Palm Kernel Demand for Dairy Seen by Oil World Curbing EU Supply

Palm-kernel meal demand has been “unusually strong” this season on growing use in feed for dairy cows in New Zealand, South Korea and China, reducing supplies available for Europe, according to Oil World.

World imports of palm-kernel meal are forecast to climb to a record 6.81 million metric tons in the 2013-14 season through September from 6.5 million tons a year earlier, the Hamburg-based industry analyst wrote in a report.

Prices for palm-kernel expeller, a byproduct of pressing oil from palm kernels, rose to an average $239 a metric ton in Rotterdam in April, almost double the average price in the decade through 2010, according to Oil World.

“The dairy industry in New Zealand has significantly increased its consumption of palm-kernel meal,” the analyst wrote. “We now consider it likely that the EU will reduce imports and that its share of world trade is likely to plunge.”

New Zealand’s imports of palm-kernel meal are predicted to climb to 1.76 million tons from 1.56 million tons in 2012-13 and 1.41 million tons in 2011-12, according to the report. South Korea’s imports of the meal may rise to 900,000 tons from 818,000 tons, while China’s purchases may increase to 560,000 tons from 520,000 tons, based on Oil World data.

The EU may import 2.67 million tons of the meal in 2013-14 from 2.76 million tons in the previous period, with the bloc’s share in world trade of palm-kernel meal slipping to a new low of 39 percent from 42 percent a year earlier, the report shows.

“All of the increase this season will be on account of New Zealand, South Korea, China, Vietnam and other Asian countries, attributable to the rapidly increasing feed demand from the expanding dairy industries,” Oil World said.

Consumption estimates for New Zealand, China and Japan may be “on the low side,” and higher-than-expected shipments to Oceania and Asia would require additional demand rationing by the EU, according to Oil World.

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