Palm Kernel (PKE) Update from ADM for March 2016
March 10, 2016
The PKE market continues to see great caution as a result of the on farm financial situation. While some buying is still occurring owing to pasture deficits in small pockets, the vast majority of regions have adequate pasture following good rains. Granted there is still a possibility of further dryness in some regions this season, but the window is closing and the typically warmest month of February is now all but past.
We know that as a result of cash flow many farmers are cutting back on supplements, but that at the right price (which varies by farm) some continue to use in the same manner as previous seasons. Market prices continue to range from $190 - $205 depending on timeframe. The biggest limiting factor is really the concern about ongoing average pay-out and what the farming system needs to look like at those levels. A positive note is that futures have lifted since the last GDT auction.
The origins continue to be in the low season of production which will continue on for another 1-2 months before production will slowly increase. There is also talk that the El-Nino could result in the first reduction in Palm Production in many years.
Europe continues to produce milk with great enthusiasm. However, famers there are facing similar financial pressures. But as we have mentioned before, often the first strategy to low prices is increased production. EU grains continue to remain cheap.
There continues to be increased demand from non-traditional PKE markets due to the ongoing low prices. Accordingly, these markets will really be the limit to the downside in the market. But they too are getting low prices for their commodity production.
There continues to be abundant supplies of most commodities. The stock to use ratios of many of the main crops are the most relaxed they have been for many years. This means there is less reliance on the forthcoming crops in addition to prices remaining suppressed. The chart below shows that CBOT corn (maize) continues to trade in a sub $4 bushel trading range. At this time, barring a major weather event, low prices are likely to persist for some time.
For further information please contact one of the team on 0800-123-PKE.
This is general advice only. The provider of this advice has not considered any of your personal circumstances, financial objectives or needs. You must therefore assess whether it is appropriate to act on this advice, in the light of your own individual circumstances.