NZ commodity prices rise in February, meat, dairy and steel gain while wool continues to drop

Friday 3rd March 2017

New Zealand commodity prices saw broad-based gains in February, with meat and steel increasing while wool continued to fall.

The ANZ Commodity Price Index rose 0.2 percent in February to 282.3 and was up 20.9 percent on an annual basis. In New Zealand dollar terms the index rose 0.6 percent in the month and 9.2 percent on an annual basis as the stronger kiwi against the US dollar meant 10 of the 17 commodities experienced a fall in local returns.

Wool prices dropped 4.2 percent month-on-month, with lack of interest from China driving the further large fall, though auction prices stabilised late in the month with producers refusing to sell below the cost of production, ANZ agri economist Con Williams said.

Dairy prices rose 1.2 percent in February, with milk powder, butter and cheese all improving, while casein prices fell 2 percent.

"Sentiment in dairy markets has softened recently and milk supply conditions have improved from a torrid second half in 2016," Williams said. "However, Chinese import demand remains strong and this is expected to help underpin market fundamentals."

Prices rose 4.4 percent in the meat and fibre group, with beef up 11.3 percent on the back of tight Australasian supplies and US importer restocking, and lamb prices up 0.5 percent with Chinese and Middle Eastern demand for lamb flaps and forequarter cuts strengthening.

Aluminium gained 4.2 percent, continuing its recovery, while forestry rose 1.5 percent in the month on Chinese demand. Log prices rose 1.8 percent with favourable demand from both local processors and China continuing, and wood pulp prices were up 2.8 percent, buoyed by continued Chinese demand, delays in supply and low inventories.

Seafood prices fell 0.5 percent, though most products showed small lifts, with the overall decline driven entirely by a 5.8 percent fall in rock lobster prices, Williams said. Seafood prices have been a consistent outperformer recently with overall prices up 15 percent since April 2016.

BusinessDesk.co.nz

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