By BRIAN FALLOW
World prices for New Zealand's export commodities improved for the 13th month in a row in July, but a higher exchange rate clawed back the gains.
ANZ's commodity index rose 1 per cent in world price terms to be 26.3 per cent above its level a year ago. But
when adjusted for the stronger dollar returns it fell 2.9 per cent, though it is still 16.7 per cent higher than a year ago.
ANZ economist John Bolsover said there were signs the upward momentum in world commodity prices was levelling off.
"There are signs prices for dairy products, apart from casein, have started to settle around high levels.
"There is no evidence they are so high as to choke off demand, but given where they are they could not continue to climb indefinitely."
Dairy prices, which make up about a third of the index, rose 1.6 per cent last month, continuing a two-year upswing.
Lamb prices edged up 0.6 per cent to be 13.5 per cent above their level a year ago and the highest they have been in the 18-year history of the index.
Continued tight supplies of lamb in Britain, combined with lower sheepmeat production in Australia, had contributed to ongoing strength in the European market, Bolsover said.
Beef prices fell 1.1 per cent as the strong recovery of the past year tapered off after reaching an 18-year high last month.
United States beef supplies were expected to remain tight through to the 2006 season and beyond, Bolsover said.
Seafood prices climbed 3.2 per cent, building on solid gains in the first half of the year.
Other commodities to rise were kiwifruit, logs, sawn timber and aluminium.
In New Zealand dollar terms the index is higher than at any time between 1986 and 1999.
