New Zealand's three biggest export commodities - dairy, meat and logs - are holding their ground despite disruption arising from the Covid-19 pandemic.
Dairy prices firmed a touch at this morning's Global Dairy Trade auction, with key whole milk powder prices gaining 1.7 per cent to break through the psychologically important US$3000 a tonne barrier.
Prices generally were up 2.2 per cent on the last auction's.
• How New Zealand commodities should fare in 2020
• Higher commodities prices boost NZ farmer confidence - Rabobank
• Commodities up as wool sector slips
• Major commodities trader launches probe, shares sink
Milk fat prices led the price gains, with butter and anhydrous milk fat jumping 8.4 per cent and 5.4 per cent, respectively.
However, this reflected a reduction in the volumes on offer by Fonterra ahead of the auction, rather than a fundamental shift in supply.
Skim milk powder prices eased after a strong run, dipping by 0.9 per cent.
"The firm overall result points to global dairy demand remaining relatively firm despite the impact of Covid-19," Westpac agri economist Nathan Penny said.
"Importantly, wholemilk power prices topped the key psychological barrier of US$3,000/tonne overnight for the first time since August, indicating a degree of confidence in the market," he said.
Penny noted that prices had firmed while New Zealand production was hitting its seasonal peak.
He said the result reinforces the bank's $6.50/kg farmgate milk price forecast for 2021.
"All up, we remain cautiously optimistic on the dairy price outlook," Penny said.
"If anything, the result introduces some upside risk to our forecast. In the short-term, strong New Zealand spring production still has the potential to put pressure on prices, although for now firm global demand is dominating," he said.
Shane Kingston, general manager sales for Alliance Group, said meat prices had generally held up.
Covid-19 had taken its toll on the foodservice trade to the world's restaurants but the retail and digital commerce channels were strong.
"In the total picture, there is really good demand," Kingston said.
"Some items remain challenged - particularly in the foodservice sector, such as racks of lamb and some cuts of beef."
Beef prices were running at very similar levels to last year and it was a similar story for lamb.
In the US, manufactured beef prices are at US$2.45 a pound from US$2.40 this time last year.
In the UK, lamb was selling at £5.00 a kilo, down slightly from £5.00 time last year.
"Overall, I think it is in a really good place," he said.
"That said, on the outlook we have to remain cautious.
"At best it will be holding its own. At worst we may see some decline."
Latest data from the Meat Industry Association showed sheepmeat exports rose 12 per cent by volume and five per cent by value in August compared to a year ago.
A fall in sheepmeat exports to China - 13 per cent by value - was offset by a big increase in demand from the UK and Europe, despite the uncertainty of the fast-approaching Brexit.
Association chief executive Sirma Karapeeva said trade patterns in the meat industry were continuously changing.
"The red meat sector's ability to maintain steady overall export volumes and value during these difficult times underlines the importance of flexibility and responding to constantly evolving market dynamics," she said.
ANZ, in releasing its Commodity Price Index for September this week, said its horticulture index rose 1.1 per cent over the month as kiwifruit prices lifted while apple prices eased.
The forestry index gained 1.7 per cent in September.
Log prices are now 2 per cent higher than they were a year ago, but are still well below the prices attained in early 2019.
"Demand for logs has been strong domestically and demand from China –our main export market –has also been strong," the bank said.
"Construction activity is at its seasonal peak in China and this is bolstering demand from this market," ANZ's agri economist Susan Kilsby said.