New Zealand’s ANZ World Commodity Price Index slid a further 3.2% in July following a 0.9% dip in June, but is still 3.1% above late-2017 levels and broadly flat on a year ago, notes the research team at ANZ.
Key Quotes
“Of the 17 commodities in the index, 12 fell, three were unchanged and two lifted. Of the six broad categories, only forestry prices rose – a star performer.”
“NZD movements absorbed only a small part of the monthly decline, depreciating 0.1-0.2% m/m against all major trading partner currencies except the AUD, which was flat m/m. This saw the NZD index dip 3.1% m/m and annual growth shed 1%pt from June to 6.5% y/y in July.”
“A 6.5% m/m fall in dairy prices drove much of the monthly weakness, leaving this index down 7.1% on a year ago.”
“New Zealand’s goods terms of trade remain high by historical standards, but with export prices turning more mixed and import prices set to lift as global inflationary pressures build, we don’t anticipate any further record breakers any time soon.”
“New Zealand’s terms of trade generally follow the global economic cycle and data flow is suggesting this is near (or slightly past) its peak. If the global economy evolves as we expect, the terms of trade should remain elevated and with it exporter incomes. However, risks are heightened as tit-for-tat tariffs between the US and a number of its trading partners (which have lifted demand for New Zealand product to date) are making markets nervous and could be stalling global investment and import demand.”
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