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NZ commodity prices fall in April, led by weaker dairy products

Wednesday 4th May 2016

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New Zealand commodity prices fell in April, led by weaker prices for dairy products.

The ANZ Commodity Price Index slid 0.8 percent in April to 228.7, and was down 17 percent on an annual basis. In New Zealand dollar terms, the index dropped 2.8 percent in April and was down 8.5 percent on an annual basis as the kiwi strengthened against the greenback.

"Dairy prices, notably butter, cheese and casein weighed heavily," ANZ Bank New Zealand agri economist Con Williams said in his report. "These products have been under more pressure in recent months with Northern Hemisphere inventories building. The likes of US cheese inventory levels have recently hit 10-year highs, meaning more of this product could start seeping into tradable supply."

Butter prices dropped 5.1 percent, cheese slid 1.1 percent, and casein declined 5.9 percent.

Milk powder prices were largely unchanged in the index, however Williams noted whole milk powder prices have showed some improvement from low levels at recent GlobalDairyTrade auctions. Whole milk powder rose 0.7 percent to US$2,176 a tonne at the GDT auction overnight, even as the overall GDT price index fell 1.4 percent.

Outside of dairy, commodity products had a mixed performance in April, with overall non-dairy prices down 0.3 percent. Prices for beef were down 2.8 percent, venison fell 3 percent, logs slid 1.4 percent and wool was 0.3 percent lower. However, some of the weakness was due to seasonality, Williams said.

The better performers in the month were lamb, up 0.9 percent, skins ahead 3.3 percent, apples gaining 0.5 percent, and aluminium rising 3.3 percent.

Williams said sheep meat returns are improving from low levels as Australian and New Zealand supply tightens, while aluminium prices have advanced with a broad-based rally in industrial metals due to an improved near-term economic outlook for China and associated restocking.

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