Weaker prices see index fall again

Softer world prices for meat and dairy products led the ANZ commodity price index to post its sixth consecutive fall last month.

The index fell 0.9 per cent, putting it 1.6 per cent lower than a year ago.

The decline was offset by the exchange rate, which on a month-average basis declined between October and November so that in New Zealand dollar terms the commodity index was up 0.1 per cent.

But ANZ said that if converted at the exchange rate prevailing at the end of the month, the world price index would have been down 1.7 per cent in New Zealand dollar terms.

Dairy products, which make up 31 per cent of the commodity index and which have helped keep it high by historical standards, fell 1 per cent in November.

ANZ said part of the reason was the strengthening of the US dollar. Supply and demand remained in close balance.

"Prices for dairy products and beef are stretched from a cyclical perspective, but supply and demand look in sufficient balance to suggest that the decline will be gradual," the bank said.

"Lamb prices have shown a steady upward trend since 1997 and do not look as prone to cyclical retracement."

Lamb fell 0.9 per cent last month but remains 2.2 per cent up on this time last year.

Beef prices fell for the fourth consecutive month, shedding 2.1 per cent to be 3.9 per cent down on a year ago and 11.5 per cent off their peak in September last year.

Wool prices fell 5.4 per cent to a three-year low, with little activity by Chinese buyers, while skins tumbled 12 per cent, reflecting a switch from leather by European, especially Italian, fashion houses.

Aluminium prices jumped 6.3 per cent to 10-year highs.

Log prices rose 2 per cent after four consecutive monthly declines but the gain has been more than offset by higher shipping rates, ANZ said.