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NZ commodity prices largely unchanged in May

Thursday 6th June 2019

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New Zealand's commodity prices were unchanged in the month of May and were slightly higher on the year, the ANZ Bank's monthly commodity price index shows.

The ANZ world commodity price index was unchanged in May having gained 2.6 percent in April. The index is 0.7 percent higher than a year earlier. In local currency terms, the May index rose 2.3 percent in the month of May and was 5.7 percent higher on the year, bolstered by the softer New Zealand dollar.

In May, dairy prices gained a further 0.5 percent in the month, although the upward price trajectory earlier in the year "has now come to a standstill," said ANZ agriculture economist Susan Kilsby.

She said a seasonal increase in supply from extra milk becoming available in the Northern Hemisphere, combined with a late-season boost in domestic production, is weighing on prices.  Still, demand from China remains robust, she said.

The meat and fibre index rose a monthly 0.4 percent in May as stronger prices recorded for lamb offset weak beef prices. 

The horticulture index dipped 0.3 percent in May as a lift in new season apple returns was not enough to offset weaker prices for kiwifruit. 

Record levels of kiwifruit have been exported so far this season, with gold varieties accounting for a larger portion of the crop and maturing earlier than green kiwifruit. The gold harvest is now complete while the green harvest is in full swing. 

The forestry price index fell a further 0.7 percent on the month in May following a similar fall in April. Prices for both logs and pulp eased, even though underlying demand from China remains strong. 

New Zealand is exporting more logs than ever before as the quantity of timber available for harvesting now is elevated due to additional land being planted in trees in the early 1990s, said Kilsby.

Aluminium prices fell 3.3 percent in May and are 23 percent lower from a year earlier. Growth in aluminium demand is forecast to slow in 2019 while supply is also under pressure. 

Kilsby noted that aluminium pricing has been negatively impacted by the US imposing tariffs on steel and aluminium imports. While this has not directly impacted New Zealand exports it has contributed to the negative market sentiment.

(BusinessDesk)

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