The price of palm kernel expeller, or PKE, has jumped as farmers turn to the supplementary feed for their stock in the face of parched pastures.
PKE is imported from Malaysia and Indonesia and is a by-product of palm oil processing.
NZX Agri-Fax's grain market analyst Ivan Luketina says Indonesian prices have risen 20% since February and spot sales have now been stopped because of tight supply, with only contracts for PKE being honoured.
He says the price on the Malaysian market has risen between 15% and 16% in March.
Ivan Luketina says New Zealand demand for PKE is also being fuelled by the low dairy payout.
Meanwhile, a Whanganui farmer Brian Doughty says he will have to start feeding meal pellets to his dairy cows and milking goats because he has been unable to get supplies of palm kernel.
He says he has run out of bailage and the animals have also exhausted his palm kernel supplies. His only option for getting new supplies, he says, would be from Tauranga and transport costs are too high.
Brian Doughty says plenty of farmers in his region would use the rye-grass straw on offer in Canterbury if they could get it to the North Island at a reasonable cost.
Analysts say importers of PKE are trying to get their shipments to New Zealand faster, but with a six-to-eight week lead time, that is not easy.
As well, heavy rain in Southeast Asia is hindering the loading of the ships there and most of the PKE already on its way has been pre-sold.