5 Dec 2022

'Double whammy' sees main commodities at lowest level in nearly two years.

4:54 pm on 5 December 2022
A man withdraws money from an ATM at the global headquarters of the Australia and New Zealand (ANZ) Bank in Melbourne on February, 2012.

Photo: AFP

Falling world prices and a rising New Zealand dollar have battered returns for key export commodities to their lowest level in nearly two years.

ANZ Bank's monthly commodity price index has fallen 3.9 percent in November on the previous month to be 11.5 percent lower on the same month a year earlier.

Agricultural economist Susan Kilsby said exporters suffered a "double whammy" because the New Zealand dollar had risen in value knocking export returns by 9.1 percent for the month, with returns at their lowest level since January 2021.

The biggest drivers of the decline were 4.4 percent fall in dairy prices and 6.3 percent drop in meat prices.

"The softer dairy prices recorded in November reflect the fact that global demand is weak at present, although there are tentative signs that relatively slow growth in milk output is now providing support to prices," Kilsby said.

Tumbling lamb prices, down 9.5 percent, were the main influence on meat prices, which have had two large monthly falls.

"Lamb is a luxury product in most markets, meaning demand has been impacted by deteriorating economic conditions," Kilsby said.

Horticulture exports were knocked by poorer quality apples, while lower log prices hit forestry returns.

The only main commodity to buck the trend was aluminium, as falling stockpiles offset slowing demand.

Kilsby said New Zealand businesses continued to pay high shipping costs than many overseas countries even though global prices were normalising after two years of pandemic disruptions.

"It is still far from plain sailing for New Zealand exporters as the costs of moving goods from New Zealand are still considerably higher than prior to the pandemic and there are ongoing disruptions in shipping schedules."

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