Commodity prices rise in September, snapping five-month decline

New Zealand commodity prices rose in September, following the sharp rebound in dairy prices, and snapping a five-month decline for locally produced raw materials.

The ANZ Commodity Price Index rose 5.5% to 239.5 last month, matching its July level. In New Zealand dollar terms prices climbed 9.3% to 199.4. On an annual basis, world prices were down 18%, and up 2.7% in New Zealand dollar terms.

"Dairy and aluminium drove the increase in the overall index, while falls were seen across the remaining four major commodity groups," ANZ Bank New Zealand agri economist Con Williams said in a note. "With continued global instability and uncertainty over the state of global demand, the NZ dollar will need to remain supportive to cushion in-market wobbles."

The turnaround in commodity prices matches similar improvements in consumer and business sentiment surveys out in recent weeks. Firms and New Zealanders have become less pessimistic since milk powder prices bounced from their lows over the past month and a half at Fonterra Cooperative Group's GlobalDairyTrade auctions. The dairy exporter has since raised its forecast payout to farmers, soothing nerves that a decade-low farmgate price would erode economic activity in the regions and restrain national growth.

Today's commodity price index showed dairy prices rose 15% in September, ending a five-month decline, with prices for whole and skim milk powders up 21%. ANZ said the recent gains on the GDT platform indicate prices may keep rising, though they're still 24% lower than a year ago.

Aluminium prices rose 2.5% in September, after dropping 5.6% a month earlier. A report by Wellington investment firm Woodward Partners this month said declines in the New Zealand dollar weren't enough to offset a slump in global aluminium prices, which was weighing on the Tiwai Point smelter's cashflow and commercial viability.

Other commodity prices fell in September, with beef prices down 4.1% and lamb prices falling 1.7%. Log prices fell 1.2% last month, while timber and pulp prices were flat. Kiwifruit and apples prices edged lower in the month, while seafood prices slipped 0.4%.

(BusinessDesk)