New Zealand commodity prices fell in June, weighed by whole milk powder and beef prices but while the shine has come off New Zealand's goods terms of trade recently, they remain elevated by historical standards, said ANZ Bank New Zealand.
The ANZ commodity price index fell 1 percent in June and is up 2.2 percent from a year earlier. In New Zealand dollar terms, the index fell 1.1 percent in June but was up 7.4 percent on the year. According to ANZ, the New Zealand dollar had a "topsy-turvy" month but ended up appreciating against all major trading partners except the US dollar.
Dairy prices slipped 1 percent on the month in June, with whole milk powder prices down 1.1 percent on the month. Skim milk powder was the only dairy component to post an increase, up 2.4 percent on the month. According to ANZ, however, overall, dairy prices continue to hold at high levels, supported by solid global demand, particularly from China, and some recent slowing in global production growth.
Meat and fibre prices fell 0.8 percent as beef prices were down 2.8 percent on solid global and New Zealand supply. Culling due to Mycoplasma bovis is providing a further boost to supply. Lamb prices, however, lifted 1.1 percent, reflecting ongoing solid demand out of China and Europe. Wool prices continued to recover from low levels, up 0.6 percent on the month.
Horticultural product prices fell 3.5 percent but were mixed as a 4.2 percent month on month lift in apples partially offset a 7 percent fall in kiwifruit prices from June, ANZ said.
Aluminium prices fell 2.7 percent on the month but remains up 19.3 percent on the year. They are expected to bounce around at a high level on the back of US sanctions on Russia, ongoing trade tensions and China’s clampdown on excess production and environmental restrictions.
According to ANZ, "rising import prices (reflecting higher oil prices and broadening global inflation pressures) are expected to limit any significant upside to the terms of trade from here, but recent export price performance should keep it travelling at a high level."