WELLINGTON - The weighted average price for New Zealand's main commodity exports fell slightly during September, according to the ANZ.
"Although renewed activity in levels of world industrial production has lifted demand for base metal and mineral commodities, large supplies of both agricultural and horticultural products remain constraining price improvements for these products," the bank's economists say in the latest commodity report published today.
The ANZ world commodity price index was at present 1.8 per cent below levels seen a year ago, although it was above its early 1999 low-point, with a turnaround evident in some commodity prices in recent months, they say.
"Global developments continue to suggest some further recovery in New Zealand's commodity prices over the year ahead."
The world index fell a provisional 0.8 per cent in September, after a 1.3 per cent fall in August.
On a commodity trade-weighted basis, the New Zealand dollar continues to lose ground, softening the impact of world commodity price declines in local terms.
Consequently, the New Zealand dollar index fell a revised 0.1 per cent in August, but was provisionally up 0.5 per cent in September. Prices were 3.1 per cent below September 1998 costs.
Beef and lamb prices declined in September - on the back of six consecutive months of growth.
Purchase patterns and high production in both Britain and the United States have pointed to some retracement in prices over September, although the medium-term outlook remains good.
With other commodities largely unchanged, these falls are enough to offset further strength in the price of aluminium, the report says.
World log prices, as measured in Japan, have remained depressed, having trended downwards over the past two years. A weaker cross-rate between the kiwi dollar and yen has helped mask lower prices, thus providing a cushion somewhat to exporters.
However, log prices have remained static throughout 1999, which would suggest the market may have troughed.
Furthermore, South Korean log exports rebounded remarkably strongly following the fall-off in early 1998, although they have softened recently.
Yet demand uncertainties remain in Japan, with the Japanese housing market relatively subdued.
Moreover, tentative concerns surrounding stock levels in both Japan and South Korea, with underlying competitive shifts via exchange rate movements, cloud future demand.
The ANZ says that nevertheless, prices are on balance likely to remain stable over coming months.
- NZPA
Average export prices see dip
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