Commodity prices surge: ANZ

Thursday 3rd December 2009

Commodity prices surged last month for their first annual increase since August 2008 as buyers of dairy products continue to pay a premium toas they restock their depleted inventories.

The ANZ Commodity Price Index climbed 10.5% in November from October, and advanced 17.4% from the same month a year earlier, led by rising international dairy prices, which surged 22% last month.

Eight of the 11 commodities tracked increased, while three declined.

“Dairy prices are currently 75% higher than the low point measured in Februrary, but would need to rise by another third to return to the highs recorded two years ago,” economist Steve Edwards wrote in the report.

Dairy prices have recovered as buyers replenish dwindling stockpiles after the global financial crisis eroded demand for high quality products, with the price of whole milk powder jumping 95% from its low in July on Fonterra Cooperative Group’s online trading platform.

The dairy exporter’s global trade managing director Kelvin Wickham doesn’t expect prices to fall until European and American farmers ramp up milk production when their season starts next year.

The kiwi dollar was weaker through the month of November, and intensified the gains in New Zealand dollar terms to its biggest monthly increase in the series.

Still, the currency is up about 45% from its sub-50 U.S. cents low in March, and Wickham estimates the first quarter of any gain in dairy prices has been eaten by the rampant kiwi dollar.

Wool prices climbed 8.8% on a global price basis, while wood pulp, aluminium, sawn timber, beef and skins all rose between 3% and 4.5%.

Lamb prices slipped 1.4% from an all-time high in October, while venison and seafood edged lower 0.7% and 0.3% respectively.

Businesswire.co.nz

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