Domestic Price of Feed

IBISWorld expects the domestic price of feed to increase by 0.6% during 2024-25, to 146.8 index points. New Zealand imports a significant share of its feed. Hence, the domestic price of feed is influenced by the worldwide supply and prices of Palm Kernel Extract (PKE), wheat and coarse grains. Although world prices of wheat are falling, along with domestic and Australian coarse grain prices, the world price of palm kernel oil has skyrocketed due to adverse weather conditions and labour shortages in key growing locations like Indonesia, Malaysia and Thailand. Furthermore, the New Zealand dollar has depreciated over the previous two years and the lagged effect of this is also inflationary.

PKE prices spiked at the end of 2019-20 due to production delays in Indonesia and Malaysia. The price continued to surge over the two years through 2021-22, due to labour supply disruptions caused by the COVID-19 pandemic as well as adverse weather conditions. Palm kernel oil prices plunged over the two years through 2023-24, on the back of improving supply conditions. However, world wheat and grain prices skyrocketed as a result of the war in Ukraine 2021-22 and 2022-23. Despite a drop in 2023-24, they remained substanitally above pre-war levels. Rising transport costs due to surging oil prices and a weakening New Zealand dollar placed further upward pressure on imported feed in New Zealand. Additionally, weather events like Cyclone Gabrielle have resulted in loss of feed, elevating domestic feed prices as supply shortages are exacerbated.