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Commodity prices tumble in October

Tuesday 4th November 2008

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New Zealand's commodity export prices tumbled last month, led by beef, skins, aluminium, wool and dairy products, a sign that demand for the nation's products is being hurt by the global downturn.

The commodity export price index fell 7.4% in October from the previous month to an 18 month low, ANZ National Bank said. Beef prices slumped 17.7%, skins dropped 16%, aluminium declined 16% and wool slid 12.6%. prices of dairy products, New Zealand's largest export, fell 9.9%.

The nation's commodity prices "will not be immune to global developments,'' said Steve Edwards, economist at ANZ.

The slide in prices for commodities is coinciding with a weaker New Zealand dollar, which has so far erased much of the impact in local currency terms. The NZD Commodity Price rose 0.7% in October and is hovering near its record high. In the past three months, the kiwi dollar has dropped to about 58.80 US cents from 72.5 cents.

Exports make up about 30% of New Zealand's economy. Meat processor AFFCO Holdings rose 4.4% to 47 cents. Rural services company PGG Wrightson was unchanged at $1.75. Fishing company Sanford fell 1.7% to $5.65.

Prices for nine of 13 commodities tracked by ANZ fell, three rose and one was unchanged, ANZ Bank said. Kiwifruit had the biggest gain, rising 1.9%. Seafood rose 0.3%.

By Jonathan Underhill

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