NZ commodity prices rally for 6th month in a row in October

Thursday 3rd November 2016

New Zealand commodity prices rose for a sixth consecutive month in October, led by butter, lamb and aluminium, although the strong kiwi dollar limited the benefits for local producers.

The ANZ commodity price index rose 0.7 percent last month and is 4 percent higher than the same time last year. In New Zealand dollar terms, prices are 5.3 percent lower than in the same period last year, which ANZ New Zealand agri economist Con Williams said was due to the NZ trade-weighted index being 7 percent higher year-on-year.

The release of the commodity price index follows the results of the latest GlobalDairyTrade auction, which showed the GDT price index jumped 11.4 percent to US$3,327, while the price of whole milk powder, the biggest product New Zealand sells by volume, soared 19.8 percent to US$3,317 a tonne.

Dairy rose 1.5 percent month on month in the ANZ index, with butter up 6.5 percent and cheese gaining 4.2 percent.

"Demand for New Zealand-sourced milkfat products has been robust lately and competitor product continues to be soaked up by their own domestic markets," Williams said. "Milk powder prices consolidated in October following large gains since mid-year."

Lamb gained 5.5 percent in October, driven by tight local supply and improved Chinese demand, while wool fell 6.8 percent due to reduced Chinese buying. Beef dropped 5.1 percent in the month after a lift in US domestic supply, uncertainty over Brazil's market access, and competition from pork and poultry.

The weak British pound continued to weigh on overall NZD returns, which dropped 4 percent for the month and are down 8.8 percent in the year.

BusinessDesk.co.nz

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