NZ Commodity Prices Down in January

 The ANZ Commodity Price Index fell 0.1 per cent in January to 276.8 and was up 19.1 per cent on an annual basis. In New Zealand dollar terms the index fell 1.1 per cent in the month and rose 8.6 per cent on an annual basis as the kiwi lifted against most major trading currencies apart from the Australian dollar. On an annual basis, the dollar is up 8.2 per cent against the US dollar, 11 per cent against the euro and 27 per cent against the British pound, putting a strain on export returns particularly in the meat sector.

Wool prices dropped 8.6 per cent month-on-month and are now 30 per cent weaker compared to a year ago. Prices have dropped more than 5 per cent every month since September 2016, mainly due to lack of interest from China, said ANZ agri economist Con Williams.

Dairy prices dropped 0.4 per cent in January, due to cheaper whole milk powder, which fell 2.3 per cent in the month. Other dairy products improved in January, with skim milk powder up 1.6 per cent, butter gaining 1 per cent and cheese advancing 0.8 per cent. Dairy prices are up 38 per cent on the year, with whole milk powder gaining 55 per cent since June, driven by tight global milk supplies and improved Chinese demand.

Non-dairy commodity prices gained 0.7 per cent in the month. The ex-dairy index rose 7.4 per cent over the year, with major non-dairy groups improving. Beef and lamb prices rose 1.9 per cent and 1.6 per cent respectively, with good demand from China and the Middle East for the latter, though gains are limited by the strength of the dollar against the US dollar and European currencies.

Seafood prices rose 0.9 per cent for the month and 14 per cent in the year, while forestry rose 0.5 per cent and aluminium gained 3.2 per cent in January. Log prices have found support from Chinese demand and construction activity, and wood pulp prices gained 1.4 per cent with surplus inventories "snapped up by strong Chinese demand," Dr Williams said.

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