Dairy, aluminium and timber lead surging commodity prices in 2009

Wednesday 13th January 2010

The largest annual increases in the price of dairy, aluminium and sawn timber products led the 30% gain in New Zealand commodity prices last year.

The ANZ Commodity Price Index gained 2.6% in December from a month earlier, with an annual gain of 30% for the calendar year. Dairy, aluminium and sawn timber soared 50%, 47% and 40% respectively as global demand for raw materials returned after the slump caused by the credit crunch.

"As further confirmation that the global economy is on the mend, aluminium and sawn timber prices have both strengthened in nine of the last ten months," said economist Steve Edwards in his report.

"These two commodities are closely linked to industrial production. As such, they provide a timely gauge of the pulse of the global economy."

Rising dairy prices helped underpin gains in New Zealand's primary sector, though Fonterra Cooperative Group's latest online trading event showed whole milk powder prices dropped 7% earlier this month.

Still, a rampant kiwi dollar offset as much as a quarter of these gains after the currency surged more than 40% from its sub-40 U.S. cents low in March.

A muted month for the kiwi in December helped lift the New Zealand dollar commodity price index by 4.3%, at an annual increase of 1.7%.

Six of 13 commodities tracked increased last month, with five declining and two unchanged.

The price of aluminium surged 12% last month, leading the gains, with an increase in wood pulp of 4.1% and a 2% rise in sawn timber and logs.

Dairy prices gained 3% in December, and lamb increased 1.4%. The price of wool and skins both dropped 3.8% last month from November, while seafood declined 1.2%, beef slipped 1.1% and venison eased 0.6%.

Businesswire.co.nz

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