By BRIAN FALLOW
Export commodity prices edged lower last month and the fall was amplified by the continued strength of the New Zealand dollar.
World prices for the commodities in ANZ's index fell 0.7 per cent from those prevailing in May.
Lower prices for apples, skins, venison, beef, wood pulp and seafood
were only partially offset by rises in aluminium and kiwifruit prices.
Translated into New Zealand dollars at the average exchange rates prevailing over the month, the fall was 1.1 per cent, said ANZ, and at current exchange rates it would be 1.9 per cent.
ANZ's world price commodity index has been fairly stable this year, consolidating a rebound in the second half of last year led by dairy products. The index is 5.7 per cent up on where it was a year ago.
But in New Zealand dollar terms it is 8.3 per cent lower, reflecting the rapid appreciation of the exchange rate, which has taken the kiwi to 5 1/2-year highs against the United States dollar.
But ANZ economists believe that further gains by the New Zealand dollar on a trade-weighted basis will be limited.
"We are expecting to see some moderation in the speed with which the kiwi rises against the US dollar, and a slow drift downwards in the New Zealand-Australian cross rate," said the bank's treasury economist, Sean Comber.
The US dollar is expected to remain out of favour with international investors. But the upward effect of that on the exchange rate with the US dollar would be mitigated by a narrowing of the currently wide differential between New Zealand and American interest rates.
"It's the same sort of story with Australia: economic growth rates converging and interest rate differentials closing," said Comber.
In world price terms dairy products, lamb, wool, logs and sawn timber recorded little or no change last month.
Apple prices fell 5.1 per cent in line with a seasonal pattern in the European market.
Hides and skins fell 4.6 per cent., largely retracing a rise in May.
Beef prices fell 3 per cent, the third consecutive monthly fall.
