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Commodity prices fall for ninth month in November, led by milk powder

Tuesday 2nd December 2014

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New Zealand commodity prices declined for the ninth consecutive month in November, to the lowest level since February last year, as milk powder prices fell to five-year lows.

The ANZ Commodity Price Index dropped 1.6 percent to 286.3 last month, 12.4 percent lower than its reading the same month a year ago and the lowest for a November month since 2012. Skim milk powder fell 7 percent, while whole milk powder dropped 6 percent, with both series at their lowest since 2009.

Today's data comes ahead of the GlobalDairyTrade auction overnight. Since the start of the year dairy prices have halved at the GDT auctions as over-supply and weaker demand in China, the biggest destination for New Zealand's largest export, weighs on prices.

"Dairy has been a major force driving down the ANZ commodity price index," said ANZ Bank economist Steve Edwards. "The dairy component (has been) falling for nine successive months to be 37 percent below the same level a year earlier, and 45 percent below April 2013 peaks."

Other commodity prices which fell include cheese, butter and casein, which all eased 2 percent to two year lows. Wool prices fell 4 percent, pelt prices declined 3 percent and beef prices slipped 2 percent. Log prices declined 1 percent, while timber prices eased 0.25 percent.

Aluminium was the biggest gainer in the month, rising 5 percent while kiwifruit advanced 2 percent to record highs, ANZ said. Sheepmeat increased 0.5 percent, while seafood, wood pulp, apples and venison were unchanged in the month.

The ANZ NZD Commodity Price Index, which shows the price movements in New Zealand dollars, fell 1.6 percent in November, to be 15 percent below the March 2011 peak.


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