NZ commodity prices rise 0.8% in September

Dairy prices continued to trade largely sideways. Photo / File

New Zealand commodity prices rose in September for the first time since June with all of the six major groups lifting on the month.

The ANZ Commodity Price index increased to 295.4 in September from 293.2 in August, up 0.8 per cent on the month and 12 per cent on the year. In New Zealand dollar terms, the index was at 214.7, up 1.7 per cent on the month and 13 per cent on the year after the New Zealand dollar fell against most major peers for the second month in a row.

Dairy prices continued to trade largely sideways, edging up 0.4 per cent on the month, with mixed results. Both whole milk and skim milk powder prices slipped, down 1.5 per cent and 1.8 per cent month-on-month respectively, but milkfat prices continued to outperform in September with butter up 2.7 per cent month on month and cheese up 3.4 per cent "reflecting robust Asian demand and a tight supply-demand balance for butter in Europe," said ANZ Bank New Zealand rural economist Con Williams.

Meat and fibre prices eked out a small increase of 0.4 per cent while wool prices rebounded 7.7 per cent, but off very low levels. Horticulture prices lifted 2.6 per cent on the month, with apple prices up 1.3 per cent and kiwifruit prices up 3 per cent. Kiwifruit prices rose 14 per cent on the year due to a smaller green crop and a higher proportion of the gold variety in the export mix compared with last year, Wiliams said.

Seafood prices increased 0.3 per cent on the month while the forestry group gained 0.5 per cent with log prices up 0.4 per cent. Williams noted they have lifted for 12 consecutive months.

Meanwhile, aluminium prices rose 3.5 per cent on the month and prices are up 42 per cent since their low point in November 2015 and are at the highest level in over five years.

Williams said the still-elevated NZD commodity prices will provide a strong boost to rural incomes in 2018, which will diffuse through the broader economy.

"This will be important with the economy entering a transition phase as some of its previous growth drivers (housing, construction, tourism, migration) peak, and we await others to step in and fill the void," he said.