We are currently experiencing what is known as “Agflation” for commodities around the world and commodities coming into New Zealand (NZ).
Commodity pricing is heavily influenced by the international shipping prices which we have seen climb steeply over the past 12 months. To provide context, 12 months ago, a 20 foot container from China to NZ would cost approx. $2,000 USD ($2,857 NZD). Today those freight rates have increased 275%, to a cost $7,500 USD ($10,714 NZD). Unfortunately for the commodity market the pricing of freight is carried on to the importer and to the customer, ie the farmers purchasing product.
Alongside this increase in freight, it is becoming extremely difficult to maintain consistent supply of product such as Magnesium and Sodium Bicarbonate, as freight companies have limited space due to less ships moving. Space on ships is also promised to the higher paying companies so stock may be push back by weeks. This is again, driving prices upwards.
In addition to freight influence, we are seeing Stockfeed shortages around the globe. With the latest hurricane in the U.S wiping out some crops, but more importantly logistic infrastructures, on the Mississippi river. This has put pressure on feeds such as DDG coming into NZ, making the availability of product on the SPOT market near impossible to obtain at present.
PKE
The PKE price is remaining high at origin due to continued staff shortages to process the fruit. PKE freight prices are 3x higher than what they were 12 months ago, so this suggests that there will be no ease in the NZ domestic pricing in the near future. There is also a possibility PKE may become difficult to source on the SPOT market if high load out volumes continue due to grass growth being slow off the mark.
Proteins
Soya Meal spot price has, as predicted, continued to fall back over recent weeks. With the U.S receiving much needed rains positively impacting Soya bean plant growth. We expect this market to remain volatile for the next month, but with a downward trend.
DDG price is set to rise due to lack of availability in NZ currently. Contract tonnages are safe and confirmed at present.
Canola that is currently available is NZ grown Canola Meal (rapeseed meal). Because of NZ supplies Canola pricing has remained consistent. Aussie Canola is hard to get presently and at a competitive rate due to the freight issue.
Peas are an alternative rumen degradable protein source that can fill the protein gap in pasture.
Grains
It is well known by now that last season’s harvest of cereals across the South Island were only average, when taken into account all areas throughout the Island. And due to increases in international freight prices, other species ie poultry and swine are buying local supply grains as they are cheaper than imported grain and present. So these two factors are putting pressure on local grain stocks and there is a real concern from DBC that we will run out of local grain before the new harvest gets started.
Unless contracted, there is little to no Barely available on the SPOT market. What may be available will have questionable quality.
For the new harvest this summer, it is anticipated that all grain harvested will start off at higher prices off the back of good local demand and higher growing costs of the crop.
Other Commodities
Soya Hulls are becoming difficult to source with no SPOT sales being offered at present.
Tapioca is limited with no importation of the product into the South Island this season so far.
For more information on the market or to contract commodities please get in touch with your DBC rep about feed options we can provide to help you through these times.
The DBC arrow traffic light system is a good indication on the direction the market price is moving and when the time is right to buy.