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NZ commodity prices dip in April

NZ Newswire logoNZ Newswire 4/05/2017 Paul McBeth

New Zealand commodity prices slipped 0.2 per cent in April as an excess supply of skim milk powder (SMP) and cheaper cheese weighed on the broader dairy sector.

The ANZ Commodity Price index fell to 282.9 from 283.5 in March, led lower by a 2.5 per cent fall in dairy prices.

Skim milk powder prices dropped 12 per cent in the month and cheese prices dropped 6.8 per cent, which weighed on the broader index, ANZ's New Zealand agri-economist Con Williams said in his report.

"The pressure point in global dairy markets remains SMP with an excess of North Hemisphere inventory and seasonal supply lifting," he said.

"Encouragingly, however, GDT (global auction) whole milk and milk fat product prices have recently increased, due to low seasonal supply from New Zealand and strong demand from Middle East/North Africa and China, suggesting the overall dairy picture is more nuanced."

Dairy prices have recovered from their slump early last year, which put many farming operations underwater and prompted banks to watch their balance sheets closely.

Since then, global dairy prices have recovered, with the most recent GlobalDairyTrade auction showing an unexpected increase in whole milk powder prices, and lenders have become calmer about the sector's outlook.

Thursday's ANZ survey shows dairy prices are still 46 per cent higher than they were a year earlier.

Meat and fibre prices rose 1.9 per cent in the month, with lamb prices up 3.6 per cent as tight Australasian supply spurred greater competition, while beef prices gained 2.2 per cent with supply limited in the US. Wool prices fell 5 per cent.

Aluminium prices increased 0.8 per cent while wood pulp prices gained 2.7 per cent on strong Chinese demand and log prices increased a more modest 0.7 per cent.

Horticulture prices rose 0.6 per cent with apple prices up 2.1 per cent.

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