ANZ sees Commodity Index rise

New Zealand commodity prices gained ground in February, driven by improvements in dairy and meat, but problems in the world’s trade routes are making shipping more expensive, ANZ said.

Its latest World Commodity Price Index gained 3.5 per cent, month-onmonth, in February.

In New Zealand dollar terms, the index lifted 4.1 per cent, month-onmonth, as the New Zealand dollar fell 0.8 per cent against the US dollar.

Global shipping prices are generally trending higher as problems traversing the Suez Canal and the Panama Canal are making journeys longer and more expensive, ANZ said.

Dairy prices were benefiting from reduced global milk production, particularly in the EU and the US, which has encouraged buyers to secure product while there is still ample supply, ANZ agri-economist Susan Kilsby said.

The meat and fibre index posted a solid gain in February as wool, beef and lamb prices all improved.

Despite the improvement, lamb and wool prices were still very low.

Demand for lamb products was especially weak in China, while and elevated supply of Australian lamb was also weighing on market prices.

Beef demand remained solid despite increased supplies, with the US buying more meat than usual.

ANZ’s horticulture index remained unchanged as new season pricing was not yet available.

A record kiwifruit harvest is forecast, which will test the depth of our markets, but a much smaller grape harvest is expected due to unfavourable weather earlier in the season, ANZ said.

Log exporters were reporting some improved demand from China as building activity lifts again following the Chinese New Year.

Aluminium prices fell in February.