Latest / The SME Stream / The Country 11/12/25: Emma Higgins talks to Jamie Mackay

Transcript

The Country 11/12/25: Emma Higgins talks to Jamie Mackay · The SME Stream

• 0:00
  Speaker 1: Affectionately here on the country, I call her the Christmas Grinch.
• 0:04
  Speaker 1: She bites back about that one. But she is also
• 0:07
  Speaker 1: a RABO Research Senior agg analyst. Her name is Emma Higgins,
• 0:11
  Speaker 1: and she is authored the Q four Global Quarterly Dairy Report.
• 0:16
  Speaker 1: And Emma, I want to start with the sentence that
• 0:18
  Speaker 1: caught my eye, and this is from you, your words.
• 0:21
  Speaker 1: There is an elevated risk that farmgate milk price moves
• 0:25
  Speaker 1: lower across the course of the season, which could mean
• 0:28
  Speaker 1: that the final season payout lands around the nine dollars
• 0:33
  Speaker 1: per kilogram of solid smark. That is Christmas Grinch sort
• 0:37
  Speaker 1: of stuff. Emma, good afternoon, Good afternoon, Jamie.
• 0:41
  Speaker 2: Just the season. Look, I promise I'm not stealing Christmas
• 0:45
  Speaker 2: or trying to like the Grinch, but I am just
• 0:48
  Speaker 2: trying to make sure that farmers aren't blindsided by what
• 0:52
  Speaker 2: could be coming down the pipeline. So perhaps think of
• 0:54
  Speaker 2: me as the Grinch who brings a reality check so
• 0:57
  Speaker 2: that farmers can plan and prepare accordingly.
• 1:01
  Speaker 1: The story about the milk is all about supply. As
• 1:04
  Speaker 1: I had said often in recent weeks, the tap has
• 1:07
  Speaker 1: literally been turned on right around the world, and here
• 1:09
  Speaker 1: in New Zealand. There's just too much supply for the
• 1:12
  Speaker 1: demand out there at the moment.
• 1:15
  Speaker 2: Yeah, absolutely too much milk not enough demand. That's the
• 1:18
  Speaker 2: story globally, and we're certainly seeing it locally as well.
• 1:21
  Speaker 2: With eight gdt's moving lower on the trot and look
• 1:27
  Speaker 2: New Zealand farmers are producing record volumes as well. It
• 1:30
  Speaker 2: is very bittersweet, right because commodity pressures and commodity prices
• 1:34
  Speaker 2: themselves are obviously under pressure due to extra supply, and
• 1:39
  Speaker 2: globally that's the story too. So we think that the
• 1:42
  Speaker 2: peak of global milk supply from the Big Seven what
• 1:46
  Speaker 2: we like to call the Big Seven. These guys are
• 1:48
  Speaker 2: responsible for around eighty percent of global trade. We think
• 1:51
  Speaker 2: that peak has passed, and that passed in quarter three,
• 1:54
  Speaker 2: but quarter four is likely to end up at a
• 1:57
  Speaker 2: very similar level. The good news is that, you know,
• 2:00
  Speaker 2: twenty twenty six should see some balancing come into play
• 2:04
  Speaker 2: around milk supply, but it will take probably until the
• 2:07
  Speaker 2: second half of twenty six for this to emerge.
• 2:09
  Speaker 1: We think so was ten dollars just a fleeting moment.
• 2:16
  Speaker 2: Well, it's appearing that way, just given that we've moved
• 2:18
  Speaker 2: from Fonterra forecasting ten dollars down to nine dollars fifty
• 2:22
  Speaker 2: for the twenty five to twenty sixth season. I think
• 2:25
  Speaker 2: the reality is that what's changed is that we knew
• 2:29
  Speaker 2: global milk supply was increasing, right, farmers in New Zealand,
• 2:32
  Speaker 2: we're making more money, so we and certainly my view
• 2:36
  Speaker 2: was that we were going to see stronger milk production.
• 2:39
  Speaker 2: I think what is shot to the market is the
• 2:41
  Speaker 2: volume coming out of the northern Hemisphere, and it's coming
• 2:44
  Speaker 2: from two places. One is the United States. Now again
• 2:48
  Speaker 2: we did see this coming to the extent that you know,
• 2:51
  Speaker 2: margins were quite positive. But what's been really strong out
• 2:55
  Speaker 2: of the United States is obviously the dairy beef calf income,
• 2:59
  Speaker 2: so that's helping to prop up margins now in the
• 3:01
  Speaker 2: face of weaker milk prices. The real surprise factor has
• 3:05
  Speaker 2: come out of the EU. And what's happened there is
• 3:08
  Speaker 2: that established or had a second flush come through, and
• 3:13
  Speaker 2: that's the result of the blue tongue virus that we've
• 3:16
  Speaker 2: talked about on previous shows, Jamie. That had an impact
• 3:19
  Speaker 2: on carving patterns last year, and so this year we've
• 3:22
  Speaker 2: seen just a change in terms of the milk supply
• 3:25
  Speaker 2: coming out of the EU market's been caught a little
• 3:27
  Speaker 2: bit on the hop with all of this together, and
• 3:29
  Speaker 2: we've got too much milk for market.
• 3:31
  Speaker 1: Okay, final question for you, if you're a dairy farmer
• 3:33
  Speaker 1: listening to this and you're updating your budget as we speak,
• 3:37
  Speaker 1: what number would you plug in there? Would you plug
• 3:39
  Speaker 1: a nine dollars flight?
• 3:42
  Speaker 2: Well, I think we need to be realistic. You know,
• 3:44
  Speaker 2: we do have a situation where it does take a
• 3:47
  Speaker 2: while for those supply taps as you talked about, to
• 3:50
  Speaker 2: be switched off. Now. Typically, if we think about the
• 3:53
  Speaker 2: northern hemisphere, it can take up to six months of
• 3:56
  Speaker 2: negative margins to start seeing those slaughtery really emerge and
• 4:02
  Speaker 2: changes to the supply scenario. So I think we do
• 4:05
  Speaker 2: need to be a realistic. Hey, if we get a
• 4:07
  Speaker 2: balve nine dollars, that's fabulous, But you know, moving into
• 4:11
  Speaker 2: Christmas and thinking about the year heare in twenty twenty six,
• 4:14
  Speaker 2: maybe it might be a little bit prudent to think
• 4:16
  Speaker 2: about a low liment press.
• 4:17
  Speaker 1: Emma Higgins from Rabobank, thanks for your time, Thanks for
• 4:20
  Speaker 1: your contribution throughout twenty twenty five. Always love chatting to you,
• 4:24
  Speaker 1: and you know I'm only joking about the Grinch bit right.
• 4:28
  Speaker 2: Absolutely no, I appreciate the banter we have