Commodities slippage worsened by exchange rate

Monday 4th July 2011 2 Comments

A key commodity price indicator, the ANZ Bank's index, has fallen for the first time in 10 months with a drop of 1.2 percent during June.

It was the first monthly decline in the series since August last year, but still left the index on its third highest-reading since the series began.

At the same time, the kiwi dollar gained against the exchange rates for all New Zealand's major trading partners.

Against a trade-weighted parcel of exchange rate, the NZ dollar lifted 2.2 percent, with the biggest rise, 3 percent from May, against the Australian dollar.

The lift in the value of the New Zealand dollar compounded the drop in commodity prices, which showed as a 3.3 percent fall on the ANZ's commodity price index for June, when expressed in NZ dollars.

On the main index, prices of seven commodities recorded a drop in June, six recorded a rise and four were unchanged.

Kiwifruit and beef prices fell the most, kiwifruit by 9 percent from a month earlier, while beef prices dropped 8 percent.

The price of whole milkpowder (WMP) and skins slipped 3 percent, aluminium and apples prices fell 1 percent and log prices fell very slightly.

The bank's economists said the drop in the fruit prices reflected a traditional seasonal decline, as the Northern Hemisphere export season progressed and the price premium of the new season’s fruit was reduced.

The drop in beef prices reflected an oversupply of imported product into the United States. Demand had picked up late in the month, spurred on by the run-up to a major holiday weekend, July 4.

Wool prices hit a new record high as wool and skim milk powder prices lifted 5 percent in June, and venison prices rose 3 percent.

Lamb, sawn timber and seafood prices lifted by up to 1 percent.

NZPA

Comments from our readers

On 5 July 2011 at 8:03 am Patrick Kerr said:

I find it extra-ordinary this article bearly mentions the plumbeting price of saw lags at the wharf. May saw prices for A grade 5.9m at $128.00/t. June down to $113.00 & the July schedule is now $88.00 - a drop of 30% in 2 months.

On 5 July 2011 at 9:16 am Jane said:

@Patrick The tumbling log prices should be reflected in next month's index update. ANZ prices are up to a month out of date when this index is published.