Positive trend for forestry prices

Forestry prices lifted in December's monthly ANZ commodity price index.

A positive trend for forestry prices — with a 0.8 per cent lift in December in the monthly ANZ commodity price index — is expected to continue into 2019, ANZ agri-economist Susan Kilsby says.

The quantity of logs sitting on wharves in China was very low and was driving buying and keeping prices buoyant, she said.

The strength of that market had helped absorb the increase in logs harvested in New Zealand.

Other main markets for New Zealand logs, such as Japan and India, were not as buoyant as China but needed to pay competitive rates to secure supplies, Ms Kilsby said.

New Zealand commodity prices fell for a seventh consecutive month in December, although the 0.2 per cent fall in the index was the smallest decrease recorded since May.

The index finished the year down 3.4 per cent on the previous year. A strong year for forestry prices had not been enough to offset the weaker prices recorded in the dairy, horticulture and aluminium sectors, she said.

Dairy prices fell 2.5 per cent in December to end the year down 6.2 per cent. The dairy market had since improved, which would probably be reflected in January data.

Ms Kilsby said the meat and fibre index lifted 2.7 per cent in December to end the year in positive territory, up 0.8 per cent year-on-year.

Returns for both lamb and beef meat lifted in December and venison pricing remained upbeat.

International prices for lamb were up 6.1 per cent year-on-year. Beef prices had retreated over the past year, down 3.3 per cent, but did record an uptick in December as demand from the US for manufacturing beef improved.

Wool prices remained in the doldrums, falling 2.3 per cent in December to end the year down 3.6 per cent.

The horticulture index lifted by 0.9 per cent but was down 9.6 per cent year-on-year. Kiwifruit returns lifted in December as the last of this season's fruit was sold through European markets. Throughout 2018, apple prices dropped by 14.8 per cent while kiwifruit eased 7.4 per cent.

Aluminium prices fell 2 percent in December to finish the year down 8.7 per cent.
Aluminium prices peaked in April and had trended down since.

Sanctions on Russian aluminium producer Rusal were expected to be lifted later this month, which would increase the available supply and put further downward pressure on prices, Ms Kilsby said.