New Zealand commodity prices fell in October as dairy prices eased although they fared better in New Zealand dollar terms after the kiwi fell to its lowest level in more than a year on a trade-weighted index basis.
The ANZ Commodity Price index slipped to 294.6 in October, down 0.3 per cent on the month and up 10 per cent in the year. In New Zealand dollar terms, the index was at 220.1, up 2.5 per cent on the month and 14 per cent on the year as "local exporters received a further boost as the NZD continued its descent," said ANZ Bank New Zealand senior economist Phil Borkin.
The kiwi dollar has come under significant pressure due to political uncertainty after the change in government. The TWI recently traded at 73.36 and is about 3 per cent lower than it was prior to the announcement of the new government.
"Strong New Zealand dollar prices bode well for rural incomes and profitability, and this will support the economy over 2018," Borkin said.
Dairy prices fell 3.1 per cent in the month, "courtesy of rising milk supply in the US and Europe," said Borkin. Butter prices dropped 6.5 per cent as the supply-demand balance improved in Europe, while whole milk powder prices slipped 2.8 per cent despite a slow start to milk supply for NZ's new season.
