The Country 04/09/24: Andrew Murray talks to Rowena Duncum

Fonterra’s chief financial officer debuts on The Country to look at the latest Global Dairy Trade auction results, which dropped 0.4% across the board, with whole milk powder down 2.5% and skim milk powder up 4.5%. He also talks about why the co-op is investing in a new UHT plant in Southland.  

 

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Episode Transcript

Speaker 1 (00:00):
Well overnight.

Speaker 2 (00:00):
The first global dairy trade auction for September was how
dislight dip prices down across the board zero point four percent.
Homework powder was down two point five percent, but skim
milk powder was at four point five percent. Making his
debut on the country, fontira's chief financial officer, Andrew Murray
joins me to discuss the results.

Speaker 3 (00:19):
Good afternoon, Good afternoon, Arena.

Speaker 2 (00:22):
You just won me five dollars, my friend, because I
said in the office with a name like Andrew Murray,
odds on you would be Scottish.

Speaker 1 (00:29):
Where in Scotland does that accent hail from? Ah?

Speaker 3 (00:32):
It is a Glasgow accent. But I am not a
tennis player.

Speaker 1 (00:34):
Ah, there we go, there we go. Obviously have to
make that distinction. Yeap. How long have you been in
New Zealand?

Speaker 3 (00:41):
Oh about six weeks? Yeah, relatively new and.

Speaker 1 (00:43):
Good time of the year to be coming.

Speaker 2 (00:45):
And everything kind of gets better from here on into summer.

Speaker 3 (00:49):
People keep telling me that weather will get better, so
I will I will await that.

Speaker 1 (00:53):
Yes, yes you do. Hey.

Speaker 2 (00:54):
Look obviously disappointing that the first auction after increasing the
farm gate forecast was a of a drop last night.
What were some of the key factors for you.

Speaker 3 (01:04):
Oh look, I think expectations from the market were probably
a little bit higher than what we saw overnight, but
you know, we're moving into peak volumes now, and actually
the underlying resilience of the pricing is really good to see.
There is tight in infantry and that's reflected and thinking
a short term pricing, so buyers are really paying a
premium for front month contracts versue the longer dated So

(01:26):
actually there was a good amount of resilience in the
market considering the prices are relatively high now.

Speaker 2 (01:30):
Product is also tried it outside the GDT platform as well.
How important are there's like your pulse octions and other
deals that are going on at this point moving through
the pak Oh.

Speaker 3 (01:42):
Look, JDT you know on average will be about a
sound of a total sales, So you know, I think
that are of GDT are obviously really important as well.
But it's you know, essentially GDT is the one that
informs mostly the milk price, but we do get a
premium for what goes off GDT, So I think there's
a good balance at the moment that that's really what's
for us. So we're in a good spot.

Speaker 2 (02:05):
We also saw a huge change in the k we
dollar against the greenbeck last month. How is that movement
and currency impacting our dairy exports?

Speaker 3 (02:16):
Yeah, so, look, it will have an impact. I think that,
you know, if we look at what that means for
fon terror and what it means for a farm gate
milk price. You know, we do quite a lot of
hedging of currency, and so the impact that we will see,
we take out a lot of that volatility and smooth
it over time. So we would hedge you know, eighteen
months out, so we're not seeing that impact there obviously.

(02:36):
You know, there's a lot of other things that are
at play with currency, and I think is you know,
as we move into what the US election looks like
and some of those things we're going to start, we're
going to see continued volatility. So the approach we take
is to hedge it, yeah, and to just smooth out
that volatility.

Speaker 2 (02:50):
Now, recently I was at the Red Mate Seek the conference.
A lot of the conversations there came back to those
US elections that are upcoming. How can I and I
are you keeping on those from a dairy perspective.

Speaker 3 (03:04):
Although we definitely keep an eye I think the interesting
part is obviously what that means for China and the
relationship with China. So that's obviously, you know, a really
important thing to you know, both bullfroon terror, but also
to New Zealand is that trade relationship with China. So
we definitely keep an eye on that. I don't see
it having a massive impact on our actual sales within
that region, but yeah, definitely with China, that's where that's

(03:27):
where we're going to be keeping our close eye on.

Speaker 2 (03:29):
Closer to home, how are things looking on New Zealand's
farms really throw the peak of carving for the North
Island South Island still in it, but in terms of
you know, grass conditions and production, how's that all looking?

Speaker 3 (03:43):
Yeah, actually really strong. So we're up on last year.
You know, the weather has been kind I think through
winter carving rates are looking really strong. So we're definitely
seeing an increase in collection basus where we were last year.
So it's been a really strong start to this season.

Speaker 2 (03:57):
In an announcement yesterday, one hundred and fifty million dollars
into a new UHT cream plant at Aidendal Whe's demand
for UHT cream coming from.

Speaker 3 (04:08):
Oh Look, UHT cream is big in China for us.
Obviously that's a big part of the business in China,
but we're really seeing that come through in food service
in Asia as well. So that's the high value product
and so as we push further and further into that,
then the demand comes for the UHT cream and then
hence the investment in there. So a really good investment
for us to make one hundred and fifty million, as

(04:29):
you said, but seventeen new jobs as well all along
with it. So we're really pleased to be able to
make that investment with the strong demanders here.

Speaker 2 (04:37):
Yeah, seventeen year jobs is great for South and Andrew
Murray fonterra is cufow, thanks so much for making your
debut on the Country while I was hosting not Jamie.

Speaker 1 (04:47):
It's been a pleasure chatting to you.

Speaker 2 (04:48):
And I'll go climb my five bucks for picking your
name and your accent, right, spend a five dollars well,