By JIM EAGLES
A sharp turnaround in dairy and wool prices - partly prompted by the impact of the Australian drought - has driven the ANZ World Commodity Price Index to its highest level in nearly a year.
The index, released today, suggests there is room for optimism about prices for New Zealand's key primary exports over the next few months. The international dairy market, in particular, looks likely to stay fairly strong.
Fonterra chief executive Craig Norgate said the 9.4 per cent increase in dairy prices recorded during October was consistent with the company's expectations and had been built into its forecasts
Norgate said that level of improvement should be sustainable and, in fact, the company expected further price rises. "But the extent of the movement will depend very much on what the European Union does with export subsidies."
Although the overall commodity index is well below the heights reached a year ago, the ANZ's chief economist David Drage pointed out that commodity prices were still "extremely favourable compared to the prices which have prevailed for most of the past 15 to 20 years".
The latest figures, he said, "support a cautiously optimistic outlook for the export sector ... a better outcome than has generally been anticipated."
During October the world index rose by 2.8 per cent to be only 5.3 per cent below the peak a year earlier.
The impact of that was, however, somewhat undermined by a rise in the New Zealand dollar.
Strong outlook for dairy, wool exports
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