IFCN Workshop and Outlook

Hello everyone it's Friday the 9th of October and welcome to episode 312 of the kite podcast with me well Evans and me Ben Eagle. We're going global on today's episode and reflecting on what happened at IFCN's supporter conference. We'll be exploring the dynamics of play present on global dairy in terms of supply, how this compares in a UK context and what the economic picture is for key dairy producing countries around the world at present. To discuss all this we are joined by Melissa Kochich lead in product development at IFCN. We're also joined by podcast producer Becky Ray and everybody's favourite dairy market analyst Chris Walkland. Chris over to you for the milk market report, where are you this week? Well I'm sorry to say I'm bringing you my report from the doldrums today. That's the metaphorical ones that is I'm not in a boat stuck somewhere although I think there will be people out there who wish I was and I'm there because the doldrums seems to be where the fat market is right now especially not skin milk powder or way the sore away way. I don't think the message is getting through to farmers but the global fat market continues to deteriorate butter and cream are on the slide big time and so to our cheese prices in Europe and this skin milk powder really that's good well it's only 80% of its highest price over the last five years so there's a bit to go before we can say it's brilliant I'd say. So if you think your milk prices are going to keep increasing through the winter and a lot seem to do then you need a reality check. As it stands now some milk price maybe not all are more likely to fall than hold. There is undoubtedly a view out there among some farmers that prices are on the rise for the winter and will all be okay from now on. Don't assume that will be the case. So what's the news this week? Well firstly there was a bit of good news on the GDT auction it increased modestly overall with a gain of 1.2% with the average price crossing over 3,900 dollars and 3,500 euros that's the highest price since June. Inevitably skin milk powder posted the highest gain of 4.3% to nearly 3,430 euros and Arla's skin powder sold for 3,500 euros and that's the highest price since mid-2022 but she's had a hard time of it with mozzarella and cheddar both down 3.5% to 4% and butter dropped a bit overall to 4,230 euros which is its lowest price for 3 years. However EU butter dropped 270 euros on the previous auction to average 3,870 euros for the next 3 months and this reflects the general negativity in EU market sentiment to put that price in context I would love it if the butter price was 5,000 euros and even then it wouldn't give a particularly brilliant milk price. So all in all I reckon the commodity is converting to a UK milk price equivalent of around 30 pence. In Europe duck butter lost another 50 euros that's four weeks of 50 euros a week drop on the trot taking the price down to 3,900 euros but I'm seeing bids and offer closer to 3600 euros are not least from some Irish sellers buyers are just screwing sellers so it seems because of the stock situation and still pretty strong milk flows which I'm sure we'll talk about later. Cream I've been told is also down I've heard as low as £1.50 to as high as £1.58 so that's about 20 pence down on its recent peak it was at 175 and it needs really to be 195. So to this week's futures butter is down for the fifth week in a row by 140 euros over the next six months to 4145 euros that's the lowest for a very long time although we did have a few contracts around that level back in the summer for a bit. In contrast EU skin powder increased 55 euros to 3500 euros that's the same prices are as gdt skim. So basically over the last couple of weeks butter is down to 50 and skim is up to 50 and the milk price they convert to is still between 29 and 30 p. Cheese is slipping to my pdf mile prices at 3,400 sterling but under pressure as I'm hearing some traders talk at 3,100 sterling for Irish and EU prices are in between 3,2. Mature is around 4,000 but again I'm hearing Irish is a couple of hundred quid cheaper and prices will not hold as they are with EU prices especially Irish much lower than hours and to further reflect the negative sentiment the EX cheddar price suffered its first drop in eight weeks it wasn't a lot but it was symptomatic of prices flat lining or even falling and mozzarella well that fell for the third consecutive week on the EX and is down to 29,30 sterling that's an awful price and will return milk prices well below sustainable ones for this winter. UK MOTS is a bit higher but the danger is it will be dragged down by these low EU prices. Finally spot milk is in the low to mid 40 pence range so there you are things continue to go the wrong way other than skim milk powder but while that rises butter falls and the milk price effectively stays the same. Hopefully Melissa and Becky will have a more encouraging outlook from the IFCN conference that I've just given you especially on milk flows frankly they need to tighten before the end used buyers start to get worried about supplies and prices moving the right direction again but the question is will the traders take note of the milk flows or the stock situation take it away everyone. Goodbye. Thank you Chris leaving us with a lot to ponder today. Melissa welcome back to the show please can you introduce yourself and explain what IFCN is and what it does please. Thank you so much it's going to be back after one year. I'm Melissa Kotish I'm a lead product development in IFCN and I've been here for around seven years now. My role does sit somewhere between the dairy market analyst, farm economics, farm structure and of course product development so a big part of my work is turning data into insights that companies are using. Of course with all that I also had a list of roles during our annual conference as well from presenting moderating panel and also overall supporting the organization of it and what IFCN is we are a global dairy network so we combine globally comparable data with the knowledge of our researchers and industry experts from all around the world. Our core is a milk supply, milk prices, washing out farm economics and dairy demand as well so for simply we help people across the dairy value chain understand what is happening, why is happening and what it could mean for their decisions. Okay tell us about the conference and in terms of what you discussed and who was in the ring. Yes IFCN conference was a great success so in team we're still celebrating this I have to say already one week after it is over it is our flagship event and it basically summarizes what IFCN is all about. We had more than 200 people in Parma for four days coming from the whole their world and for the first time. we had our both networks together. So our network of researchers and company representatives together in one event. So our researchers are country, dairy experts. They come from universities, from dairy or other institutes, private consultants, even farmers, who are the backbone of our data. And on the other side, we have a network of companies coming from the whole dairy industry. So from processing, farm input, feed, technology, machinery, genetics, animal health, so up to the finance and the dairy institutions as well. What was very interesting for me is that more than 40% of participants have described themselves as dairy legends with 20+ years of experience in their industry. So if you didn't know something about the dairy, this was exactly the place to learn. The topic was the future of global dairy with efficiency, innovation and cooperation in volatile market. And we looked from this from several directions, through the global supply and demand balance, through farm economics, through efficient sustainability, through company cases and how today contributes to increasing efficiency across the dairy chain, through researchers, perspective and specially focusing on a different regions like Latin America, Africa, Asia or New Zealand, as well as Europe. And with this, we were trying to connect this global picture and especially to look behind the different pangais. Okay, so did you say dairy legends? Is our leaders quite new so as well? Yes, so we had quite a lot. We should we should rename the podcast to dairy legends, dairy legends. So we had categories from dairy rookies, dairy pros after dairy legends. So I'd rate of dairy. Brilliant, brilliant. The impression. Just tell us a little bit more about those main themes. What did you find most interesting at the conference? We started a conference with one very strong message and that was embrace volatility. And over the next three days, we were talking about that, how the volatility is no longer something we can treat as a temporary deviation. We have a climate, we have geopolitics, input costs, consumer behaviors, and they're all moving at the same time, sometimes in the same direction, sometimes in the opposite direction. So dairy sector, what it really needs is adaptability and resilience. The second topic was about the efficiency and it's not simply about producing more milk. It is about how we use resources, feed, labor, capital, natural resources in a more effective way. Because what we thought in the past that were somehow natural competitive advantages of the regions, the gap is is closing. We don't look at the labor simply as the difference is in the wages because the labor issue is growing in all regions. The access to feed and the good quality feed is there and covering the gap between what consumers need and demand and supplying this needs to be closed. And of course, the third one is about cooperation between the farmers, processors, researchers, technology companies as well who all control this, but only the part of solutions. So this is why the cooperation and collaboration is so much important. And what I find very interesting is that there are somehow consensus in the room that data are creating the value and can help lead these decisions in the right direction. And more important conference wasn't only about what was said on the stage, which was very brilliant, but it's also some very valuable conversations happened during networking hours in the evenings during coffee break lunch. So really to understand what bothers industry today? What does one data point which we come as say on the stage actually means for them and how do they perceive the market development for their own role, for their own part of the industry? Yeah, it's amazing how often that happens at conferences. Those conversations are so important, aren't they? Becky, you were there, but what stood out for you and what were the key take home messages for you? The conference is always so good as an exactly for the reason that you've just described that the content to start with, but the networking and having those informal charts. I find it really useful. I was just looking back, the IFC and Crew sent out the slide decks and I've just counted over the three days, there was 700 slides. So forgive me if I miss out a name check or a mention on something that I might have seen and thought was useful, because I suppose you still digested it. The volatility piece that Melissa mentioned is it's good to contextualise, isn't it? So for me, that buckle up for volatility was one of the key themes of the conference. So we did keep coming back to it in terms of, and it's really exacerbated, isn't it? The swing that we've seen from 2025 to 2026 in the UK and even if you get 24 in front of that as well, and it's really easy. When you listen to Chris and where the milk markets are at the moment, it's really easy to sort of spiral around in the bottom of that volatility cycle. Whilst maybe not remembering that we will come out of it, it's just if and when sort of thing. So it was a good check on, we are capable of riding the storm from a volatility perspective. What the data that IFCM presented did show is that actually some of those cycles are getting more extreme. So higher highs and lower troughs and shorter. So we used to have this sort of three to five year dairy cycle, but that now seems to be short, shortening a little bit to sort of 18 months, three years type cycle. There was a couple of really stand out bits for me, really, I love and already speak to sort of Eric Mayer from High Ground and we've had Eric on the podcast in the past. The US is really interesting at the moment and has been for the last sort of two years in terms of what they were doing. Some of the conversations and some of the stuff that he presented on this sort of shifting output or the sustained shifting output. So they were sort of five, six, seven percent year on year up last year and then have sustained another one and a half to depending on which quarter this year. So their milk output and still the acceleration that they've seen in their cows genetically in terms of fat and protein percentages as well. So that doesn't seem to be a plateaued a little bit but is still keeping momentum. I think that the really stark one and when you think about what Chris has said in the intro was I looked back at the number so the US had a big swing from being a netting porter to a net exporter of butter in 2025 and in 25 their total export was 55,000 kilo tones and I looked at their half one data and they've already exported 40,000. So when Chris talks about the fat market really struggling to lift, those guys are putting a lot of product on the market and the other sort of informal discussions with several processes and traders in the room was exactly that. We do have any data on national or international stock levels but the discussion was that you know with where the markets have been in volume and value there's still a lot of stock that will end up coming into the market and will keep the price of due not just on butter but on cheese as well. As opposed if you want to try and make it a little bit cheerier, income from beef is playing a huge role in terms of farm income and cash flow and has probably been a bit of a save you for world milk producers not just from a UK perspective so we've seen that in our dataset but on a global basis that's the same. And I suppose in terms of recovery as Chris suggested at the end of his report, one of the things that we need to happen is milk volumes to ease. We've seen that in the UK, we're seeing that in other European territories and milk zero or comment as we go through. So we are seeing milk volumes ease off but still globally you know we're still up here on the year so until the markets catch up or until the farm catches up with the market it's there's a little bit more storm to weather yet I would say. Yeah the no end use buyer is worried about milk flow and the double edge sort of the beef income is of course it's keeping more cows in the states and keeping the US production up. you mentioned the US butter exports from the US to put that in context with that, it's about a thousand quid cheaper than our butter. Yeah. And whilst Debbie you have that differential and that's what we saw wasn't it in 2025 when the US butter came into Europe with such a price differential that it was worse the tariff and the hassle of bringing it onto the continent so unless you needed specialized butter and I sat next to Roberta Brasalis at dinner on one of the evenings who are the oldest dairy business in Italy I think and proud butter makers as well as Granpedana cheese and you know he was professing the regional delicacy of his butter in Italy but in reality there's a lot of butter that goes into processing a lot of fat that goes into processing that doesn't need to be European origin and so when you have such a value and volume available at it that's where it becomes really really trickier. Jumping to the end of the value chain those are session on consumers it was called dairy demand in the future why not to forget the consumer perspective Malita coming over to you on this but what do you think we learned from this? So what was very much discussed was exactly what Becky was saying about the whole demand for protein and protein craze which we have at the moment which is definitely driving way prices and S&P prices and as long as there is incentive for S&P prices and production you will get butter as a byproduct so in some way there was a message that butter has become a byproduct of S&P and way it has become a byproduct of cheese. In this end there is quite an encouraging demand signals also if we look at the past trends cheese did grow in a dairy trade in all the past trends there is increasing demand for fresh category especially from the U.S. as well so there are already quite a few other plans which are being expanded or built to cover the fresh category as well and one interesting conclusion also from our panel discussion was that with the protein demand we have an increasing split in the milk components so this was quite challenged by an Italian processor where there is opinion that milk should still be looked at as a whole and now let consumers think that milk is now fat and protein that there is a whole list of ingredients and micro ingredients which are also inside and this is of course creating the whole market challenge for us as well because the prices are only in the opposite direction and there was one more session which was quite interesting about the demand and perception from the consumer side is that the dairy probably has less of a problem when it comes to products but more over how we are communicating the value of it and somehow changing the interpretation from dairy production is we produce X-million or later of milk to we provide X-billions of calories proteins minerals to billion of people every day and this is the method that needs to stick with the people and also with the policymakers because we also had a discussion and a panel discussion through different institutions that somehow policymakers operate with the way less facts compared to industry which is very much data driven and this creates the gap in the dairy industry and then of course whatever comes to the consumers it's quite confusing. The consumer session I found super interesting to imagine and there was a whole piece that the presenters set up about the difference between or the misinterpretation that more information means better understanding and you know actually we've given the consumer more information and the general public more information about health and nutrition than they've probably ever had before but are we clear that they understand why they're consuming what they're consuming and then he went on to talk about how much time and space we've got to talk to people so how people absorb information so a lot of the social media type stuff but then evolved the discussion into how because of the type of lives that the consumer lead now i.e you know busy and more demanding other requirements of them that nutrition as a functional thing to do actually has less brain space to do it and he put a concept out there that in not in the not too very distant future that you know people will be typing into AI I've got the kids to feed and I I need 20 grams of protein what should I eat an AI is then going to come up with the I've ordered this from you know Uber Eats I've delivered it for six o'clock and you know here's the recipe to make it and one of his challenges to us in the room as the dairy sector is what information are we feeding the web with the AI will draw upon in relation to dairy products to inform that decision to make that work make sure that there is an animal protein more broadly is positioned right if that's the world that we think we're going to live in it was super interesting yeah I mean that is fast night isn't there as we squeezed more and more it's I mean I have no idea how anyone can be squeezed more and more in their time to be honest still that I completely take that point and then how that feeds into AI how that feeds into I suppose taking those decisions away let's see let's let's turn to the global picture as a whole in terms of supply can you just give us a your overview of the general dynamics at play when we touched on this in certain places but give us give us that big picture first of all yes so definitely we are coming out of the period of a very strong supply growth 2025 was exceptional and we have the data to prove that and this was really valid for a worldwide so all drivers were quite positive and encouraging male supply and this continued also early 2026 and so far in the first nine months we are estimating the additional 10 million of tons of milk globally of course excluding any Pakistan which are adding on top of that as well but definitely the growth since this summer is slowing down it's losing its momentum with the heat waves in Europe they have affected both milk volumes and milk components large growth is also affected and this will have a little bit longer consequences for winter feeding and of course margin pressure is there so purely looking at the margins we have calculated around thousand euros let's margin for cow this year compared to the last year so if we're looking at the average is margin is still not that bad we have seen worse but just the sentiment that we come from very high period to this level is is creating a bad bad situation all in farmers as well and what is also affecting it is immediate cash flow because last year they were buying for two hours at one price this autumn it will be way higher so at least 30 to 40 percent higher prices energy prices have already exploded and with the feed both forage quality and quantity was affected and now with the feed inflation the question is how much can be substituted so supply is going to go into the slower moment and on top of that if we look at the global south weather risks are increasing even though New Zealand Australia Latin America are still producing quite a bit of a milk coming is El Nino and what is described by some weather forecasters is strong El Nino and even Godzilla El Nino which we haven't seen in a very long time so the last strong El Nino was in 1516 so now it might be even worse and whenever we want to know when was the last El Nino we need to open one chart for example milk production of Argentina and we immediately see when was the drop in a supply and we can really detect easily what was the the weather concern over there this will come probably starting from November December to early 2027 so we have still built quite a lot of the milk globally there is still milk in the system as what was mentioned by boatbeck increase before and commodity stocks particularly for butter are there I wonder let's say if you want to just talk a little bit about you know people who get snapshot listeners will get snapshot of some of those European territories in terms of milk output and we're a bit of a tipping point out we now in terms of year on year gross by month is starting to come parity and negative but that's on the back of exceptional European volumes, this time, multi-two ago, where it started in 2025. So actually in real terms, we're still 4, 5, 6% upon two years ago at the moment. But some individual territories in Europe that people are just familiar with, you know, what's going on in France and Denmark and in terms of milk output. Because we've talked a lot about those individual territories in the past on the podcast. Yes, you are quite right. So the last quarter of 2025 was very strong and we now get into the comparables with the strong base-year effect. But France was definitely one of the first countries which was heavily impacted by a heat wave. So in the end of June, they had somehow a triple heat wave and especially impacting the main producing regions like Brittany and Normandy, where they have seen a strong drop in the milk volumes from week to week and then a bit recovering because once cows adapt a bit to the heat, they start producing again milk, but the milk component drop is still visible. When it comes to a larger producer like Germany, there was still quite a positive effect. So there was a week when there was a strong drop, but then it recovered a bit and still in some way positive. So we are floating around, probably 1 to 2% year over year. Other countries like the Netherlands or Denmark are also quite positive. So there is still not a negative impact that is yet visible, but it can be that it is coming. When we were looking at the Germany, in terms of the number of dairy cows, Germany for over 10 years was decreasing number of dairy cows. But since 2025, we have stability and even slight increase and this was holding also during 2026. Only now during summer we have seen that the calling rates have started to increase slightly, of course, last year what we were assuming and putting as a hypothesis that quite a few farmers were delaying calling because milk prices were amazing and, of course, any additional call and effort that you can get was bringing even more money so that they were really trying to keep as many cows as it was possible. And now during the heat waves, they were likely to get rid of the less productive cows and especially with the concerns about the forage and the winter feeding quantity of the forage, they might have made a decision that this postpone calling is time to have. How much is this really going to translate and if we are going to really have a drop in the milk supply, it's still up to see because some farmers might decide to go out of it faster, but as long as they still had feed stocks from the previous period when it was still cheap, they would try to produce more because as mentioned, if dairy margins and milk prices have dropped, of course, it is trouble, but it also means if I produce less, I will have even less milk revenue. So if I try to produce more, I can maybe keep some of my cash flow as long as costs are bearable. What can we learn from this in a UK context, Becky, based on what Malice has been saying? Well, we're in a very connected market, aren't we? And so that's why we're seeing what we're seeing at the moment and we've been through a similar cycle and I was talking to some of the team. You really have to take the longer term context of milk volumes that looking at year on year, so the numbers at the moment, week on week will be, you know, we're back roughly two and a half percent from the same week last year. But that was from a position of been at this point in the year, five percent up on 2024. So contextually, there's still a lot of milk around in compared to two years ago, to although it sounds, and I think to Chris' point earlier, this is where there is a little bit of, I'm not so confusion, but a mismatching interpretation between maybe farmers, processes, traders, that when you say numbers like were two and a half percent back, that still means were two and a half percent up on the milk volume that we had in 2024. So in terms of supply growth and demand growth, we're still a rough parity with that year on year, global demand growth that we say. It's, milk volumes are easing, and that is going to help us just before we get in too much of a negative spiral. You know, we're past the tipping point, I would say, and now in terms of milk volumes. So we're in the bottom and we're, you know, and that's why we've seen some of the more prices start to go up. That we've had a little bit of a, not false data because it matches reality, but the heat wave, actually, this summer has helped us take out some milk volume, but actually with the bounce that we've had in the weather, and not that I would wish us not having had the rain that we needed, but that's actually bounced milk volumes again from a GB perspective. So we're not doing too badly at the moment. Malice had took us through those main themes right at the beginning, embracing volatility, efficiency, and how we use resources, the labor assured, how about screwing everywhere, and then cooperation as well. I suppose that all comes round to the wonderful buzzword, resilience becky, what does it, we've been practical, does it mean in terms of that, the Euro the panel, at the conference, about dairy resilience in volatile times? Well, and it's interesting. My first reflection is we at Chi and the UK hosted IFCN in 2023, and we hosted it in Chester, and I chaired that conference with IFCN colleagues, and I remember at the time, we were talking about a resilient dairy sector in the context of a defense position in against non-dairy, and we were really worried about the consumer turning away from dairy and going for alternatives and losing relevance, losing space, losing, and so the frame of the conference in 2023 was about positioning that sustainability piece of we're meeting the environmental needs of the consumer, so don't ditch dairy out of your basket. The panel that myself and Eric Mayer and Tom from Rabobank and Roberta Gonzales sat on was the very end of the conference. It was a tough slot. But not once through the three, four days had anybody spoken about defending dairy. All of the conference was about that the world has got a demand for dairy that we've become more relevant as an animal protein and as a protein supplier than we've ever become, that the upside of way and the structural change in consumption is really good thing that moved towards natural eating. So my very first sort of take home was if you wouldn't prove a resilience in three years, the diolous swung from talking about defending dairy to being uber relevant. So, you know, case in point one, it felt really horrible at the time and I know both of you will and Ben were, you know, did a lot on social media at the time in terms of, you know, defensive farming. So if you want a symbol of resilience, if you talk really broad or sort of less broadly at a individual business level, it's all the stuff that we know. Like, none of this is new stuff, isn't it? And it's balancing that financial resilience with environmental resilience, which has come into real sharp focus over the last couple of years with, you know, the resilience of the individual with the resilience of the cows, you know, so how are we, how are we breeding cows that are better able to cope with heat stress or how are we growing crops that are better able to cope with heat stress or how we were building resilience into the business on a whole basis. And it was really interesting. There was some talks on various technologies throughout the couple of days and innovations that and various countries. And was it Vietnam, Malaysia, where they were talking about temperatures above 48, I think, degrees C and how to money. And that's where that cooperation, collaboration piece which always seems a bigger word than it delivers sometimes. But that's where that, you know, learning from other industries or other parts of the world or other people where we might have different resilience challenges, but we've probably got something to learn from each other. So there was a really great piece by the guy from Vietnam, who's near my, I forget, but, you know, looking at sort of heat stress and heat abatement and, you know, that they pulled the cows out four times a day into like a 40 minute, I don't know, cool. Almost like a bit of a spa, rain, spa thing to cool the cows down because basically cold temperature starts to rise that they can't do enough mitigation. So literally pull them out of the sheds into a what I, what he showed was like a massive collecting yard with water and fans. And then he talked a lot about water infrastructure and, you know, that how important that was obviously so. I've got, I've just told you the stuff that I really enjoyed, I can't remember what the question was, but. There was so much 700 slides four days, yeah, I came home and, and did not a right lap. You sound like, you sound like Hermione in Harry Potter in her first potions class, an excited little girl bouncing on a seat with her arm up all the time. I've been questions. Do you know that's the second time that somebody's reference Michael masters will love that listen to this podcast this week because he called me Hermione. The other week for something else. So. Another Harry Potter reference. Okay, 48 degrees has thrown me a little bit. I can't even, that's a, that's a Welsh person, I can't even imagine that. I think you might see me off. Becky, we've seen some price moves for October and November. But I don't mind everything Chris talked about at the beginning. Is this a turn of the market? Do you think or not? Oh, this feels like after all that excitement you're making me sit back home and sit on my hands. I think Chris's comp introduction was very comprehensive and I think you probably got the answer in there. I think those at the bottom of the market needed to move up a little. But there's been some very big leaps and with the way that things are looking at the moment. Yeah, it's tough to see that we should be expecting big jumps, certainly side of Christmas and. I think the one element that we don't know and is impossible to really get a grip on is the competitive element of milk pricing. You know, we can talk about the commodity prices and how that should theoretically link in with milk prices. But processors like to be and have to be competitive with their neighboring processes. And you can see that in the mozzarella price from time to time. The mozzarella farm gate price, the milk from mozzarella is much higher than the returns from the commodity simply because they have to be competitive with their rival processes. And that might be a big factor, a big driver, this quarter four to maintain prices for some higher than the commodity prices would suggest. And that is the strength of GB dairy in particular, Chris, isn't it? Is that actually we've got quite a diverse one portfolio of products and the sort of base of liquid milk market, which is not the same as the international territories where, where would, you know, milk is much to rub up brazilis. Roberto brazilis is discussed, you know, it's the last commodity stand in our butter and SMP. And so we've got the liquid milk market underpinning the fresh liquid milk market underpinning GB and the diversity of size scale and sort of ownership structure in the UK as well. So we've got obviously, you know, co up some of the large co ups, but we've also got a real strong mid ground of privately owned processor businesses. And and privately owned closer to businesses spread over liquid and cheese and specialty cheese markets. So you write to call out graces, we're not, you know, we're not an exporter. We do export, but we're not an exporter driven nation. Okay. So is that a world milk price is lifting at all? Is it is something that's globally driven or not? Yeah. So our message at the moment is that market is building a floor driven by the supply slowdown, but there is a price ceiling due to build stocks and global competitiveness, which is there. So our current also sees quite moderate positive, but moderate. And there are, of course, a major difference between the products and the regions with the protein market being very supportive while butter has been way more extreme by the stocks and the US competitive supply, which was mentioned before. And when it comes to the other side of a demand, we do think that demand can be quite steady, but with increasing inflation, which was started with the energy inflation first, it is not likely to be explosive. So the market will find its balance, it goes into positive direction, but we don't see that the recovery is going to be skyrocketing. You spoke about supply earlier, Malice, that you also touched on demand there, but I mean, if we turn to general economics in in key dairy producing countries, joy and feel free to pick out which examples you want, but can you give us your thoughts on that? Yeah, so many producers globally definitely benefited in the last two to three years. They were good milk revenues, feed costs were quite stable, strong cattle and beef prices were coming on top of the milk income, which was brilliant. And definitely the production conditions from the weather perspective were not limiting so milk just kept blowing. What helped is that there was quite some money being accumulated, which was reducing the debt in quite few regions, which was mentioned before, but definitely in 2026 the picture is changing. So with the war in the Middle East, energy and fertilizer projects are adjusting, it is going to immediately start from now the cash flow of the farmers starting this autumn when they start a new planting season hearing Europe and this will be reflected in the production cost in 2027 and especially for feet. And moreover, with the general global feet supply, it is an impressive this year when it comes to Europe, U.S. is also reporting poor yields than they were expecting and then upcoming future supply from Latin America will also likely be impacted by El Nino. Poor engine Europe has lost on both quantity and quality and this will increase the question how many farmers can really substitute this poor quality with the concentrates if they can afford it with a high feed inflation and if milk revenues are going to allow that so that milk supply can still be somehow more resilient or they need to cut short or they would need to get rid of less productive cows so they can still feed their. Best performers and it's really up to measure so. In general, the farm economics in Europe this year is worsening and in 2027 it will be reflected even more in the production cost. For the U.S. they were playing already with the lower milk prices even last year, but thanks to the cattle returns, they were really balancing their income. Their cattle returns went from 10 to 15% up to 20% of their total farm returns which is brilliant in New Zealand. Funtera promises for the last three seasons were great and even this season it's not that bad when they opened so their main concern is going to be pasture conditions starting from November December, but they also when they're at their peak of the milk supply so I really think that they started strong in the milk in the new season to produce as much milk as possible as well get the weather conditions allow. And this is where 26 27 economic turns will be worse, but what really helps is that if farmers built a resilience in the last two to three years when the cash flow was quite good. Yeah, best for the long term Becky just bouncing that back to you for the UK context. Yeah, it's a really relevant point isn't it and it and it can sometimes I wonder if it lands say and hope you built some money up one one times a good 22 23 was you know we've seen this cycle before and I think it learns. lessons in 2223. So I think that the general view was where cash was made in those good times that people have reinvested that and had the confidence to reinvest it. You know, we've been talking about the sort of longer term outlook and with those reinvestments hope, you know, you hope comes efficiency benefits that then help the resilience of the business. I think there's a couple of things that are sort of clouding, some hiding, far economics, and I think you've really got to differentiate here between cost of production and what was a long-term profitable business and what might become a cash-stabbed business. The beef income is massively hiding the pain that the milk prices cause into some of those that are particularly those that are at lower end, but even in the average space, so the beef income is propping up the cash of the business, but in real terms that's not helping the business strengths or grow. Costs embedded overhead costs have lifted over the last 18 months have been hidden in milk volumes because we've been washing diluting those out in milk volumes, so actually those actual costs are baked in now, and as we lose milk volume in real terms, then cost of production on a pens-political basis goes up because you don't wash that out, and then the other consideration is where we've been on a long-low feed market for the last 18 months and our feed model price in we talk about milk price feed price ratio. Our feed model price has been running at sort of 262.70, a tone which is basically several feed ingredients that we put together to sort of represent feed price. That's what puts 300 now, but as people drop off contracts that they had forward booked and with where the market is at the moment, you'll see a sort of hockey stick type curve in terms of feed prices going forward, and then if we just look at where the global economics are in terms of interest rates and cost of borrowing, that they're going up as well. So for me, there's a bit of cloud at the moment that's hiding the economic picture of where we are or where dairy farmers are, and therefore I do think it's. I think the industry is structured to get through it, but I think it's going to pick, you know, painful in the short term. Okay, Militia, you led a session out of the conference with a good friend of the podcast, Eric Elgers, met titled "From volatility to vision, dairy market outlook for communicants and beyond." To round off this episode, how would you summarize the outlook? Yes, first a great thing to be with Eric Elgers now on the stage and to share this presentation. So yes, we were covering somehow more short and the long term perspective for the dairy industry, and in a short term, as mentioned before, one summary is that price outlook is building a higher floor, but has a limited ceiling. One of the conclusions with a slowdown in the milk supply, in a way the scarce milk volumes will create a new competitive advantage for those who can still produce milk in the upcoming months. And I was also reminded by one of our clients who is not. because she's doing a marketing intelligence for her company. She got the question from her boss, "Oh, what is with El Nino?" And she actually brought to the story about El Nino earlier this year because we were reporting on upcoming El Nino already in February or March. So in some way we were expecting that there is going to be recovery in the milk price, but fully aware that the supply was way too strong to skyrocket the market. And in a long term, we're quite positive that demand has a way stronger potential to grow than the supply, and back you also mentioned that there is not really a fee or some alternatives will take over the market because the demand for animal protein is quite strong. The regions which are emerging and are going to be center of a demand are growing in terms of the population and in terms of the GDP growth, and also in terms of the changing diet, increasing dairy in their diet as well. So the main challenge which we're going to face are the major importing regions, which need to cover the gap between this growth and a demand and in spite of expected growing supply in those regions, we're still going to need to import quite a bit of commodities there. And overall conclusion is that volatility is definitely going to remain, but it creates the opportunities and the winners are not necessarily going to be those who produce more milk or who have more milk per cow, but definitely the farmers and the producers that use their resources efficiently, who can adapt fast and build this resilience over the time to survive this high volatility, and also to create the most of the value out of every cow and in every liter of milk. Okay, but what an informative episode that has been today, a lot to think about, but that's all we have time for. A very big thank you to our guest Melita Kutchich as well as Chris Walkland and podcast producer Becky Ray. Yeah, thank you all safe for listening as always. Please see the show notes from more information including our podcast disclaimer. We'll be back with you next week, but for now it's goodbye from all of us here.