The Country 16/04/25: Paul Joules talks to Rowena Duncum

Rabobank analyst looks at global urea prices and tells us why consumers are paying more for Easter Eggs this year - exceptionally high cocoa prices.

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Episode Transcript

Speaker 1 (00:00):
We're after Sydney on the Country. Now did we find
Paul Jill's agricultural analyst with RABO Research out of Rabobank.
Good afternoon, Paul, Welcome to the country. Hi, how are
you doing very well? Thank you? Now this is your
debut on the Country and in the ad rank you
and I were chatting. I was asking where your accent
is from and you're not a mile away from where

(00:20):
I used to farm in Wales.

Speaker 2 (00:22):
Yeah, no, absolutely so I'm from a place called Pembrokeshire
in West Wales from in the UK.

Speaker 1 (00:27):
And Saint David's the beautiful part of the country.

Speaker 2 (00:31):
Yeah, no, incredible, it really is a lot more rainfall,
but yeah, in the summer it's absolutely beautiful.

Speaker 1 (00:37):
Yeah, So how do you go from Saint David's to Sydney.

Speaker 2 (00:42):
So really I've been with Rabobank for three years, so
I did two years in London and then the opportunity
came up to move over to Sydney, which yeah, I
thought was a really really good opportunity and decided to
go for it. So that was really how I ended
up over here.

Speaker 1 (00:57):
Fantastic. Hopefully one day you'll end up in New Zealand,
which is way better than Sydney. But anyway, I'll get
on with the matter at hand. You've written a report
looking at global urea supplies and prices. I mentioned this
with our UIST farming correspondent Todd Clark last week. He
was saying, you know, urea prices had actually come back,

(01:18):
which was helping farming margins and things like that. What
are you seeing and what's your report all about?

Speaker 2 (01:25):
Yeah, so, well, firstly, i'd say that that is absolutely correct.
We have seen a bit of an improvement in prices.
But nonetheless, if we look at urea prices against their
historical averages, particularly against the levels that we saw before
we had the initial invasion of the Russia Ukraine War,
those urea prices are still about forty five percent higher
than those levels. So really what we're seeing as farmers

(01:45):
are having to deal with these these more inflated urea prices,
and that's been the case for quite a while now.

Speaker 1 (01:50):
Yeah, what else does the report show?

Speaker 2 (01:54):
So effectively what it shows and really what we do
is we take a look at the global market from
a sort of bird's eye view, and effectively, what it
tells us is that we are still continuing to see
a number of supply issues in the market which are
really impacting and driving up prices. One of those key
areas is China. So we've effectively seen China drastically reduced
their export capacity, so they're trying to protect local prices

(02:17):
for farmers. So because of that, they've effectively stopped exporting
as much as they typically would and because of that,
we've just seen prices titan off the back of that.

Speaker 1 (02:26):
What does New Zealand typically get our yuria from? Which
countries do we export from the most?

Speaker 2 (02:33):
Yes, and we're typically important from Middle Eastern countries and
actually a lot of the countries that we speak about
in this report, they're not necessarily direct suppliers to us,
but nonetheless it's actually these specific countries that we are
seeing some supply issues. For example, China, were also seeing
some issues in Iran in Egypt that's impacting global prices

(02:53):
and it's having a knock on effect for US. So
even though it's not necessarily our direct supply chain which
is experiencing issues, we're still seeing issues in that global
market which is actually having a bit of an impact
on our pricing.

Speaker 1 (03:05):
Here is the key weed dollar having much of an
impact as well.

Speaker 2 (03:09):
Yeah, so absolutely, and this is something we've flagged them
in the report that because we have seen that weakness
in the keyweed dollar, and because we are very much
reliant on imports and we talk about fertilizers, it really
means that when we have that weakness, then that inflates
prices as well, and our expectation over the next twelve
months is really a continuation of weakness in the Keywied dollar.

(03:30):
So from that side, it puts a bit of a
limit on potential downside when we talk about imported products
like fertilizers.

Speaker 1 (03:37):
One thing I've also noticed of difference in price this
year compared to last year. Paul and I heard our
sister station here at the country the hits Danta and
therejus through the wall there from our office here, I
heard them discussing the price of Easter eggs this morning.
They are significantly more than what we've seen. What's the

(04:00):
the global price of cocoa doing it must be having
a mix of.

Speaker 2 (04:03):
Impact, yeah, absolutely. And you know, slightly different topic here,
and this is really one where we certainly have seen
some big, big volatility in recent years. So if we
cast our mind back to last year, we saw coco
prices reach a record high. There were three or four
times above the typical average you'd see cocoa prices trader.

(04:23):
They have come off those record high levels, but then
again if you compare them to the historical average, we're
still very, very very high. Just to give you an idea. So,
coco prices trade in US dollar terms, typically they trade
around about three thousand dollars a ton. At the moment,
they're about eight thousand dollars a ton, so and that's
actually come off from the highs that we've previously seen

(04:44):
last year. So even though we've seen a bit of
a cooling, we're still very much in a very high
priced environment. So these chocolate companies are probably being forced
to pass on these higher prices to consumers. And that's
been the case for a while now.

Speaker 1 (04:58):
Yeah, well, hopefully it continues to ex does a bit
of a deterrent because my waistline is enjoying the higher prices,
although my taste funds are not. Paul Jewels, agricultural analysts
from Rabobank out of the Sydney office, I really appreciate
your time on the country today.

Speaker 2 (05:14):
Go well, thanks j jerm