April: PKE Market Update
April 15, 2016
The month of March saw an increase in local PKE buying activity as a result of lower prices. During April however feed markets have generally firmed leading to cautious commitment to long term forward contracts. The firm NZD is keeping a lid on additional price appreciation. Weather for the most part has been favourable for pasture growth. While most areas need to build the pasture feed bank before cooler weather sets in there is certainly more feed on hand both in store and on farm compared to recent years. NZ PKE prices have ranged from upper $160’s to $190’s over the past month depending on timeframe and region.
Like NZ the origin market price softened in March but as reported appreciated in April. This is due to reduced palm kernel supply as a result of the dryer than expected wet season. Concern continues to persist pertaining to the impact of El Nino on palm kernel yield and production. In general crushers remain under no pressure to sell at values which remain low by historical standards. The first signs of reduced NZ imports are starting to become apparent and this could keep a cap on prices despite competing destinations showing increased interest in PKE.
Summer should see more European cows outside and on pasture. PKE continues to be at max inclusion in the dairy ration and hence they will most likely take similar PKE volume compared to previous seasons.
Most soft commodities remain soft vs recent years. At this point in time there is few reasons to suspect a major increase in grain values. Accordingly, with high stocks levels prices are likely to remain subdued for some period.The bearish factors stem from USDA’s generally positive winter crop progress survey in addition to burdensome stocks reports. Questions also remain over China’s requirement to import or in fact export corn over the year.