The Country 03/09/25: Richard Allen talks to Jamie Mackay

Fonterra’s President Global Ingredients reviews last night’s disappointing GDT Auction (- 4.3%, whole milk powder down 5.3%, skim milk powder down 5.8%).

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Episode Transcript

Speaker 1 (00:00):
Richard Allen is Fonterra's president of Global market Ingredients globaltary
trade auction overnight. It wasn't good. The futures market was
picking a drop, I don't know, two three four percent.
We ended up getting four point three percent across the board,
perhaps more of a worrying number as whole milk powder
down five point three percent. Second biggest ingredient in the

(00:22):
basket skim milk powder down five point eight percent. Richard,
should Fonterra farmers be worried about this auction or is
this just what happens at this time of the year.

Speaker 2 (00:33):
Good Jenny, I thank thanks for having me on. Look, look,
I think you know it was in line with where
the market was picking. And certainly if you look look
around the world right now, you know there is a
little bit of volatility. We're seeing pretty good milk supply
out in New Zealand in that but I think where
I kind of go to is, you know, we've sold
a lot of milk already in the season. We're at
pretty good prices still, you know, this time last year

(00:55):
sitting closer to the thirty four hundred. Last night we
cleared at thirty eight hundred, so you know, we are
heading into our biggest volume events and so you know this,
in the next couple of events, we see sort of
duty volumes peaking out. So the combination of that, I
think we've seen buyers sort of sit back a little bit,
but overall not a bad result in line with kind

(01:17):
of expectations. And you know, we're still sitting sitting pretty good, so.

Speaker 1 (01:20):
Don't panic volume. Traditionally at this time of the year,
obviously it does start to peak. I think the last
auction was thirty six thousand metric tons. This one forty
one and a half thousand metric tons, So in percentage terms,
that's quite a big increase in volume.

Speaker 2 (01:37):
Yeah, it is. And again we try to get the
you know, our duty curves as close to our you know,
our production curve as possible, you know, to get the
product out into market. We see a couple more events
where it steps up, and then we go back into
our sort of seasonal seasonal as as sort of declines
over the shoulders.

Speaker 1 (01:55):
So the next couple of global dairy trade auction is
going to be a bit sticky, We'll see you.

Speaker 2 (02:00):
So I gave up picking prices years ago, Jamie I'm
not very good at it. But again, I think, you know,
there is still good demand out there. We're still seeing
good participation from the likes of China. A was a
little bit quiet in this event, but I expect to
see them back in the market. Overall. I think it's
a little bit of a wait and see. And again
we're you know, Visa v last year. We're still sitting

(02:20):
in a pretty good place.

Speaker 1 (02:21):
And I think back a couple of years we had
that big slump. Was it August twenty twenty three, yep, yeah,
and we came right after that one.

Speaker 2 (02:30):
Yeah, it's a long season, Jesse, you know, so we're
only just sort of getting into it now. You know,
a lot can happen from here till thirty one July.
And so I think, you know, overall, we've sold a
lot of milk, another two hundred and seventy million dollars
into the New Zealand economy last night. We're still seeing
goodbye participation and yeah, I think, you know, we'll continue
to do what we do, which is ensure that you know,

(02:51):
we're putting our milk into the best demand around the world.

Speaker 1 (02:53):
Richard Allen, President of Global market Ingredients for Fonterra. Love
that americanized title, know that, Richard, and I guess you,
being the ingredient s guy, you're going to have a
lot to do over the next few years.

Speaker 2 (03:07):
Yeah, you know, well, first there was it was great
to see the announcement a couple of weeks back. I
think it's an excellent outcome. We'll be out there chatting
to our farmers around the devestment and they've got a
big decision to make as we as we head into
sort of October November. But we know we're really confident
in you know, what we have to offer as a
as a B to B specialist, both in terms of
our ingredients and our food service business. It's where we

(03:29):
make the best money for our farmers when we sort
of deploy their capital. And you know, generally when I'm
out there talking to customers right around the world, they're
a strong demand and a strong future in terms of
you know, the partnerships we have in place in some
of the innovation we're talking about.

Speaker 1 (03:43):
Richard Allen, thanks for your time.

Speaker 2 (03:45):
Thank you