The global economic slowdown has finally caught up with New Zealand's export commodity prices.
ANZ Bank's commodity price index fell 2.4 per cent in world price terms last month as 10 commodities recorded decreases, five were unchanged and just two - lamb and fish - rose.
The impact was softened by exchange rate weakness; in New Zealand dollar terms the index fell 0.6 per cent.
ANZ chief economist David Drage said the steepest fall, 23 per cent, was in skin prices.
"The terrorist attacks appear to have accelerated a weakening in the US market, which started slowing six to seven months ago.
"Korea has taken the drastic action of winding production back 40 to 60 per cent, which is expected to take at least three months to work through the system."
Wool fell 7.4 per cent. Chinese buying has been intermittent, although European buyers have shown interest at lower prices.
Sawn timber prices fell 3.5 per cent.
Australian building approvals may have peaked, Mr Drage said, following this year's dramatic increases driven by falling interest rates and the Government's grant scheme for first-time buyers.
"However, there is a solid pipeline of construction work to keep the sector growing well into the middle of next year."
Dairy prices fell 1.4 per cent overall.
Milk powders face weaker demand, especially in Asia, and a build-up of stocks in the United States, which it is feared may emerge as subsidised exports.
Aluminium prices fell 4.6 per cent.
Pulp prices are unchanged but at levels so low that production cuts are being implemented worldwide.
This should lend support to prices around current levels, but Mr Drage said prices were not expected to lift until well into next year.
NZ feels pinch of worldwide slump
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