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NZ commodity prices rise 2.8% in February, as supply concerns bolster dairy

Monday 5th March 2018

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New Zealand commodity prices rose in February as supply issues bolstered prices for dairy products as well a lift in meat and fibre prices.  

The ANZ commodity price index gained 2.8 percent in February to 296.4  and was up 5 percent on the year. In New Zealand dollar terms the index lifted 2.4 percent on the month to 215.5 as the New Zealand dollar was broadly steady against major trading partners in the month. It was the first lift in New Zealand dollar prices since November. The index was up 6.4 percent on year in New Zealand dollar terms. 

Dairy prices jumped 6 percent on the month in February, driven by concerns about a potential early finish to the New Zealand season and cooler weather in Europe, said ANZ Bank New Zealand rural economist Con Williams. Gains were broad-based and led by skim milk powder, which lifted 9.4 percent on the month. 

Meat and fibre increased 1.6 percent month-on-month, lifted by wool and beef prices. "Beef markets continued to perform well with tight Australasian supply and inter-market competition between the US and China," said Williams. Beef prices rose 3.9 percent on the month.

Wool prices lifted 7.4 percent on the month, driven by bargain hunting and its current price competitiveness versus substitutes lifting demand. 

Seafood prices were unchanged. Horticultural products are in hibernation for the off-season, and were also unchanged.

Forestry eked out another small gain, lifting 0.1 percent on the month. The increase was led by a 1 percent in wood pulp prices but "growth momentum in these prices is slowing as rebalancing among world markets takes place," Williams said. 

Aluminium prices fell 1.6 percent on the month, after lifting 6.2 percent in January. "While global growth momentum remains strong, it is arguably showing signs of peaking, which is perhaps weighing on sentiment. But the big focus going forward will most likely be the possible impact of recently announced US import tariffs. In time, this could weigh on the world aluminium price," Williams said. 


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