Commodity prices fall to eight-month low in April as dairy stumbles

Steve Edwards, ANZ Bank New Zealand economist

New Zealand commodity prices fell for a second month in April, with dairy leading the decline.

The ANZ Commodity Price Index dropped 4 percent to 323.7, the lowest in eight months, with dairy products driving the decline. The index was 2.8 percent below its level in April 2013, the first annual decline since February last year.

Butter prices sank 14 percent, while skim milk powder dropped 12 percent and whole milk powder fell 10 percent. Cheese prices declined 4 percent. Prices for pelts dropped 14 percent, while beef prices slipped 1 percent and casein prices decreased 0.25 percent.

"The fall was dairy-centric, with dairy products accounting for three of the four largest falls," ANZ New Zealand economist Steve Edwards said in a note.

Dairy prices on Fonterra Cooperative Group's GlobalDairyTrade platform sank to a 14-month low in April, raising speculation the dairy exporter may not be able to stick to a forecast record payout of $8.65 per kilogram of milk solids.

Of the six commodity prices to gain, aluminium was the biggest, up 6 percent, followed by a 3 percent increase in sheepmeat prices, and a 1 percent rise in prices for wood pulp, seafood and wool. Lumber prices increased 0.25 percent. Prices for logs, kiwifruit, apples and venison were unchanged in April.

In New Zealand dollar terms, the index dropped 5 percent in April, and was down 3.6 percent on an annual basis.

(BusinessDesk)

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