March 3, 2026 • 4 mins
Rabobank’s Australian-based Senior Dairy Analyst comments on the surge in the GDT auction, and we also look at the trade challenges of the Middle East War for the world economy.
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Speaker 1 (00:00):
I often say in jest that no one at Rabobank
has a short title, while this man is no exception.
His name is Michael Harvey, based out of the Western Ireland, Australia.
He's a senior dairy and consumer foods analyst. Michael, Good, afternoon,
New Zealand time. The last time we chatted, you were
just to play an old senior dairy analyst.
Speaker 2 (00:21):
Jamie thinks had me. It's great to be back. Yeah,
I think you could have added a senior vice president
in there somewhere, I think with my title, but we'll
go with there in consumer foods analyst.
Speaker 1 (00:29):
All right, Well, we might talk about presidents a wee
bit later. I've got Matt Bolger coming up from Fonterra,
he's the MD of co Op Affairs, to talk about
this global dairy trade auction overnight. So I'll keep the
powder a wee bit dry there, but gee, five point
seven percent the index skim milk powder nine point one
percent is an outstanding result when you look at all
(00:52):
the turmoil around the world at the moment.
Speaker 2 (00:55):
That's right. Another strong brounds, which is great news for
the export sector in New Zealand. Then just the broader
price signal that sends around the world around the value
of milk, and our clear observation is it's clearly being
led by the protein complex. You've got real tightness in
the supply of skiven mill powder and that's what's really
driving the recovery. We're seeing commodity prices and I think
(01:16):
the GEDT skim offerings are on the GDT are quite
low at the moment, so it's part of that protein
story is getting a bit of a boost and that's
providing upside for the broader dairy commodity complex. But I
think in the context of what's going on globally, because
there is a lot of milk supply still out there
in the world, but I think what it's showing you
is that there's some real bio sentiment is quite high
in terms of pricing in risk premium because of the
(01:38):
global noise, and that's what you see coming through in
the results. You know a lot of buyers in the
Middle East, Southeast Asia, those sorts of regions pulling forward
some of their cover for New Zealand origin product which
are declining seasonally and lower on the GEDDT auction. So
it's that risk premium being priced in for New Zealand
product at the moment in the short term, which is
a good result.
Speaker 1 (01:57):
So effectively, Ostralation and clute Australia, Australasian dairy farmers are
benefiting and the short term from this war in the
Middle East.
Speaker 2 (02:06):
In the short term in terms of the dairy commodity complex,
absolutely here in Australia has been a little bit different.
We haven't actually seen the downside in farm gate pricing
that you have previously because we've got a different pricing
structure here. But certainly, you know, higher commodity prices in
ust all the terms has already provided them upside back
into the milk price in New Zealand, and we still
think there might be a little bit more upside in
the current season and it certainly provides a bit of
(02:29):
momentum around what the payout forecast might look like for
the new season. So yeah, it's beneficial from that perspective,
But you can't ignore the risk on the other side, Jamie,
that you know in amongst all this, there is some
margin outlook risk because of what might happen in the
Middle East if things continue to escalate, and it's in
a drawn out conflict, and it really sits around energy
(02:52):
and the supply and supply risks that come from things
like fertilizers. So that's the angle we're looking at here.
I mean, energy prices are already up or upside risk
if it's a conflict is prolonged, and the higher they
stay for longer, the more problematic that becomes for the
global economy and everything else. So we're watching that end.
But of course we know that there's a lot of
(03:12):
fertilizer that comes out of the Middle East region into
our markets in this part of the world, So it's
price risk, but it's also supply risk if you can't
actually get the product into market. So there's a bit
of a watch on that perspective, and that's the key
thing we'd be thinking about.
Speaker 1 (03:24):
And obviously there's going to be a bit of a
watch on infistrates. More importantly, inflation the number one enemy
of the economy.
Speaker 2 (03:33):
That's right, I mean, and that's the risk for most
economies around the world now is if you do get
higher oil prices for longer, that that is problematic for
global economies and global growth, and then that does change
potentially the outlook around central banks and their policy and
monetary policy what it might do for interest rates, but
also then how that feeds into the currencies and things
(03:53):
like that, and the other thing to think about in
all this, particularly with a dairy hat on, is clearly
high oil prices generally the grain and oil seed complex higher,
so that can mean clearly a spike in feed costs,
which have been quite affordable for a lot of dairy
farmers around the world at the moment. If you get
upside risk in terms of feed prices, that does change
the margin outlook for producers outside of New Zealand, and
(04:15):
it might actually change the outlook around milk production growth
as well. So there's a few layers to it all,
but clearly, yeah, absolutely, the whole discussion around energy prices
being up, what that means for global economies and how
central banks will respond to that will be a clear
clear watching them coming months.
Speaker 1 (04:31):
How long you've been a vice president for that's a
very americanized title, Michael.
Speaker 2 (04:35):
Harpy, No, not a vice president. Just to seenior analysis Rabobank.
Speaker 1 (04:40):
It's just a plain old senior dairy and consumer foods analyst.
Great to have your analytical mind on the country today.
Thanks for your side.
Speaker 2 (04:49):
Thanks for having me,
I often say in jest that no one at Rabobank
has a short title, while this man is no exception.
His name is Michael Harvey, based out of the Western Ireland, Australia.
He's a senior dairy and consumer foods analyst. Michael, Good, afternoon,
New Zealand time. The last time we chatted, you were
just to play an old senior dairy analyst.
Speaker 2 (00:21):
Jamie thinks had me. It's great to be back. Yeah,
I think you could have added a senior vice president
in there somewhere, I think with my title, but we'll
go with there in consumer foods analyst.
Speaker 1 (00:29):
All right, Well, we might talk about presidents a wee
bit later. I've got Matt Bolger coming up from Fonterra,
he's the MD of co Op Affairs, to talk about
this global dairy trade auction overnight. So I'll keep the
powder a wee bit dry there, but gee, five point
seven percent the index skim milk powder nine point one
percent is an outstanding result when you look at all
(00:52):
the turmoil around the world at the moment.
Speaker 2 (00:55):
That's right. Another strong brounds, which is great news for
the export sector in New Zealand. Then just the broader
price signal that sends around the world around the value
of milk, and our clear observation is it's clearly being
led by the protein complex. You've got real tightness in
the supply of skiven mill powder and that's what's really
driving the recovery. We're seeing commodity prices and I think
(01:16):
the GEDT skim offerings are on the GDT are quite
low at the moment, so it's part of that protein
story is getting a bit of a boost and that's
providing upside for the broader dairy commodity complex. But I
think in the context of what's going on globally, because
there is a lot of milk supply still out there
in the world, but I think what it's showing you
is that there's some real bio sentiment is quite high
in terms of pricing in risk premium because of the
(01:38):
global noise, and that's what you see coming through in
the results. You know a lot of buyers in the
Middle East, Southeast Asia, those sorts of regions pulling forward
some of their cover for New Zealand origin product which
are declining seasonally and lower on the GEDDT auction. So
it's that risk premium being priced in for New Zealand
product at the moment in the short term, which is
a good result.
Speaker 1 (01:57):
So effectively, Ostralation and clute Australia, Australasian dairy farmers are
benefiting and the short term from this war in the
Middle East.
Speaker 2 (02:06):
In the short term in terms of the dairy commodity complex,
absolutely here in Australia has been a little bit different.
We haven't actually seen the downside in farm gate pricing
that you have previously because we've got a different pricing
structure here. But certainly, you know, higher commodity prices in
ust all the terms has already provided them upside back
into the milk price in New Zealand, and we still
think there might be a little bit more upside in
the current season and it certainly provides a bit of
(02:29):
momentum around what the payout forecast might look like for
the new season. So yeah, it's beneficial from that perspective,
But you can't ignore the risk on the other side, Jamie,
that you know in amongst all this, there is some
margin outlook risk because of what might happen in the
Middle East if things continue to escalate, and it's in
a drawn out conflict, and it really sits around energy
(02:52):
and the supply and supply risks that come from things
like fertilizers. So that's the angle we're looking at here.
I mean, energy prices are already up or upside risk
if it's a conflict is prolonged, and the higher they
stay for longer, the more problematic that becomes for the
global economy and everything else. So we're watching that end.
But of course we know that there's a lot of
(03:12):
fertilizer that comes out of the Middle East region into
our markets in this part of the world, So it's
price risk, but it's also supply risk if you can't
actually get the product into market. So there's a bit
of a watch on that perspective, and that's the key
thing we'd be thinking about.
Speaker 1 (03:24):
And obviously there's going to be a bit of a
watch on infistrates. More importantly, inflation the number one enemy
of the economy.
Speaker 2 (03:33):
That's right, I mean, and that's the risk for most
economies around the world now is if you do get
higher oil prices for longer, that that is problematic for
global economies and global growth, and then that does change
potentially the outlook around central banks and their policy and
monetary policy what it might do for interest rates, but
also then how that feeds into the currencies and things
(03:53):
like that, and the other thing to think about in
all this, particularly with a dairy hat on, is clearly
high oil prices generally the grain and oil seed complex higher,
so that can mean clearly a spike in feed costs,
which have been quite affordable for a lot of dairy
farmers around the world at the moment. If you get
upside risk in terms of feed prices, that does change
the margin outlook for producers outside of New Zealand, and
(04:15):
it might actually change the outlook around milk production growth
as well. So there's a few layers to it all,
but clearly, yeah, absolutely, the whole discussion around energy prices
being up, what that means for global economies and how
central banks will respond to that will be a clear
clear watching them coming months.
Speaker 1 (04:31):
How long you've been a vice president for that's a
very americanized title, Michael.
Speaker 2 (04:35):
Harpy, No, not a vice president. Just to seenior analysis Rabobank.
Speaker 1 (04:40):
It's just a plain old senior dairy and consumer foods analyst.
Great to have your analytical mind on the country today.
Thanks for your side.
Speaker 2 (04:49):
Thanks for having me,
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