Commodity prices fell in October

The ANZ Commodity Price index slipped to 294.6 in October, down 0.3% on the month and up 10% in the year

Commodity prices fell in October
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, BusinessDesk reported.

The ANZ Commodity Price index slipped to 294.6 in October, down 0.3% on the month and up 10% in the year.

In New Zealand dollar terms, the index was at 220.1, up 2.5% on the month and 14% 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% 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% in the month, "courtesy of rising milk supply in the US and Europe," said Borkin. Butter prices dropped 6.5% as the supply-demand balance improved in Europe, while whole milk powder prices slipped 2.8% despite a slow start to milk supply for NZ’s new season.

Meat and fibre prices eked out a 0.8% increase. Beef prices rose 1.7%, supported by tight Oceania and US supply, good US retail and foodservice demand, with solid economic conditions, he said. Wool prices fell 7% as short-term buying interest from China reduced.

Horticulture prices lifted 2.8% 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% 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% on low inventories and strong Chinese demand, Borkin said.

Aluminium prices were up 1.9% on the month and are now 28% higher on the year.


Related stories:
Australia’s Reserve Bank holds official cash rate
Consumer prices increase