CSB - Stu Davison - GDT

Stu Davison SENIOR MANAGER, GLOBAL MARKET INSIGHTS - out of HighGround Dairy recaps the latest GDT results.

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Episode Transcript

Speaker 1 (00:00):
From the cricket field to the cow shed. It's the
Country Sport Breakfast with Brian Kelly on Gold Sport.

Speaker 2 (00:06):
Seven eighteen joining us on the show. Now out of Chicago.
Senior Manager, Global Market Insights at a high Ground, Dari
Stu Davison, Morning.

Speaker 1 (00:15):
Stoop, Good morning. How are we getting on after this
ripper auction?

Speaker 2 (00:19):
Oh? Absolutely brilliant. Before we touch on the auction, you're
in Chicago. What's the feeling like? It is election day
in the US. What's the feeling in the office like
over there?

Speaker 1 (00:28):
Yeah, there's a real buzz in the office today.

Speaker 3 (00:30):
It's definitely front and center everyone here, and you know
it's all across the news channels and across the news website.
So it's hard to get away from, to be honest.
But yeah, we await the results and see how market's reacting. Honest,
we think that's gonna be a fever bit of volatility
come everyone's way this week.

Speaker 2 (00:47):
Yeah, I'm sure there will be. All right, we'll talking
about markets reacting. How about the global dairy trade plus
four point eight.

Speaker 1 (00:53):
Up, mate, unbelievable. No one expected it to move this far.
The futures markets a little bit wrong foot it they
had the direction right, but they did not get the
scale correct.

Speaker 3 (01:04):
So you know, four point four percent move on homwalk
powder to push us to three seven hundred on the
index is incredible.

Speaker 1 (01:11):
But there's a real big explainer behind this too.

Speaker 3 (01:13):
And we only just got the data overnight, so it's timely,
but we wish we had it, you know, six.

Speaker 1 (01:18):
Weeks ago, and that's China.

Speaker 3 (01:20):
China's inventories of homwicpowder are significantly small, so sort of
the smallest I've been since October twenty nineteen, and that
really explains the squeeze we've seen at the moment too.
So China and they're doing some heavy lifting on homicpowder prices,
trying to make sure that pipelines and volumes are available
for them to consume as much as they need. They're
very short at the moment, which explains this massive pop

(01:44):
that no one was expecting.

Speaker 2 (01:45):
I was just going to say, nobody expected that one,
and you basically put it down to China coming back in.

Speaker 1 (01:51):
Yeah, we're China bought.

Speaker 3 (01:52):
You know, they've been pretty consistent over the last four months,
buying at least half of the overall auction. They did
the same again this time, and they were the biggest
and homic powder and the biggest in skim and butter
and AMF has per usual, but they were definitely pushing
prices and just hearing the chatter out of China as
well as the market data we'll finally got our hands on,
it all comes together and makes sense. You know, China

(02:14):
was the driver a little bit of other regions as well.
So Latin America was in there pushing there a bit
short on milk and you know, looking for cheaper product elsewhere,
so they were in there and jumped compared to the
last couple of options.

Speaker 1 (02:27):
But underlying all of this has been Chinese demand.

Speaker 2 (02:30):
Did a big jump in butter, wasn't there.

Speaker 1 (02:33):
Oh, the milk fats have just gone crazy.

Speaker 3 (02:35):
So we saw a little bit of action on the
futures market in the last two weeks, which is you know,
like a bit of a smoke signal to what's going on,
but we never see the real results until physical and
so that leap fat six nine hundred butter for New
Zealand is impressive, but just speaks to how tight the
globe is on milk fat at the moment. You know,
we see regions globally pushing out a little bit more butter.

(02:55):
We've seen America's data recently increasing butter production dramatically. New
Zealand's but and AMF productions like full noise. But the
market just is desperate for product, and as we can
see by the eight point three percent move, the buyers
are willing to pay for it to get their hands
on it.

Speaker 2 (03:10):
The only one with the minus alongside was lactose.

Speaker 1 (03:14):
Yeah, and if you're a Kiwi farmer, that's a positive
for you.

Speaker 3 (03:17):
The cheaper lactose is in the world, the cheaper it
is to get to New Zealand, and the less it
takes out of the cost of production for the New
Zealand milk price.

Speaker 1 (03:24):
So that's that's a real positive for Kiwi farmers out there.

Speaker 3 (03:27):
So you know, the forecast for milk price in New
Zealand has a we had like six weeks ago, we'd
penciled a forty five cent cost of lactose. As these
prices stay depressed, it's like five cents off my forecast already,
and it could go back under forty cents per milk
solid for a lactose cost. So that's that's a win
in terms of New Zealand farmers getting a little bit

(03:48):
more in their back pocket.

Speaker 2 (03:49):
Stu, thank you for joining us. Mate. Enjoyed the election
day over there and that's a great result on the
global dairy Trade auction.

Speaker 1 (03:56):
Well do wish me luck for the rest of the
day and we're talking in two weeks time.