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NZ commodity prices drop for fourth month, but falling dollar helps

Comnmodity prices were down again in September, though the decline in the NZ dollar is helping exporters. Photo / Martin Sykes
Comnmodity prices were down again in September, though the decline in the NZ dollar is helping exporters. Photo / Martin Sykes

New Zealand commodity prices fell for a fourth straight month in September as demand for locally produced raw materials comes off its record highs amid signs of a global economic slowdown.

The ANZ Commodity Price Index fell 1.3 per cent to 299.8, and has shed 4 per cent since a peak in May. Still, it's gained 17 per cent in the past 12 months on burgeoning demand in Asia for raw materials. Of the 17 commodities measured, 10 fell, three gained and four were unchanged in September.

The index rose 0.4 per cent in local currency terms to 200.7 as investors sold off the kiwi dollar amid turbulent financial markets. The local currency shed 12 per cent in the three months through to September 30.

"While we've seen a retracement in commodity prices in both local and international terms over the past few months, the overall level of both series remains elevated," ANZ rural economist Con Williams said in his report.

"Strong commodity prices remain a key pillar of support for the economy."

Surging dairy prices in particular have underpinned New Zealand's economic recovery, and strong demand for locally produced exports helped push out the terms of trade to a 37-year high in the June quarter.

The price of apples led decliners, falling 23 per cent in a traditional seasonal pattern, while kiwifruit and aluminium each shed 4 per cent. Butter prices dropped 3 per cent, while skim milk powder fell 2 per cent. The prices of logs, beef, wool and cheese each fell 1 per cent, while sawn timber prices slipped by a quarter of a per cent.

Seafood prices rose 0.5 per cent, while sheep meat and skins crept up less than a quarter of a per cent. The price of wood pulp, whole milk powder, casein and venison were unchanged.

- BusinessDesk

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