NZ Commodity Exports: Commodity index jumps fuelled by dairy rebound
October 12th, 2009
The latest ANZ commodity price index is good news for farmers’ cash-flow prospects with world prices for NZ’s export commodities soaring 6.8% in September, lead by rebounding dairy prices – its steepest rise in 22 years. The latest rise leaves the index at 20% above its low point of February 2008 but the rapidly appreciating dollar has taken a two-thirds chunk out of the rise in exchange rate adjusted terms. Dairy prices jumped 17% to reach levels which have only been higher twice previously between January 2007 and November last year.
Commenting on the report the bank says; “Logic would suggest after such a sharp movement higher in global dairy prices [there] could be a pull-back this month.” However, the bank is unsure if this will happen noting domestic stocks of dairy products have been run down rapidly, which makes it more likely increases in exports will have to be met from new season production but this cannot be increased overnight. This implies some underlying support to prices.
The second highest increase of 8.3% was recorded by skins, although the rebound has to be tempered by the fact it is off all time low prices. Lamb prices were up 2.3%, beef up 2.2% and wool up 5.3%. Some good news for farmers with forestry blocks too, with sawn timber posting a 7.2% rise on the previous month and pulp prices up 3.1%. On the flip side, logs were down 3% despite strong demand from China. Overall, forest products are off their mid-year lows but still at historically weak levels.
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