NZ commodity prices rise in September, snapping 5-month drop

NZ commodity prices rise in September, snapping five-month decline

By Paul McBeth

Oct. 2 (BusinessDesk) - New Zealand commodity prices rose in September, following the sharp rebound in dairy prices, and snapping a five-month decline for locally produced raw materials.

The ANZ Commodity Price Index rose 5.5 percent to 239.5 last month, matching its July level. In New Zealand dollar terms prices climbed 9.3 percent to 199.4. On an annual basis, world prices were down 18 percent, and up 2.7 percent in New Zealand dollar terms.

"Dairy and aluminium drove the increase in the overall index, while falls were seen across the remaining four major commodity groups," ANZ Bank New Zealand agri economist Con Williams said in a note. "With continued global instability and uncertainty over the state of global demand, the NZD will need to remain supportive to cushion in-market wobbles."

The turnaround in commodity prices matches similar improvements in consumer and business sentiment surveys out in recent weeks. Firms and New Zealanders have become less pessimistic since milk powder prices bounced from their lows over the past month and a half at Fonterra Cooperative Group's GlobalDairyTrade auctions. The dairy exporter has since raised its forecast payout to farmers, soothing nerves that a decade-low farmgate price would erode economic activity in the regions and restrain national growth.

Today's commodity price index showed dairy prices rose 15 percent in September, ending a five-month decline, with prices for whole and skim milk powders up 21 percent. ANZ said the recent gains on the GDT platform indicate prices may keep rising, though they're still 24 percent lower than a year ago.

Aluminium prices rose 2.5 percent in September, after dropping 5.6 percent a month earlier. A report by Wellington investment firm Woodward Partners this month said declines in the New Zealand dollar weren't enough to offset a slump in global aluminium prices, which was weighing on the Tiwai Point smelter's cash flow and commercial viability.

Other commodity prices fell in September, with beef prices down 4.1 percent and lamb prices falling 1.7 percent. Log prices fell 1.2 percent last month, while timber and pulp prices were flat. Kiwifruit and apples prices edged lower in the month, while seafood prices slipped 0.4 percent.

(BusinessDesk)

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