Global spot prices for dairy commodities have stabilised in recent weeks, after previous sharp falls, a bank economist says.
ASB Bank chief economist Anthony Byett said market commentators were hopeful that dairy commodities such as milk powder might have hit their "long-anticipated bottom" with prices at historically low levels.
"There are still
a few weeks yet for some rebound before higher New Zealand supply hits world markets again," he said.
But the New Zealand export sector still faced a risk created by large United States stocks overhanging world markets, which suggested any upturn would be limited. Prices at present appeared broadly consistent with Fonterra's forecast of a $3.70/kg payout for the current season.
Byett said a sharp rebound in the exchange rate of the New Zealand dollar against the United States currency meant the CBA NZ commodity index rose in foreign currency terms but fell slightly in New Zealand dollar terms.
Among the major moves was a fundamental price change - a lift in oil prices - and a seasonal lift in meat schedule prices.
Byett said though meat prices were below the levels of this time last year, the market sentiment was positive.
Droughts in the US and Australia have kept beef supplies up in recent months and consequently had put downward pressure on prices.
"This may also open a window of opportunity for New Zealand exporters later this year as US farmers withhold stock to re-build herds," he said.
In Britain, demand was good for New Zealand lamb, and price increases were expected over the coming weeks, constrained by low prices for competing meat products.
- NZPA
