NZ Commodity Price Update

Wednesday 14 Aug 2019

New Zealand commodity prices fell in July, weighed by the recent fall in forestry and dairy prices.

The ANZ world commodity price index fell 1.4 percent in July after falling 3.9 percent in June. The July index was 0.5 percent lower than it was a year ago. In local currency terms, the July index fell 2.8 percent but was up 0.3 percent on the year.

The forestry price index fell 8 percent as demand from China for logs fell away, said ANZ agriculture economist Susan Kilsby. A high level of supply of logs from New Zealand and other regions has resulted in a build-up of stock on wharves in China, at a time when usage rates have eased.

Building activity slows in China during its hot summer months and buyers are also more cautious than normal due to the impact the trade war between China and the United States is having on manufacturing activity, she added.

Dairy prices fell 1.6 percent in July, but are now starting to firm, according to Kilsby. Butter and cheese prices remain under some pressure, particularly in Europe. New Zealand skim milk powder has been trading at a premium to product from other sources. Whole milk powder prices are stable and are expected to be supported in the year ahead by relatively tight supply.

The meat and fibre index lifted 1.6 percent in July following a similar lift the previous month. Higher international prices were recorded for both beef and lamb, with strong demand from China the driving factor.

The horticulture index inched up 0.2 percent in July and aluminium prices lifted 2.4 percent in July, to record the first positive price movement since March. Prices are still 13.1 percent behind levels one year ago, said Kilsby.






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