NZ: Commodity Price Index lifted 3.2% m/m in August - ANZ

Con Williams, Agri Economist at ANZ, notes that the NZ’s ANZ Commodity Price Index lifted 3.2% m/m in August and it was the fourth consecutive monthly rise, with prices increasing 10% over this period (11.1% y/y).

Key Quotes

“The monthly gain was led by dairy (+8.3% m/m), followed by seafood (+1.7% m/m), meat (+1.1% m/m) and aluminium (+0.7% m/m). This was offset by a 3.0% m/m decline for horticulture and a 0.8% m/m fall for forestry products.

The NZD commodity price index rose 1.9% m/m in August taking the four-month gain to 4%. So while a higher NZD continues to weigh heavily on exporter returns there has nonetheless been some trickle-through to the farm-gate. That said, the NZD commodity price index is still below the same time last year (-0.5%) despite international prices being 11% higher.

In terms of sector specifics:

• The dairy recovery accelerated with an 8.3% m/m lift in August, building on growth in the previous two months to hit a 10-month high. Wholemilk powder led the group with a solid 11% m/m rise, followed by cheese (+9.7% m/m), casein (+4.8% m/m), butter (+4.5% m/m) and skim milk powder (+1.9% m/m). Slowing milk supply growth across key exporting regions, tight end of season New Zealand inventories and increased demand from China have been the main drivers.
• Seafood (+1.7%) and meat prices (+1.1%) continue to rise, along with aluminium (+0.7%). In seafood, an increase in salmon prices was enough to offset a small decline in orange roughy. Lamb prices improved 2.1% on the back of historically low New Zealand supply. Wool (1.8%) and beef (0.4%) rose, while skins fell slightly.
• Horticulture and forestry prices fell in August. General European market conditions for fruit remain challenging outside set marketing programs. There has also been more competition from Chile, which is improving its quality standards. Pushing forestry prices lower were log prices (-0.5%) and wood pulp (-2.7%).”