NZ commodity prices jump in June on support from dairy industry

Commodity prices in New Zealand jumped in June, posting the second straight month of rise in a row, primarily led by bounce in dairy industry. Also, rise in prices of seafood contributed to the surge. However, an appreciating kiwi dollar limited those gains in local currency terms.

The ANZ commodity price index rose 3.7 percent last month, after a 1.1 percent increase in May. On an annual basis, prices were down 5.4 percent. In New Zealand dollar terms, the index rose 0.3 percent, adding to a 2.5 percent increase in May, and an annual decline of 5.9 percent. The trade-weighted index rose 4.9 percent in June, data released by Australia and New Zealand Banking Group, ANZ, showed Tuesday.

Further, dairy prices rose 4.8 percent in June, with cheese prices up 9.2 percent, skim milk powder gaining 8.4 percent and whole milk powder increasing 3.7 percent. According to ANZ's agri-economist, Williams, skim milk prices are catching up with those in Europe, while whole milk prices were bolstered by the lower seasonal supply from New Zealand.

Further, seafood prices also contributed to local gains, rising 8.2 percent with a notable increase in the price of hoki and squid. NZX-listed fishing group Sanford has previously said the hoki catch has been lower as it tries to align supply with demand.

In addition, horticulture prices extended their gain, up 4.2 percent as new season crops reached markets in Europe and Asia, while meat prices rose 2.6 percent due to a smaller lamb crop. Forestry prices increased 1.7 percent in June while aluminum prices were up 2.3 percent in the month.

"There was broad-based strength across all the major categories. However, producers won't be celebrating too loudly," said Con Williams, Agri-Economist, ANZ Bank, New Zealand, in his report.

Meanwhile, New Zealand’s biggest commodity industry of the dairy products has suffered in wake of low global prices, owing to oversupply in the European and North American regions. However, prices have marginally recovered compared to that of last year and NZX futures indicate prices at the upcoming Global Dairy Trade auction will rise between 3 percent and 5 percent, reports said.