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


NZ dollar falls to fresh 5-year low after dairy prices drop

NZ dollar falls to fresh five-year low after dairy prices drop at auction

By Tina Morrison

July 16 (BusinessDesk) - The New Zealand dollar fell to a fresh five-year low after whole milk powder, the country's key commodity export, dropped more than expected in the GlobalDairyTrade auction overnight.

The kiwi touched 65.81 US cents, and was trading at 65.92 cents at 8am in Wellington, from 67.05 cents at 5pm yesterday. The trade-weighted index sank to 70.01 from 70.88 yesterday.

The New Zealand dollar dropped sharply after dairy product prices sank an average 10.7 percent to a six-year low in the GDT auction, with the key whole milk powder price dropping 13.1 percent to US$1,848 a tonne. Dairy prices have remained lower for longer amid higher global supplies in New Zealand, Europe and the US, weak demand in China and an import ban in Russia. The weaker prices come as New Zealand production is rising heading into the country's peak supply period in October, raising concern about the impact on the nation's economy.

"The GDT auction was again weak with few redeeming features," ANZ Bank New Zealand senior economist Sharon Zollner and senior FX strategist Sam Tuck said in a note. "We see downside risks opening up for (the) New Zealand dollar again."

ANZ lowered its forecast for Fonterra Cooperative Group's 2015/16 milk payout to farmers to a range of $3.75-$4.00 per kilogram of milk solids, from a previous expectation of $4.50/kgMS. That's below the dairy exporter's $5.25/kgMS forecast.

ANZ expects the kiwi to trade between 65.30 US cents and 66.80 cents today. The local currency's weakness overnight was exacerbated by a stronger US dollar as the Federal Reserve reiterated interest rates were set to rise in the world's largest economy this year, and by general weakness in commodity currencies after the Bank of Canada cut its benchmark interest rate.

In New Zealand today, the BNZ-BusinessNZ performance of manufacturing index is scheduled for release at 10:30am, followed by second quarter inflation data at 10:45am and the ANZ consumer confidence survey at 1pm.

The New Zealand dollar dropped to 89.31 Australian cents, from 89.72 cents yesterday, fell to 60.17 euro cents from 60.94 cents, declined to 42.13 British pence from 42.85 pence and weakened to 81.59 yen from 82.74 yen.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Reserve Bank: Official Cash Rate Unchanged At 1 Percent

The Monetary Policy Committee has decided to keep the Official Cash Rate (OCR) at 1.0 percent. Employment remains around its maximum sustainable level while inflation remains below the 2 percent target mid-point but within our target range... More>>


Food Prices: Avocados At Lowest Price In Almost Three Years

Avocados are at their cheapest average price since February 2017, with tomato, lettuce, and cucumber prices also falling, Stats NZ said today. More>>

Auckland Port Move: Cabinet Ministers Deliberate On Report

Cabinet ministers now have a copy of a report urging the government to move the Auckland port up north, but say no final decisions have been made. More>>


Toxicology Tests Planned: Dead Rats Washed Up On Beaches

As many as 600 rats washed up on Westport's North Beach over the weekend to the horror of locals. DOC said they may have been killed by a recent 1080 poison drop 140km away and washed down the Buller River after heavy rain battered the coast. More>>