NZ commodity prices decline for fourth month, but falling kiwi dollar helps

Monday 3rd October 2011

New Zealand commodity prices fell for a fourth straight month in September as demand for locally produced raw materials comes off its record highs amid signs of a global economic slowdown.

The ANZ Commodity Price Index fell 1.3% to 299.8, and has shed 4% since a peak in May.

Still, it’s gained 17% in the past 12 months on burgeoning demand in Asia for raw materials.

Of the 17 commodities measured, 10 fell, three gained and four were unchanged in September. The index rose 0.4% in local currency terms to 200.7 as investors sold off the kiwi dollar amid turbulent financial markets. The local currency shed 12% in the three months through Sept. 30.

“While we’ve seen a retracement in commodity prices in both local and international terms over the past few months, the overall level of both series remains elevated,” ANZ rural economist Con Williams said in his report.

“Strong commodity prices remain a key pillar of support for the economy.”

Surging dairy prices in particular have underpinned New Zealand’s economic recovery, and strong demand for locally produced exports helped push out the terms of trade to a 37-year high in the June quarter.

The price of apples led decliners, falling 23% in a traditional seasonal pattern, while kiwifruit and aluminium each shed 4%. Butter prices dropped 3%, while skim milk powder fell 2%.

The prices of logs, beef, wool and cheese each fell 1%, while sawn timber prices slipped by a quarter of a percent. Seafood prices rose 0.5%, while sheep meat and skins crept up less than a quarter of a percent. The price of wood pulp, whole milk powder, casein and venison were unchanged.

(BusinessDesk)

BusinessDesk.co.nz

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