Despite slide, export prices still high

Prices for export commodities continued to decline last month, though they are still at historically high levels.

ANZ's world commodity price index fell 1.1 per cent in September and, because the dollar was stronger last month than in August, in local currency terms the fall was amplified to 1.5 per cent.

It is the fourth month in a row that world prices for the basket of export commodities has declined.

The cumulative decline is 3.1 per cent, leaving the index a scant 0.8 per cent up on where it was a year ago. In New Zealand dollar terms, it is 5.1 per cent down on a year ago.

But commodity prices remain high by historical standards. In the 20-year history of the index, only in the past year has the world price index has been higher than it is now.

In New Zealand dollar terms, the index is 23 per cent down from its peak three years ago, but still higher than at any time in the 1990s.

Of the 13 commodities in ANZ's index, kiwifruit was the only one to rise last month, by 2.3 per cent.

Of the nine to decline, apples led with a 19.2 per cent fall as the export season draws to a close. Dairy products, which make up 31 per cent of the index, were unchanged.

Lamb prices fell 1.3 per cent last month to be 5 per cent below their peak in March. ANZ economist John Bolsover said the broader theme, however, was that lamb prices had held at or around record levels for much of the past year.

Beef prices fell 0.2 per cent but continue to benefit from lingering restrictions on exports from Canada and the US, related to mad cow disease. "Beef prices will come under increasing downward pressure as trade restrictions are lifted," said Bolsover.