NZ commodity prices continue to fall

New Zealand commodity prices fell for a fifth month in October, the ANZ's monthly commodity price index shows.

"The softening in the New Zealand dollar during October wasn’t sufficient to offset weak global sentiment prevailing in commodity markets," ANZ said.  "Trade disruption has dented confidence in NZ’s main export markets, with the impact on China of particular concern, given our exposure to this market."

The index fell 2.4 percent in October and is now down an annual 5.6 percent, the largest annual decline since mid-2016,. The weaker New Zealand dollar saw the index fall just 1.6 percent in October on a currency-weighted basis, and on that basis is up 1.6 percent from a year earlier. 

Dairy prices fell 3.1 percent last month and are down 12.3 percent on the year, hitting their lowest level since September 2016. Lower prices were recorded for milk powders, cheese and milkfat products. Whole milk powder prices softened 3.3 percent during the month as seasonal supply put downward pressure on prices. 

The meat and fibre index fell 2 percent on the month and was down 4.3 percent year-on-year, ANZ said. Beef prices fell 4.2 percent on the month and 14.5 percent year-on-year, as demand from the US for New Zealand beef remains weak – a trend that will only be accentuated by the seasonal lift in supply now occurring. Lamb prices continue to benefit from limited supply, which is helping to keep in-market prices high. 

The horticulture index fell 4.3 percent from September and was down 4.5 percent year-on-year. Apple prices fell 15.2 percent on the month while kiwfruit was up 0.8 percent. 

Forestry prices fell 1.5 percent month on month but prices are still 6.1 percent higher than a year ago. Aluminium prices lifted 0.3 percent versus September but were down 4.4 percent on the year with tit-for-tat trade retaliation between China and the US continuing to disrupt the flow of scrap aluminium from the US to China and product back to the US, ANZ said. 

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