But if they don't, then you know,
I think there's some downward pressure to come in. They
coming a month or.
Speaker 1 (05:16):
So, okay, and what one more option before Christmas isn't
here I think? Am I right saying that?
Speaker 2 (05:22):
Yeah, that's right. Yeah, So you know, once we get
into that sort of Christmas period seasonally we're coming off
anyway in New Zealand and seasons have been saying to
so many people around the world, it's just got to
have it have been able to correct itself. Yet we're
not really strong at the moment three point four percent,
but actually wouldn't surprise me, but by the end of
the season that would sort of come into a smaller
growth profile. Obviously encouraged by the fact that we've seen
(05:45):
cheap supplementary feed and pique and also high milk prices.
But you know, the weather in New Zealand just has
a way of equalizing each year, so we have a
strong start. Perhaps we're a week in finow who knows
great stuff.
Speaker 1 (05:56):
Mike McIntire and Jardon, thank you very much for joining
as much appreciated.
Speaker 2 (06:00):
Thanks I mus
Well, the GDT index has not moved well in a
positive way since early August, and the prices of dairy
products have dropped about thirteen percent. That will no doubt
be raising a little bit of concern for one or
two of You're around the ten dollar farm gate milk
price forecast to look at this in more depth. Mike McIntire,
(00:22):
head of Derivatives at Jardin, I love that word derivatives. Beautiful, beautiful,
beautiful Mike. How are you?
Speaker 2 (00:28):
You have every good things famish on yourself?
Speaker 1 (00:30):
Yeah, and I can't complain sunny day down in the
matter were two today beautiful? Look it'll be you know,
like anything that sort of you know benefits from sun,
which is the old grass and the water. Amazing what
the two of those come up with, isn't it? But
what is what's the main factor sort of playing out
here in terms of these well, what's happened with the
GDT since since August?
Speaker 2 (00:50):
It's really a global issue really, so if we look
at it, Yep, New Zealand progressing very well in terms
of grass growth as you touched on there, So we're
up season to date three point four four percent in
terms of production, but so as the rest of the world.
So the EU in September that their milk was up
four percent. The US has probably been the standout in
terms of growth or up four percent in September and
(01:11):
then close to four percent again in October. And these
are big numbers on big numbers. So we produced twenty
two billion leaders of milk here in New Zealand. The
States is one hundred in Europe is a one hundred
and forty seven one hundred and fifty billion liters. So again,
once you start having big growth on big numbers, unless
you get that domestic population who's looking to acquire the milk,
(01:33):
then obviously it's got to go out into the export markets.
And you know why we might be small in terms
of global production, we're quite meaningful in terms of global trade.
And so where we see competitions from these behemoths, it
really starts impacting on our ability to in top returns.
Speaker 1 (01:47):
Yeah, so what's driving the big lift in production in
the US, for example.
Speaker 2 (01:52):
Just the price, Like initially we've seen a lot of
production go into the States. In terms of new processing facilities,
there's a real focus now in way which you would
see globally around the wood and it's not just a
dairy issue, it's it's you know, in any sort of
way producing product group. But there's been a real focus there.
There's been about nine billion spent in the last couple
(02:14):
of years in terms of new processing plants there, and
in way that's just finance way. You know, once just
a byproductive of dairy in terms of the fat, but
now it's in everything into snacking products and into nutrition,
into a nutrition so you know, it's really been ingratiated
into everything that we consume these days. And so the
milk has been demanded by these new processing plants, and
(02:36):
then as a result, you know, we've seen a bit
of an overflow in other products that where there isn't
the same sort of demand, so lesser proteins like lactose
and skimmel powder, and then also the facts as well,
so we're seeing a lot of butter come out of
that part of the world.
Speaker 1 (02:50):
So what is your long term take, Mike on what's
happening in the US in terms of this increasing production
and in Europe and the likely effect it's like to
like you a had given theres been some remarkable amounts
of money paid for dairy farms as they start to
turn over.
Speaker 2 (03:07):
Inning Z, Well, it's just a commodity cycle. So we've
seen it a million times before them, we'll set it
a million times again. So you know, the cure for
high prices is high prices, and that's just the pain
we're wearing at the moment. You know, we got up
to what ten twenty ten to twenty five in the
futures for the currencies and down to nine fifty. But
if you look a season FOURD, you know, the futures
(03:27):
we're trading yesterday at eight fifty, which is below what
darien Z would say would be the cost of production.
And so I think we need some hopefully other parts
of the world to feel the pain first and reduce
their production as a result. You know, they've got more
levers they can pull in terms of you know, they
introduced feed onto the farm, so you know, hopefully their
requests less of the supplementary feed, be it through the
(03:49):
grains or we've even seen in terms of in the States,
the milk ratio of the cost of feed started to
fall quite quickly as well as grain prices recover. We
saw that big news about so we've been the trade
between the US and the States and corn and wheat
have followed along with it as well, So hopefully it's
the other parts of the world that feel the pain first.
But certainly I think it's as part of any healthy
(04:11):
commodity cycle that we've seen so many times before.
Speaker 1 (04:14):
Right GDT auction overnight. What's your sort of feeling insight into.
Speaker 2 (04:20):
That, well, I hope, and I know hope is not
a strategy. I hope we just continue what we've seen
previously with small negative increments. But I think probably what's
given us the greatest concern is just last week's pulse,
which fell three percent, which was bigger than what the
market was expecting, and as a result, the futures have
reacted to suggest that we're going to get a larger
fulls night now. As I said, I hope that's not
(04:41):
the case, and we really just need one or two
more GDTs to get through before on the downward slide
in terms of the amount of volume that's been placed
on the options. The things I keep an eye out for,
just for people watching is just the performance of the butter,
which has been the hero of the New Zealand commodity cycle.
We've stayed so much high than the rest of the
world in terms of the butter prices and also the
(05:03):
Chinese participation. So they've been very strong this year of
buying over half the options and so hopefully those two
things retain remain But if they don't, then you know,
I think there's some downward pressure to come in. They
coming a month or.
Speaker 1 (05:16):
So, okay, and what one more option before Christmas isn't
here I think? Am I right saying that?
Speaker 2 (05:22):
Yeah, that's right. Yeah, So you know, once we get
into that sort of Christmas period seasonally we're coming off
anyway in New Zealand and seasons have been saying to
so many people around the world, it's just got to
have it have been able to correct itself. Yet we're
not really strong at the moment three point four percent,
but actually wouldn't surprise me, but by the end of
the season that would sort of come into a smaller
growth profile. Obviously encouraged by the fact that we've seen
(05:45):
cheap supplementary feed and pique and also high milk prices.
But you know, the weather in New Zealand just has
a way of equalizing each year, so we have a
strong start. Perhaps we're a week in finow who knows
great stuff.
Speaker 1 (05:56):
Mike McIntire and Jardon, thank you very much for joining
as much appreciated.
Speaker 2 (06:00):
Thanks I mus
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