Dairy rebound helps commodity prices rise
New Zealand commodity prices rose for a fourth month in August as the rebound in dairy continued, although a strong kiwi dollar limited gains for local producers.
The ANZ Commodity Price Index increased 3.2 percent in August and was up 11 percent from a year earlier, led by higher prices for dairy, seafood, meat and aluminium products.
In New Zealand dollar terms, prices rose 1.9 percent in August, but were down 0.5 percent from a year ago as the strong kiwi stifles export returns.
Dairy prices led the index higher, up 8.3 percent in August a 10-month high. That was led by an 11 percent gain in whole milk powder, New Zealand's biggest commodity export, a 9.7 percent rise in cheese prices, a 4.8 percent increase in casein and a 4.5 percent lift in butter.
"Slowing milk supply across key exporting regions, tight end of season New Zealand inventories and increased demand from China have been the main drivers," ANZ Bank New Zealand agri economist Con Williams said in a note.
Global dairy prices have recovered from a trough earlier this year, prompting Fonterra Cooperative Group to raise its forecast payout to farmers, and the NZX futures market indicates they could rise again at this week's GlobalDairyTrade auction.
Other commodity prices to gain were seafood which rose 1.7 percent, a 1.1 percent increase in meat prices and a 0.7 percent rise in aluminium. Wool prices increased 1.8 percent.
Horticulture prices fell 3 percent with European conditions challenging and increased competition from Chile, while forestry prices were down 0.8 percent on cheaper logs and wood pulp.