Protein Markets
- Good rainfall forecast across northern and central Brazil this week. Argentina/South Brazil and Uruguay all forecast dry for the next two weeks.
- Despite recent rainfall in Argentina many areas still showing signs of stress from dryness. Dry forecast will add stress to late growth of crops.
- Pressure continues to mount on Brazilian farmers over deforestation with the first major bank BNP refusing to finance farmers on deforested land.
- The cold snap working its way through the US has pushed natural gas and energy costs significantly higher, curtailing DDG production.
- DDG spot prices remain elevated with a lack of supply and logistics available in the nearby. Markets currently showing a significant inverse in line with SBM and Corn.
PKE Markets
- NZ palm kernel demand feels soft with dairy farmers reluctant to commit forward at current price levels.
- NZ Palm imports (NZ Stats) for 2020 were fairly static at 1.91MMT verse 1.96MMT the 2 years previous.
- Palm oil prices remain strong, trading back above recent highs, currently trading 40% over 12month moving average.
Grains Markets
- US cold snap puts some winter wheat at risk of winterkill. Temps fell as low as -30’C across HRW regions.
- Markets sold off last Tuesday post WASDE report but have spent the next 5 sessions regaining lost ground as the forecast demand destruction is not happening yet based on export data.
- ABARE lifted Australian wheat forecast by 7% to 33.3MMT. Despite this increase it is still below forecasts from many in the trade with average discuss circa 34MMT. Capacity constraints and relative competitiveness globally continues to hold prices up.
- South Island cereal harvest approx. 35% complete. Recent heavy rainfall has slowed progress. Growers will be eager for some dry conditions to make headway before any further rain and quality risk.
- North island conditions turned wet this week with all regions receiving 30-100mm. Crops are now set from a moisture perspective so will now want a dry finish
Currency / Political
- NZD/USD currently trading at 0.721.
- NZ recorded 3 community cases of covid on Sunday sending Auckland into level 3 and the rest of the country into level 2 lockdown. The first vaccine are due to be distributed to front line workers this weekend.
- Freight markets continue to surge, especially in the nearby with premiums in some markets up by 10% in the last week.
- Brent Oil continues to trade over $60 with recent cuts from key producers and US supply disruption adding support to pricing.
Dairy Markets
- NZ MKP for 20/21 season currently $7.34/kg/ms and $7.07/kg/ms for 21/22 pre GDT auction.
- The latest global dairy trade auction was up 3% with WMP up 4.3% to an average of USD3615/mt, surpassing 2016 spike and now the highest price since 2014.
