New Zealand commodity prices dropped for the first time in four months in March as cheese and milk powder declined.
The ANZ Commodity Price Index fell 0.1 percent to 337 from February. The index is 14 percent above its level of March 2013. International prices for 10 of New Zealand's main commodities increased in the month and three fell.
The price of whole milk powder led the decline, down 6 percent, while prices for skim milk powder and cheese dropped 2 percent. Dairy product prices fell 8.9 percent in Fonterra Cooperative Group's latest GlobalDairyTrade auction, the biggest drop in 20 months, as volumes increased.
"It is hard to say whether this trend will continue given the impact of dry conditions in parts of the North Island, with prices dependent on the supply response of overseas producers," ANZ Bank New Zealand economist Steve Edwards said in a note. "Whether we're at a peak will depend on the extent to which further price rises in other export commodities can be achieved."
ANZ's Edwards said commodity prices were nearly twice the level of the lows reached during the Global Financial Crisis in February 2009. The recovery has broadened across other commodities from an initial dairy-led improvement, he said.
Sheepmeat prices recorded the largest increase in March, lifting 9 percent from February to a two-year high, reflecting buying demand from China and the Middle East, ANZ said.
Beef prices also increased, up 6 percent to a 15-month high, reflecting strong retail demand in the US as local US supplies tightened, ANZ said.
Seafood prices lifted 1.5 percent to a new record, underpinned by a lift in mussel prices. The prices of wool, pelts, wood pulp and aluminium increased between 0.5 percent to 1 percent while logs, butter and timber prices lifted a quarter of a percent. ANZ said.
In New Zealand dollar terms, the index dropped 2.6 percent, but remains 12 percent ahead of year earlier levels.