Source: Radio New Zealand
A 2.8 percent drop in the value of the New Zealand dollar last month also supported export price growth 123RF
Overall commodity prices are at record highs with the war in the Iran generating risks and rewards for New Zealand exporters.
The ANZ World Commodity Price Index rose 4.1 percent in March over February (m/m) — an increase second only to the outbreak of the Russian-Ukraine three years ago.
All components of the index rose in March except horticulture, which was between seasons, with market prices unavailable until the new season’s produce reached its destination.
A 2.8 percent drop in the value of the New Zealand dollar last month also supported export price growth, and helped drive the NZD Commodity Price Index up 6.4 percent m/m to a record high.
Global dairy prices rose 5.9 percent m/m as importers increased purchases to secure supply.
ANZ agriculture economist Matt Dilly said global dairy prices were rising even before the current Middle East conflict started, with current events pushing prices even higher.
“Importers have increased purchases in response to concerns about supply chain disruption. However, global milk supply remains healthy, so higher prices might not be sustained once purchasing behaviours return to normal,” he said.
Aluminium prices were up 9.8 percent m/m, with a damage to a large aluminium smelter in the United Arab Emirates further supporting prices, as the damage was expected to take several months to repair.
Meat and fibre prices increased 2.4 percent m/m with higher overseas prices for beef and lamb.
The meat and fibre index increased 2.4 percent m/m in March and is up 19 percent y/y.
“Overseas demand remains strong for both beef and lamb, despite recent events, and supply is constrained,” Dilly said.
“This could change in the coming months as New Zealand supply increases on a seasonal basis.”
Wool prices dropped 2.8 percent m/m but had risen 49 percent y/y.
The forestry index rose 3.1 percent m/m but was down 5.3 percent y/y as China’s construction activity remained a concern.
“Higher shipping costs, mostly due to fuel surcharges, will further erode margins on New Zealand log exports.”
While exporters could pass on the indirect and direct cost of fuel, he said it would be more difficult for suppliers to pass those costs on to domestic consumers.
In addition he said market volatility could quickly change global demand for commodities.
“There’s a lot we don’t know about what’s happening in the Middle East and sometimes the ripple effects of of a shock like this can have intended and unexpected consequences,” Dilly said.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
