Dairy leads commodity prices down

Wool prices bucked the downward trend last month. Photo / Sarah Ivey

A basket of New Zealand export commodity prices fell 4 per cent last month to be 2.8 per cent below its level a year ago.

Dairy products, which comprise 47 per cent of the ANZ commodity price index, accounted for three of the four largest falls — butter fell 14 per cent, skim milk powder 12 per cent and whole milk powder 10 per cent.

Pelt prices fell 14 per cent, cheese prices 4 per cent and beef prices 1 per cent.

"It was not all one-way traffic, however, with six commodities posting a lift in prices," said ANZ economist Steve Edwards.

"Aluminium prices recorded the largest increase, lifting 6 per cent followed by sheepmeat prices which rose 3 per cent. The prices of wood pulp, seafood and wool all increased 1 per cent, and lumber prices nudged up a quarter of 1 per cent."

Logs, kiwifruit, apples and venison were unchanged.

The kiwi strengthened against the currencies of all New Zealand's major trading partners, apart from Australia.

So in New Zealand dollar terms the ANZ index fell 5 per cent to a 13-month low.

Westpac economist Anne Boniface said strong growth in milk supply domestically and to some extent globally had been putting downward pressure on dairy prices, and this had been reflected in Fonterra's recent GlobalDairyTrade auctions.

"While we have passed the peak in commodity prices for now, we expect to see dairy prices broadly stabilise around current levels."