Commodity prices steady, but dairy drop continues

By BRIAN FALLOW

Dairy prices continued to fall last month, but most other commodity prices rose to send ANZ Bank's index up fractionally in world price terms.

The world price index rose 0.2 per cent, having fallen 8.7 per cent over the previous four months.

But because the exchange rate firmed last month, in New Zealand dollar terms commodity prices dropped another 1.9 per cent.

Dairy prices continued to slide from their cyclical peak in the middle of last year, dropping another 5.2 per cent last month.

ANZ economist John Bolsover said weakening demand at the wholesale level had been made worse by European Union and United States export subsidies. The latitude for further subsidy within agreed World Trade Organisation limits remained a concern.

On the other hand, lamb and beef prices continued to hold up and were expected to stay above the levels of recent years, he said. Others such as aluminium and wood pulp looked to be near the bottom of their cycles.

Venison was the only other commodity to fall last month, dropping 15.5 per cent, although prices typically hit a low early in the year as demand tailed off, and the falls of the past three months had been from historic highs.

Beef prices rose 7 per cent, reflecting short supply from Australia and New Zealand rather than demand. Nevertheless, imported beef prices in the United States are 20 per cent higher than a year ago.

Timber prices, which declined steadily from the middle of last year, rose 5.7 per cent.