Commodity prices continue upward trend

By Phil Boeyen, ShareChat Business News Editor

Wednesday 2nd May 2001

Better prices for sawn timber and apples have helped lift prices for New Zealand's main export commodities.

The improved prices are shown in the latest ANZ Commodity Price Index, which rose 0.6% in April, building on a sharp rise the previous month.

ANZ chief economist, Bernard Hodgetts, says sawn timber and apples have moved from lows in the commodity cycle although they continue to operate in weak international markets and further gains are doubtful.

The index also shows increases for butter, casein, wool, skins and venison.

Mr Hodgetts says for a number of commodities supply and specific demand factors continue to provide a buffer against the slowing global economy.

"This has allowed commodities such as wool, beef, venison, skins, butter, cheese and casein to hold up well during the month.

"A good example is wool. In recent years the Chinese textile industry has been hampered by the deregulation of state controlled mills and restrictions and delays in the release of wool quotas. However, this year's quotas have been more substantial and there have not been the delays of previous years."

On the flip side the index shows that world market prices for aluminium, wood pulp, fish and dairy milksolids fell during April, although downward pressure had been predicted as the products come off cyclical highs.

"Aluminium and wood pulp prices in particular tend to be quite sensitive to the pace of global industrial activity, which has been slowing in recent months."

Mr Hodgetts says today's commodity index figures will be of interest to the Reserve Bank, which pointed to higher world prices for New Zealand's commodity exports and New Zealand dollar weakness when it outlined strong grounds for caution about further cuts in the Official Cash Rate at the April Review."

During April the New Zealand dollar lost ground against all major trading partner currencies.

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