NZ commodity prices fall for 10th month in December, posting 17% annual decline

Wednesday 7th January 2015

New Zealand commodity prices declined for the 10th consecutive month in December, posting their biggest annual drop in 2-1/2 years, as whole milk powder prices fell.

The ANZ Commodity Price Index slipped 4.4 percent to 273.5 last month, taking the annual decline to 17 percent. Whole milk powder prices fell 11 percent in the month to be 52 percent lower than the year earlier period.

Fonterra Cooperative Group has slashed its forecast payout to dairy farmers for the 2014/15 season to $4.70 per kilogram of milk solids from a previous estimate of $5.30/kgMS and last season's record $8.40/kgMS as oversupply and weaker demand weighed on prices. The latest GlobalDairyTrade auction overnight saw a modest 3.6 percent lift in prices as volumes declined, stoking optimism about a recovery after prices dropped 48 percent over 2014.

ANZ's Commodity Price Index showed nine commodity prices recorded a decrease in December and two increased while prices for the remaining six commodities were unchanged in the month.

Beef prices, which hit record levels last year on strong US demand following a drought, slid 10 percent over the month but remained 28 percent higher than the year earlier.

Skim milk powder dropped 9 percent, aluminium decreased 7 percent, cheese slipped 5 percent, and wool declined 4 percent, while sheepmeat and pelt prices weakened 3 percent.

Butter outperformed other dairy products, rising 8 percent in the month although it remained 25 percent below year earlier levels. Kiwifruit lifted 1 percent as the Northern Hemisphere export season tailed off.

Meantime, prices were unchanged for seafood, apples, casein, venison, wood pulp and sawn timber.

The NZD ANZ Commodity Price Index, which shows the price movements in New Zealand dollars eased 3.8 percent in December, to be 16 percent below the March 2011 peak.

BusinessDesk.co.nz

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