NZ commodity prices edge up in March on higher meat, wool prices

Wool prices were the biggest gainer in the month, up 8.6%.

New Zealand commodity prices edged higher in March as wool prices bounced from a slump and red meat continued to attract buyers.

The ANZ Commodity Price Index rose 0.4 percent in March to 283.5 and was up 3.4 percent in local dollar terms to 209.4 in a month when the kiwi depreciated against its major trading partners.

Wool prices were the biggest gainer in the month, up 8.6 percent, which ANZ Bank New Zealand agri economist Con Williams said was due to bargain hunters chasing cheap product and as supply was held back with auction prices below the cost of production. Lamb prices rose 5.8 percent and beef prices increased 1.9 percent, although skin prices fell 1.8 percent.

Aluminium prices also gained in the month, up 2.7 percent, bolstered by a reduction in inefficient Chinese capacity and growing optimism about global demand, while forestry prices increased 1.2 percent as Chinese demand bolstered log and wood pulp export prices.

Dairy prices fell 1.8 percent in the month, but were still nearly 48 percent higher than a year earlier, as whole and skim milk powder prices fell on the increased New Zealand supply. However, value-add product such as butter and casein saw prices rose 9.2 percent and 12 percent respectively as Asian foodservice sales remain strong and lower Australian production stifles supply.

Prices at today's GlobalDairyTrade auction rose 1.6 percent, with enough demand to soak up the increased production from New Zealand farmers.

The recovery in dairy prices has underpinned the annual gain in the commodity price basket, with the index up 23 percent and 17 percent in New Zealand dollar terms.

Horticulture prices were unchanged in March, although ANZ's Williams said early-season indicators were good for kiwifruit and pipfruit.

Seafood prices underperformed in March, falling 3.4 percent, almost entirely due to a slump in rock lobster prices as demand tapers off from Chinese New Year.