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Dairy rebound helps commodity prices rise

NZ NewswireNZ Newswire 5/09/2016 Paul McBeth

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 per cent in August and was up 11 per cent from a year earlier, led by higher prices for dairy, seafood, meat and aluminium products.

In New Zealand dollar terms, prices rose 1.9 per cent in August, but were down 0.5 per cent from a year ago as the strong kiwi stifles export returns.

Dairy prices led the index higher, up 8.3 per cent in August a 10-month high. That was led by an 11 per cent gain in whole milk powder, New Zealand's biggest commodity export, a 9.7 per cent rise in cheese prices, a 4.8 per cent increase in casein and a 4.5 per cent 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 per cent, a 1.1 per cent increase in meat prices and a 0.7 per cent rise in aluminium. Wool prices increased 1.8 per cent.

Horticulture prices fell 3 per cent with European conditions challenging and increased competition from Chile, while forestry prices were down 0.8 per cent on cheaper logs and wood pulp.


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