The Country 21/05/25: Lucas Fuess talks to Jamie Mackay

A US-based senior dairy analyst for Rabobank is visiting NZ and presenting alongside Emma Higgins at several of the bank's events across the country, covering the latest developments in global dairy markets and what they mean for New Zealand’s dairy sector. 

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:00):
So you've heard from Richard Allen, Fonterra's President of Global
Markets Ingredients. What an americanized sort of title that is.
I'm going to stick with the US theme because now
I'm going to chat to a guy by the name
of Lucas Fees. He is a senior dairy analyst Rabobank.
He's based out of Chicago, where Richard used to be based.

(00:22):
Did you two come across each other in a past
life by anyway, Lucas, good afternoon.

Speaker 2 (00:26):
By the way, thank good afternoon. Thanks for having me.
I spent a little bit of time in that Fonterra
Chicago office. I think reflective of Fonterra's global presence, no doubt.
I think I have Matt Richard in the past. But
there's a big office of Fonterra crew there, so there
are a.

Speaker 1 (00:44):
Lot of Fonterra people around the world. You are spending
time with one of my favorite people at Rabobank, Emma Higgins.
She's very smart. She's the dairy analyst at Rabobank. You're
on a bit of a road show around the country.
What are you telling New Zealand farmers?

Speaker 2 (00:59):
That's right, I essentially on Emma's global dairy team with
Rebel Bank investing heavily in the research side of things.
But yeah, here in New Zealand this week talking about
where the US is looking to go in terms of
a dairy and one of the major themes key to
our conversations right now is typically when we consider the

(01:22):
global dairy market, key exporting countries New Zealand, of course,
the US the EU are usually relatively in price alignment,
but we've seen some softer pricing from the US over
the past few months versus the rest of the world
on most products, I think it's safe to say, but
especially on the fat side of things, something like butter.
Two key drivers there that I'm seeing. US milk production

(01:45):
has returned to steady growth so far this year, one
of the few, if only, key exporting regions where we're
seeing that milk production growth. So plenty of supply coming
out of the US right now. And then also, of
course the trade and tariff scalationian that we've seen some
concerns about the ability of US exporters to move product

(02:06):
overseas to foreign buyers. Some buyers typically buying multi month contracts,
pulling back a little bit and buying more hand to mouth.
So between higher supply and questions about exports in the US,
we are quite price competitive on a global scale right now.

Speaker 1 (02:22):
LOOKUS phase with US from Rabobank out of Chicago. Final
question for you, this isn't strictly a dairy question, but
I know you're doing the road shows with Emma Higgins
who's an expert in the field and not only dairy
but also red mate. The US beef cattle numbers, how
long will it take them to build them up again?

Speaker 2 (02:42):
It's we've certainly worked ourselves into kind of a structural
issue here where it will be a little bit challenging
to rebuild the herd. But we do think that twenty
twenty five will be the low for beef slaughter rates
in the US. We expect a bit of recovery into
the coming years, but it's something that's going to be
fixed in the very near term. It will be several

(03:04):
years before we get back to anything that resembles some
semblance of normalcy around that beef production rate in the US. Overall,
though very good news for dairy farmers. There is a
significant revenue draw from beef on dairy cross calves. Of
breeding your dairy cows to beef bowls and of course

(03:25):
eliminating the ability of that calf to join the dairy stream,
joining the beef stream instead. Several hundred dollars. Several hundred
US dollars is what a beef on dairy cross calf
is worth in the US right now. Very significant revenue
for an animal that's a few days old versus one
that you have to feed for two years before you
can see any revenue from her. So interesting things happening

(03:48):
on beef, but positive trends for dairy farmers who can
tap into that revenue.

Speaker 1 (03:54):
Lucas thanks out a Rabbi Bank Adam, Chicago. Thanks you
to I'm enjoy the risky stay in God's are good.

Speaker 2 (04:00):
Thanks for having me.