March rise in price of export commodities biggest in six years

Average world prices for New Zealand's main export commodities have risen for the past seven months, with March experiencing the largest monthly rise in six years.

The monthly ANZ World Commodity Price Index lifted 3.2 per cent last month, said ANZ chief economist Bernard Hodgetts.

The bank's NZ dollar index, which measures prices in local currency, rose 6.5 per cent as the dollar lost ground against currencies such as the US dollar and euro. This amplified price rises when measured in NZ dollar terms.

Mr Hodgetts expected average commodity prices in world markets to ease back in the next few months, although large falls in prices across the board were "highly debatable."

The world commodity index was boosted by rises in prices received for beef, lamb, sawn timber and, to a lesser extent, cheese and casein.

Supply factors such as the impact of the foot-and-mouth outbreak contributed to the price rises, although there were price drops in some key commodities, Mr Hodgetts said.

These included aluminium, wood pulp and some dairy products.

"Our analysis suggests that world prices for some of these products tend to be quite sensitive to the pace of global industrial activity, which has been slowing in recent months."

But prices for many key export commodities had not reflected the global economic cycle closely.

The 1980s world economy slow-down took 18 months to hit prices.

Mr Hodgetts said prices in NZ dollars for most of the index's 17 commodities were well up on a year ago.

- NZPA