Business

Dairy prices up 3.7 percent as commodity prices reach record high

15:58 pm on 4 November 2021

Commodity prices have shot to a new record, with dairy, aluminium and meat fetching strong prices.

Dairy prices rose 3.7 percent last month, as a result of a relatively tight global milk supply. Photo: 123rf

The ANZ World Commodity Price Index lifted 2.1 percent last month.

The report says freight prices are stabilising, although costs remain elevated, with persistent supply chain disruptions.

It said rising freight costs were inflationary, and expected to drive up New Zealand's consumer price index to a peak of just under 6 percent by year's end.

Dairy prices rose 3.7 percent last month, as a result of a relatively tight global milk supply, with sector growth relatively constrained in most of the major dairy exporting regions of the world.

"NZ has had a slow start to the production season as excessively wet weather resulted in more pasture damage than normal and has slowed regrowth," the report notes.

The meat and fibre index rose 1.6 percent month-on-month to a record level, with strong prices for beef and lamb offset by softer prices for wool.

"Global beef supply has been constrained due to restrictions on exports from Brazil and Argentina and limited supply from Australia as herd rebuilding takes place," the report says.

"Lamb supply is also relatively constrained due to low seasonal volumes from New Zealand and Australia , which has been supportive of prices."

Aluminium prices are rose a further 3.5 percent last month following a massive 9.5 percent increase in September.

"Energy shortages have reduced the production of aluminium in China - the world's largest producer of this energy - intensive metal," it said.

Log prices were bouncing around elevated levels.

"Demand from China is picking up, but congestion makes it difficult to get logs into some ports," it said, adding that local demand for timber is robust and local prices are competitive with export prices.