November 4, 2025 • 5 mins
We ask Fonterra’s chief financial officer if a $10 milk price is now in danger after yet another downward GDT auction (-2.4%, whole milk powder down 2.7%).
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Episode Transcript
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Speaker 1 (00:00):
Well, I guess it was no surprise because the futures
market was picking it. Yet another drop in the global
dairy trade auction overnight. We haven't had a positive one
since August the fifth, three months exactly two the day.
Andrew Murray is the CFO at Fonterra. First question, and
that's the obvious one. Andrew is ten dollars under threat.
Speaker 2 (00:21):
Now, good afternoon, Jenmy. Look, as you said, you know,
derivtive markets have been pacing this in for a little while,
so I don't think we've seen anything that was unexpected
from that standpoint. You know, there's a lot of milk
around at the moment, and we'll see that ply op.
In terms of what's being on the paces.
Speaker 1 (00:38):
We seem to have found a floor for skim milk powder.
It was unchanged the GDT index overall down two point
four percent. Whole milk powder obviously the most important one,
down two point seven percent. Once we get over these
high spring volumes that were going through right at the moment, well,
(01:00):
whole milk powder follows skim milk powder and find a flaw.
Speaker 2 (01:04):
Oh look, I think what we'll get to is, you
know that the New Zealand production is up stronger at
the moment, LA is the same. From December, we are
going to see the New Zealand volumes sort of drop
off and so not a lot of people sitting in
a lot of inventory, and I think that's potentially going
to put a bit of a fall under the price levels.
Speaker 1 (01:23):
And the other thing that's mitigating some of these falls
obviously falls obviously is the exchange. Right, we've seen a
bit of a fall there. We're sitting at under US
fifty seven since when I had a look earlier this morning.
I know you do have a hedging policy in place.
You may not be cashing in on all of that.
Maybe you're picking up some of that action for next season.
(01:44):
Are you in the hedging department, Andrew? You'd have to be,
is the CFO, wouldn't you.
Speaker 2 (01:49):
Yes, I do do a little bit of the hedging. Yeah, Look,
we'll still have we do still have some munchy hedged
positions for this season, although it's relatively limited. You know,
we have seen that, we have seen the FX move
and obviously that's a benefit and you know we we
will certainly see that play out through some cover into
next season as well. But yeah, there'll definitely be a
positive impact from that perspective.
Speaker 1 (02:07):
So as it stands at the moment, going back to
my original question, if you were to have to come
up with a payout right here today and now, would
it be ten dollars?
Speaker 2 (02:17):
Oh, I'm not going to say it exact number. We
have a range for a reason, and I think we
have those ranges because of all the stuff that we're
seeing play out. You know, we will certainly get in
a space where if we if we feel like we
need to make a change to the to the forecast,
then then we'll come out and do that as soon
as you feel that we need to.
Speaker 1 (02:31):
The fats weren't where it was at overnight. Butter down
four point three percent, cheese down six point six percent.
Speaker 2 (02:40):
M yeah, I mean I think what we're seeing in
that space, if I look at butter in particular, you know,
we're still seeing a really healthy premium to what's in
Europe and the US, and there's a good strong bidding
as well. But you know, you've got to see that
there's plenty of supply out there in the Europe and
the US as well. One thing I will see is
that you know, China is the biggest global market certainly
(03:00):
an import market for butter, and so our presence there
is obviously helping us maintain a bit of that premium
over what we see in the US and the Europe prices.
And I think if you look at Cheddar, you know,
again we do have a healthy premium there against what's
happening in the US and in Europe. You know, those
prices more globally have slumped a little bit in recent months,
and I think it's just seeing that play out a
(03:21):
little bit here, probably a little bit less in terms
of ex New Zealand supply in the coming months as well,
So I think we'll certainly see that that I'll have
a bit of a flow again, maybe our ound prices
there too.
Speaker 1 (03:33):
You mentioned the Chinese. I think they made up over
half of the demand on last night's auction.
Speaker 2 (03:38):
M yeah, I mean, I mean again, it comes back
to that space, right, China is the biggest import market
for you know, whole milk powder butter, I think, second
biggest for skim, so we're always going to see that
come through and obviously that you know, they are big
importers from New Zealand's right, it's a flavor profile et
cetera that they that they like and so I think
that's I mean, that's helping us versus what you're currently
(03:59):
seeing maybe in some of that Europe and US space.
Speaker 1 (04:02):
You were mentioning the high volumes coming out of New
Zealand this spring. Was there obviously the storms, particularly in
the South and to a lesser degree, I guess in Canterbury.
But down on the South there's got to have an
effect on production down there. What are you seeing through
your factory at Edendale for instance.
Speaker 2 (04:21):
Yeah, look, I mean it's it's having a little bit
of an impact, but volumes are still pretty strong year
on you to be honest. You know obviously you know
you know the songs you know don't so you know,
there's a bit of an issue there in terms of
we We had a little bit of an impact on
one of factory roofs, but relatively small, you know, the
(04:42):
biggest piece there be obviously being on farm and access
to Poe being the biggest space there. So we support
farmers where we can in that space. But if I
look at it as an all roll picture, it's still
pretty strong in terms of production for New Zealand.
Speaker 1 (04:53):
I'm pleased to hear that with an accent like yours.
You've got to you've got to be rooting for the Scottish,
the sweet Andrew Murray. They've never beaten the All Blacks.
They've drawn twice twenty five all, I think in nineteen
eighty three. And I'm just going off the top of
my head now, because I am a rugby geek when
it comes to stats, I reckon in nineteen sixty four,
(05:14):
sixty three, sixty four it was nil all. I'll check
that one. So what chance the Scotts. We've got our
captain and vice captain out, you've got half the Lions
back line and your team.
Speaker 2 (05:25):
Well, I mean I've probably better making a prediction about
that than it would be about milk proces. So you
never know. There's the first thing for everything. I think
it's what we say.
Speaker 1 (05:34):
Well, you were sitting on the fence, not only with
the rugby but also with the ten dollars payout, Andrew.
Speaker 2 (05:40):
Well, you know what can I say? I'll always root
for my home team.
Speaker 1 (05:44):
Good on you mate, Thank you very much for your time.
Well eagerly await perhaps a turnaround in those GDT auctions
and a couple of weeks time. Thanks for your time.
Speaker 2 (05:54):
No problem. Cheer Jimmy
Well, I guess it was no surprise because the futures
market was picking it. Yet another drop in the global
dairy trade auction overnight. We haven't had a positive one
since August the fifth, three months exactly two the day.
Andrew Murray is the CFO at Fonterra. First question, and
that's the obvious one. Andrew is ten dollars under threat.
Speaker 2 (00:21):
Now, good afternoon, Jenmy. Look, as you said, you know,
derivtive markets have been pacing this in for a little while,
so I don't think we've seen anything that was unexpected
from that standpoint. You know, there's a lot of milk
around at the moment, and we'll see that ply op.
In terms of what's being on the paces.
Speaker 1 (00:38):
We seem to have found a floor for skim milk powder.
It was unchanged the GDT index overall down two point
four percent. Whole milk powder obviously the most important one,
down two point seven percent. Once we get over these
high spring volumes that were going through right at the moment, well,
(01:00):
whole milk powder follows skim milk powder and find a flaw.
Speaker 2 (01:04):
Oh look, I think what we'll get to is, you
know that the New Zealand production is up stronger at
the moment, LA is the same. From December, we are
going to see the New Zealand volumes sort of drop
off and so not a lot of people sitting in
a lot of inventory, and I think that's potentially going
to put a bit of a fall under the price levels.
Speaker 1 (01:23):
And the other thing that's mitigating some of these falls
obviously falls obviously is the exchange. Right, we've seen a
bit of a fall there. We're sitting at under US
fifty seven since when I had a look earlier this morning.
I know you do have a hedging policy in place.
You may not be cashing in on all of that.
Maybe you're picking up some of that action for next season.
(01:44):
Are you in the hedging department, Andrew? You'd have to be,
is the CFO, wouldn't you.
Speaker 2 (01:49):
Yes, I do do a little bit of the hedging. Yeah, Look,
we'll still have we do still have some munchy hedged
positions for this season, although it's relatively limited. You know,
we have seen that, we have seen the FX move
and obviously that's a benefit and you know we we
will certainly see that play out through some cover into
next season as well. But yeah, there'll definitely be a
positive impact from that perspective.
Speaker 1 (02:07):
So as it stands at the moment, going back to
my original question, if you were to have to come
up with a payout right here today and now, would
it be ten dollars?
Speaker 2 (02:17):
Oh, I'm not going to say it exact number. We
have a range for a reason, and I think we
have those ranges because of all the stuff that we're
seeing play out. You know, we will certainly get in
a space where if we if we feel like we
need to make a change to the to the forecast,
then then we'll come out and do that as soon
as you feel that we need to.
Speaker 1 (02:31):
The fats weren't where it was at overnight. Butter down
four point three percent, cheese down six point six percent.
Speaker 2 (02:40):
M yeah, I mean I think what we're seeing in
that space, if I look at butter in particular, you know,
we're still seeing a really healthy premium to what's in
Europe and the US, and there's a good strong bidding
as well. But you know, you've got to see that
there's plenty of supply out there in the Europe and
the US as well. One thing I will see is
that you know, China is the biggest global market certainly
(03:00):
an import market for butter, and so our presence there
is obviously helping us maintain a bit of that premium
over what we see in the US and the Europe prices.
And I think if you look at Cheddar, you know,
again we do have a healthy premium there against what's
happening in the US and in Europe. You know, those
prices more globally have slumped a little bit in recent months,
and I think it's just seeing that play out a
(03:21):
little bit here, probably a little bit less in terms
of ex New Zealand supply in the coming months as well,
So I think we'll certainly see that that I'll have
a bit of a flow again, maybe our ound prices
there too.
Speaker 1 (03:33):
You mentioned the Chinese. I think they made up over
half of the demand on last night's auction.
Speaker 2 (03:38):
M yeah, I mean, I mean again, it comes back
to that space, right, China is the biggest import market
for you know, whole milk powder butter, I think, second
biggest for skim, so we're always going to see that
come through and obviously that you know, they are big
importers from New Zealand's right, it's a flavor profile et
cetera that they that they like and so I think
that's I mean, that's helping us versus what you're currently
(03:59):
seeing maybe in some of that Europe and US space.
Speaker 1 (04:02):
You were mentioning the high volumes coming out of New
Zealand this spring. Was there obviously the storms, particularly in
the South and to a lesser degree, I guess in Canterbury.
But down on the South there's got to have an
effect on production down there. What are you seeing through
your factory at Edendale for instance.
Speaker 2 (04:21):
Yeah, look, I mean it's it's having a little bit
of an impact, but volumes are still pretty strong year
on you to be honest. You know obviously you know
you know the songs you know don't so you know,
there's a bit of an issue there in terms of
we We had a little bit of an impact on
one of factory roofs, but relatively small, you know, the
(04:42):
biggest piece there be obviously being on farm and access
to Poe being the biggest space there. So we support
farmers where we can in that space. But if I
look at it as an all roll picture, it's still
pretty strong in terms of production for New Zealand.
Speaker 1 (04:53):
I'm pleased to hear that with an accent like yours.
You've got to you've got to be rooting for the Scottish,
the sweet Andrew Murray. They've never beaten the All Blacks.
They've drawn twice twenty five all, I think in nineteen
eighty three. And I'm just going off the top of
my head now, because I am a rugby geek when
it comes to stats, I reckon in nineteen sixty four,
(05:14):
sixty three, sixty four it was nil all. I'll check
that one. So what chance the Scotts. We've got our
captain and vice captain out, you've got half the Lions
back line and your team.
Speaker 2 (05:25):
Well, I mean I've probably better making a prediction about
that than it would be about milk proces. So you
never know. There's the first thing for everything. I think
it's what we say.
Speaker 1 (05:34):
Well, you were sitting on the fence, not only with
the rugby but also with the ten dollars payout, Andrew.
Speaker 2 (05:40):
Well, you know what can I say? I'll always root
for my home team.
Speaker 1 (05:44):
Good on you mate, Thank you very much for your time.
Well eagerly await perhaps a turnaround in those GDT auctions
and a couple of weeks time. Thanks for your time.
Speaker 2 (05:54):
No problem. Cheer Jimmy
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