Milk fat, sheepmeat drive 2.1% gain in NZ commodity prices in June

Within dairy the picture was mixed.

New Zealand commodity prices rose 2.1 percent in June, the fourth monthly gain this year, led by milk fat products and sheepmeat, while wool, wholemilk powder, casein and aluminium fell and apples reversed some of the previous month's surge.

The ANZ Commodity Price Index increased to 298 in June from 291.9 in May and was 25 percent higher than the same month a year earlier. The monthly increase was led by a 2.9 percent gain in dairy prices and a 2.8 percent gain in meat prices.

Within dairy the picture was mixed. Butter rose 12 percent, cheese was up 8 percent and skim milk powder gained 5 percent, while whole milk powder fell 1.6 percent and casein was down 0.8 percent. ANZ Bank New Zealand agri economist Con Williams said a "flat seasonal peak in European production as winter conditions lingered into spring has supported skim milk powder and butter prices." Wholemilk powder fell "as buyers awaited higher seasonal supply from New Zealand."

Meat prices were led by lamb, which rose 4.7 percent in June, while beef was up 1.7 percent. Skin prices rose 3.5 percent while wool fell 0.7 percent, which Williams said reflected high inventory levels in China.

Horticultural export prices continued to advance although June's 1.4 percent gain was modest compared to the 12 percent jump in May. Kiwifruit prices rose 2.7 percent after surging 14 percent the previous month but apples fell 1.8 percent in June, having gained 7.5 percent in May.

"Green kiwifruit markets are very short of NZ product due to a late harvest and lower overall volumes," Williams said. "This, combined with solid demand across major markets, has seen Zespri lift the bottom of its forecast orchard gate returns for Green and push the Gold forecast higher too."

Seafood export prices rose 2.4 percent in June, led by hoki and rock lobster. Forestry prices edged up 0.4 percent led by Chinese demand for logs.

Aluminium prices fell 1.5 percent.

The New Zealand dollar index fell 1.6 percent in June, reflecting the stronger kiwi dollar, although Williams said it had to be seen in the context of a 20 percent gain year-on-year.