Falling New Zealand dollar helps offset decline in export log prices

A-grade logs for export reached $110 a tonne this month, up from $103 a tonne in January. Photo / Alan Gibson

The falling dollar has helped to offset declining export log prices, says AgriHQ.

A-grade logs for export reached $110 a tonne this month, up from $103 a tonne in January, and the highest since last April. AgriHQ's log price indicator was 97.95, up from 95.39 in January, and the highest since April.

"New Zealand dollar returns have moved in the opposite direction to prices for logs delivered to China," said AgriHQ analyst Ivan Luketina.

"Although there has been a reduction in US dollar payments to exporters, the continued changes in exchange rates and shipping prices have meant that it is more than offset in terms of returns to New Zealand exporters," he said.

In China there have been increasing inventories, after sawmills closed early for the Chinese New Year.

There are issues with buyers in China gaining access to credit, which signals difficult conditions for construction companies and a bearish tone in the market.

There is also reportedly downward pressure on New Zealand log prices, because of the availability of Russian logs at cheap prices.

In the New Zealand domestic market, pruned log prices are being pushed up by good demand for finished products in Australia and the US, as well as pruned export log competition.

At present the average price is $154 a tonne - the highest it has been since April 2003.

In the central North Island there is also the added contribution of very low supply that means mills in the area have to fork out higher prices for pruned logs, AgriHQ said.