NZ commodity prices fall in January

The ANZ Commodity Price Index fell 0.9 per cent in January. Photo / NZ Herald

New Zealand commodity prices fell in January, extending their 12-month slide to about 19 per cent, led by casein, wool, beef and aluminium.

The ANZ Commodity Price Index fell 0.9 per cent in January, the 11th straight decline. In New Zealand dollar terms, the NZD ANZ Commodity Price Index fell 1.2 per cent in January. The NZD index uses monthly averages for the kiwi and the measure for January didn't fully reflect the currency's sharp decline in the second half.

Casein dropped 14 per cent in January, while whole and skim milk powder rose, providing a mixed picture for dairy products ahead of the GlobalDairyTrade auction this week. ANZ Bank Agri economist Con Williams said casein "played catch-up to the rest of the dairy complex, with increased supplies out of New Zealand and Europe weighing on prices."

This week Synlait Milk cut its forecast milk payout to $4.40 per kilogram of milk solids, under-shooting Fonterra Cooperative Group's cut to $4.70/kgMS, citing depressed global dairy prices.

Wool fell 6 per cent in January, which Williams said reflected weaker demand in Europe and China combined with a seasonal increase in supply. Beef extended its decline from a record high, falling 3 per cent.

Aluminium fell 5 per cent, tracking a broader decline in hard commodity prices. Prices were little changed for kiwifruit, apples and forestry, wood pulp prices fell 2 per cent and lamb and skins "were up a touch."

Weightings in the index are based on the contribution to merchandise trade. For 2015, dairy accounts for 46.8 per cent of the index, followed by lamb on 10.4 percent, logs at 9 per cent and beef at 8 per cent.