New Zealand commodity prices rose in April, bolstered by dairy prices and a lift in aluminium prices on the back of trade tensions.
The ANZ commodity price index increased 1 per cent in April and is up 7.1 per cent from a year earlier. In New Zealand dollar terms, the index gained 1.2 per cent in April and 5.8 per cent on the year.
Dairy prices rose 2.7 per cent on the month in April due to a range of influences. One of the most influential appears to be sluggish European production across some of the larger export regions, ANZ agri economist Con Williams said.
Lower seasonal supply from New Zealand and broad-based demand also lifted prices. According to Williams, Chinese participation at GDT auctions has increased back above the 50 per cent level, which usually leads to higher prices.
Also, Middle East buying looks like it could be getting a boost from improved oil prices, and Algerian powder demand remains high given domestic shortages, he said.
Aluminium prices jumped 8 per cent versus the prior month trade and geopolitical tensions.
China's clampdown on excess production and capacity restrictions to improve air quality continue to support prices, said Williams.
"However, the real boost was provided by US sanctions on Russia, which included limiting trade with one of the world's largest aluminium producers, Rusal," he said.
Meat and fibre prices were down 1.9 per cent as beef prices fell 4.2 per cent on increased manufacturing beef supplies from New Zealand, Australia and the US. Wool prices, however, were up 2.6 per cent on the month, driven by bargain hunting.
Forestry prices rose 0.2 per cent on the month, marking 20 months of consecutive gains.