NZ commodity prices fall in October on weaker dairy prices
By Rebecca Howard
Nov. 6 (BusinessDesk) - New Zealand commodity prices fell in October as dairy prices eased although they fared better in New Zealand dollar terms after the kiwi fell to its lowest level in more than a year on a trade-weighted index basis.
The ANZ Commodity Price index slipped to 294.6 in October, down 0.3 percent on the month and up 10 percent in the year. In New Zealand dollar terms, the index was at 220.1, up 2.5 percent on the month and 14 percent on the year as "local exporters received a further boost as the NZD continued its descent," said ANZ Bank New Zealand senior economist Phil Borkin.
The kiwi dollar has come under significant pressure due to political uncertainty after the change in government. The TWI recently traded at 73.36 and is about 3 percent lower than it was prior to the announcement of the new government.
"Strong New Zealand dollar prices bode well for rural incomes and profitability, and this will support the economy over 2018," Borkin said.
Dairy prices fell 3.1 percent in the month, "courtesy of rising milk supply in the US and Europe," said Borkin. Butter prices dropped 6.5 percent as the supply-demand balance improved in Europe, while whole milk powder prices slipped 2.8 percent despite a slow start to milk supply for NZ’s new season.
Meat and fibre prices eked out a 0.8 percent increase. Beef prices rose 1.7 percent, supported by tight Oceania and US supply, good US retail and foodservice demand, with solid economic conditions, he said. Wool prices fell 7 percent as short-term buying interest from China reduced.
Horticulture prices lifted 2.8 percent in the month, bolstered by higher prices for large kiwifruit sizes and a product mix that included more of the premium gold variety. Seafood prices were up 0.4 percent in the month.
A lift in log and wood pulp prices pushed the forestry group up 1.9 in the month as log export values underpin the market. Wood pulp surged 8 percent on low inventories and strong Chinese demand, Borkin said. Aluminium prices were up 1.9 percent on the month and are now 28 percent higher on the year.