July 2, 2024 • 4 mins
Fonterra's Head of Co-op Affairs reviews last night's plummeting GDT Auction (down 6.9%) with WMP -4.3%, SMP -6.1%, AMF -10.7%, Butter -10.2%, BMP -5.1% and Cheese -6.9%
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Episode Transcript
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Speaker 1 (00:00):
So this one wasn't a good one to wake up to.
Last night's Global Dairy Trade event down six point nine percent,
whole milk powder down four point three, skim down six
point one, butter I don't even want to go there,
down ten point two percent. Mike Crohnan joins us from
Fonterra ahead of co op affairs. Is this August twenty
(00:21):
twenty three all over again, Mike? Is this deja vu
all over again?
Speaker 2 (00:27):
God to Jamie, and they might stop me coming on
if this happens every time I come on you on
your program. But I don't think so. I think it's
just what we've seen is probably a little bit of
excitement at the end of the last season. You know,
tider autumn can weather conditions down here, so demand was
down a little bit. Pricing was just up a little bit,
you know, because it was much product around. And now
(00:49):
we're facing into the new season. But most people remember
that when we put out our eight dollar midpoint, we
did say, you know, with some caution and some conservatism
on that. So we were starting to look out to
see some of these some of these things happening. So
I don't think it's August twenty three again, But you know,
I think we just have to wait to see what
plays out a little bit.
Speaker 1 (01:08):
How much of this is due to increased product on
the platform from Northern Hemisphere because they're and well obviously
through their spring into their summer.
Speaker 2 (01:19):
Yeah, not not too much. When you look up the
Northern Hemisphere, US is pretty hot up there, you know.
It's one of the things that they're they're grappling with,
and of course the Avian flu is not helping out there,
so they're down a little eus, you know, not not
not doing too bad. So I didn't hit their stride.
So just in terms of global production, you know, we're
there there or thereabouts, I think, but you know, we're
(01:43):
as we're studying the season. You know, it's gonna be
interesting to see if we get a bit of an
Almina effect here as well down down the zied.
Speaker 1 (01:49):
Are you guilty of crashing the market Fonterra here, Mike,
I'm just asking on behalf of a friend putting too
much product on the platform.
Speaker 2 (01:57):
Yeah, I think I know who your friend might be, But.
Speaker 1 (02:00):
No, I'm just asking for myself. No, that was a
non political question. I should I should have rephrased it,
but seriously, that is a criticism that is being made
of Fonterra.
Speaker 2 (02:10):
Yeah, so what we do is, obviously, you know, we
make sure that we've got the right amount of milk
on the on the GDT platform because we want to
make sure that we're discovering the right price. Sing The
best thing we can ever do for farmers to make
sure that we land on on getting actual real data
around around the milk where the milk price is heading.
So we don't want to have anything that's created a false,
(02:33):
false sense of what might or might not be coming
as well. So no, no, we're not We're not doing that.
Speaker 1 (02:38):
What was the participation like from China? Because we're all
waiting for this sleeping bear to await and and come
back in. And I was at the Primary industry summit
yesterday and Miles Hurrell, the chief executive, was one of
the speakers there, and one of the other speakers was
saying that we're expecting China's GDP to climb back to
(02:59):
fire five percent this year. We would kill for that, Mike.
So surely as night follows day, surely China's got a recovery.
But buy some more of our stuff or am I
oversimplifying things now?
Speaker 2 (03:13):
That's where we're thinking to Jamie. But it's not as
if they're not they're absent from from the market at
the moment. You know, they're buying about a quarter or
two a third of volumes, but you know, we you
know historically they're a little higher than that. So I
think some good economic science come out of China, as
you say, a nice problem to have a five percent growth,
(03:33):
but I think there's still a bit of hand to
mouth caution up there. So invent trees have been managed
down a little bit just to see that that recovery
does come before they really fully commit back into building
up the inventories. And of course from our perspective getting
back on GDT, so.
Speaker 1 (03:53):
Mike Cronin with this head of co op affairs for Fonterra,
obviously this isn't going to affect twenty three twenty four.
That is lock and loaded. Is if we're going to
have a downturn, now is as good a time as any?
Is that a fair comment?
Speaker 2 (04:06):
Well, first auction that informs the new season, so and
the final price that we set is in September of
twenty twenty five, so you've you've got to call it
as early days. And of course the note of caution
that we gave when we gave out our forecast and
(04:27):
may still holds. But you know, some of the some
of what we sort of overnight does you know, on
the face of it look a little bit harsh. So
you know, over the next couple of options probably just
seen the fays that it just corrects up up a
little bit as well.
Speaker 1 (04:42):
Well, let's hope. So, Mike Crime and out of Fonterra
always appreciate your analysis of these GDT auctions. Chairs, have
a good day.
Speaker 2 (04:50):
Nice to talk, Jamie.
So this one wasn't a good one to wake up to.
Last night's Global Dairy Trade event down six point nine percent,
whole milk powder down four point three, skim down six
point one, butter I don't even want to go there,
down ten point two percent. Mike Crohnan joins us from
Fonterra ahead of co op affairs. Is this August twenty
(00:21):
twenty three all over again, Mike? Is this deja vu
all over again?
Speaker 2 (00:27):
God to Jamie, and they might stop me coming on
if this happens every time I come on you on
your program. But I don't think so. I think it's
just what we've seen is probably a little bit of
excitement at the end of the last season. You know,
tider autumn can weather conditions down here, so demand was
down a little bit. Pricing was just up a little bit,
you know, because it was much product around. And now
(00:49):
we're facing into the new season. But most people remember
that when we put out our eight dollar midpoint, we
did say, you know, with some caution and some conservatism
on that. So we were starting to look out to
see some of these some of these things happening. So
I don't think it's August twenty three again, But you know,
I think we just have to wait to see what
plays out a little bit.
Speaker 1 (01:08):
How much of this is due to increased product on
the platform from Northern Hemisphere because they're and well obviously
through their spring into their summer.
Speaker 2 (01:19):
Yeah, not not too much. When you look up the
Northern Hemisphere, US is pretty hot up there, you know.
It's one of the things that they're they're grappling with,
and of course the Avian flu is not helping out there,
so they're down a little eus, you know, not not
not doing too bad. So I didn't hit their stride.
So just in terms of global production, you know, we're
there there or thereabouts, I think, but you know, we're
(01:43):
as we're studying the season. You know, it's gonna be
interesting to see if we get a bit of an
Almina effect here as well down down the zied.
Speaker 1 (01:49):
Are you guilty of crashing the market Fonterra here, Mike,
I'm just asking on behalf of a friend putting too
much product on the platform.
Speaker 2 (01:57):
Yeah, I think I know who your friend might be, But.
Speaker 1 (02:00):
No, I'm just asking for myself. No, that was a
non political question. I should I should have rephrased it,
but seriously, that is a criticism that is being made
of Fonterra.
Speaker 2 (02:10):
Yeah, so what we do is, obviously, you know, we
make sure that we've got the right amount of milk
on the on the GDT platform because we want to
make sure that we're discovering the right price. Sing The
best thing we can ever do for farmers to make
sure that we land on on getting actual real data
around around the milk where the milk price is heading.
So we don't want to have anything that's created a false,
(02:33):
false sense of what might or might not be coming
as well. So no, no, we're not We're not doing that.
Speaker 1 (02:38):
What was the participation like from China? Because we're all
waiting for this sleeping bear to await and and come
back in. And I was at the Primary industry summit
yesterday and Miles Hurrell, the chief executive, was one of
the speakers there, and one of the other speakers was
saying that we're expecting China's GDP to climb back to
(02:59):
fire five percent this year. We would kill for that, Mike.
So surely as night follows day, surely China's got a recovery.
But buy some more of our stuff or am I
oversimplifying things now?
Speaker 2 (03:13):
That's where we're thinking to Jamie. But it's not as
if they're not they're absent from from the market at
the moment. You know, they're buying about a quarter or
two a third of volumes, but you know, we you
know historically they're a little higher than that. So I
think some good economic science come out of China, as
you say, a nice problem to have a five percent growth,
(03:33):
but I think there's still a bit of hand to
mouth caution up there. So invent trees have been managed
down a little bit just to see that that recovery
does come before they really fully commit back into building
up the inventories. And of course from our perspective getting
back on GDT, so.
Speaker 1 (03:53):
Mike Cronin with this head of co op affairs for Fonterra,
obviously this isn't going to affect twenty three twenty four.
That is lock and loaded. Is if we're going to
have a downturn, now is as good a time as any?
Is that a fair comment?
Speaker 2 (04:06):
Well, first auction that informs the new season, so and
the final price that we set is in September of
twenty twenty five, so you've you've got to call it
as early days. And of course the note of caution
that we gave when we gave out our forecast and
(04:27):
may still holds. But you know, some of the some
of what we sort of overnight does you know, on
the face of it look a little bit harsh. So
you know, over the next couple of options probably just
seen the fays that it just corrects up up a
little bit as well.
Speaker 1 (04:42):
Well, let's hope. So, Mike Crime and out of Fonterra
always appreciate your analysis of these GDT auctions. Chairs, have
a good day.
Speaker 2 (04:50):
Nice to talk, Jamie.
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