27 Apr 2011

High commodity prices tipped to last

9:46 am on 27 April 2011

The Meat & Wool Economic Service is confident that the high commodity prices being fetched by all primary sectors are sustainable long-term.

Executive director Rob Davison says offshore markets have strengthened, and tighter supplies of agriculture production should hold prices up.

He says lambs are now averaging $120 each, while wool prices are at record levels after years in the doldrums.

''The cost of producing food has gone up everywhere,'' he said, ''and (there is) increased extra demand coming out of Asian economies.''

Fonterra is also forecasting a record milk payout of about $7.80 per kg of milk solids because of strong international dairy prices.

Lamb prices have doubled in the past five years, along with wool prices.

Federated Farmers says, however, that they are not record prices if inflation is taken into account. Economics spokesperson Phillip York says prices are good, but farmers are not getting record returns.