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Commodities drop for 7th consecutive month

The prices for New Zealand’s key exports continued their march south for the seventh consecutive month in February, down another 4.6% to the lowest level since March 2006.

Wool and skin prices got hit the hardest, dropping 7.6% and 7.2% respectively, while eight other commodities also declined in price and three remained static from the previous month.

Beef prices reversed last month’s gains and then some, falling 6.7%, while venison and seafood prices both fell 2.7%.

Aluminium dropped 6.0% and forestry prices all fell as well, with log prices dropping 5.8%, lumber down 4.4%, and wood pulp easing 1.8%.

While dairy prices declined 5.7% in the first half of February – they managed to stabilise over the second half.

World dairy prices have now returned to a five-year low, after falling 58% from their peak.

Converted into New Zealand dollars, dairy prices have fallen 40% from their peak but remain above the longer-term average.

Lamb prices managed to consolidate last month’s price rise, remaining flat – “a positive outcome given the broad-based weakness recorded in all of the other commodity prices,” ANZ commodity price index economist Steve Edwards says.

Both kiwifruit and apples are out of season so there are no prices available for these two exports.

The New Zealand dollar eased off in value against all our major trading partners last month, with the biggest loss against the US dollar, down 6.7% from the previous month. This led to a rise in the ANZ NZ dollar commodity price index for February of 1.9%.

Exporters continue to be insulated from the weaker prices for key exports by the fall of the NZ dollar. The NZ dollar commodity price index has only dropped 10% from its peak measured in New Zealand dollars, while the commodity index valued in world prices has fallen 34% from its peak.

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