Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

NZ dollar pares gain after dairy prices fall to 5-year low

NZ dollar pares gain after prices fall to 5-year low in Fonterra's dairy auction

By Tina Morrison

Oct. 2 (BusinessDesk) - The New Zealand dollar pared its gain after dairy product prices fell to the lowest level in more than five years in Fonterra Cooperative Group's GlobalDairyTrade auction, weighing on the outlook for the nation's largest commodity export.

The kiwi was at 78.01 US cents at 8am in Wellington, from 77.77 cents at 5pm yesterday and as high as 78.60 cents ahead of the auction. The trade-weighted index was at 76.22 from 76.13 yesterday.

The GDT average winning price fell 7.3 percent to US$2,599, the lowest since August 2009 and down from US$2,795 two weeks ago. It has slumped nearly 50 percent from a peak in February amid increased supply as stocks build across the world due to Russia’s import ban and weak demand from China. The dairy auction is the first since Fonterra slashed its forecast payout for farmers in the current season by 70 cents to $5.30 per kilogramme of milk solids, a level predicated on global prices for whole milk powder recovering to about US$3,500 per tonne by March next year. Should the latest prices continue for the entire season, the milk payout would be just $3.90/kgMS, according to AgriHQ.

"It was a big fall and clearly the market reacted, and kiwi fell about 30 pips on the news, but it didn't follow through," said Imre Speizer, senior market strategist at Westpac Banking Corp in New Zealand. "There's no bottom in sight yet for the milk price. We are awaiting a rebound in the Chinese economy but that has not yet occurred so that is one reasons why it probably remains weak."

Still, Westpac's Speizer said the direction of the US dollar was a bigger influence on the kiwi.

"The big US dollar was just ranging sideways overnight so that was the main thing," he said.

"The US dollar remains strong, however It is getting stretched and within the next few weeks I would expect the US dollar to stage a corrective fall in which case kiwi/US would bounce," Speizer said. "We are on notice but for now, in the near term, momentum in kiwi is weak."

Kiwi may head below 77.60 US cents over the next few days, he said.

Today, traders will be eyeing the ANZ Commodity Price Index scheduled for release at 1pm.

The New Zealand dollar declined to 89.39 Australian cents from 89.60 cents yesterday ahead of Australian reports for August reports on housing and the trade balance.

The local currency advanced to 61.88 euro cents from 61.63 cents yesterday ahead of the European Central Bank meeting today where the interest rates are expected to remain unchanged. Still, ECB president Mario Draghi's press conference will be closely watched for any hints of further stimulus measures.

The kiwi advanced to 48.22 British pence from 48.03 pence yesterday and declined to 85.16 yen from 85.46 yen.

Chinese banks are closed today in observance of National Day.

(BusinessDesk)

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Mycoplasma Bovis: More Properties Positive

One of the latest infected properties is in the Hastings district, the other three are within a farming enterprise in Winton. The suspect property is near Ashburton. More>>

ALSO:

Manawatū Gorge Alternative: More Work Needed To Choose Route

“We are currently working closely and in partnership with local councils and other stakeholders to make the right long-term decision. It’s vital we have strong support on the new route as it will represent a very significant long-term investment and it will need to serve the region and the country for decades to come.” More>>

ALSO:

RBNZ: Super Fund Chief To Be New Reserve Bank Governor

Adrian Orr has been appointed as Reserve Bank Governor effective from 27 March 2018, Finance Minister Grant Robertson says. More>>

ALSO:

ScoopPro: Helping PR Professionals Get More Out Of Scoop

Scoop.co.nz has been a fixture of New Zealand’s news and Public Relations infrastructure for over 18 years. However, without the financial assistance of those using Scoop in a professional context in key sectors such as Public Relations and media, Scoop will not be able to continue this service... More>>

Insurance: 2017 Worst Year On Record For Weather-Related Losses

The Insurance Council of New Zealand (ICNZ) announced today that 2017 has been the most expensive year on record for weather-related losses, with a total insured-losses value of more than $242 million. More>>

ALSO: