ANZ’s monthly commodity price index rose 6 percent in March on February, and was 20 percent higher than a year ago, to reach its highest level since it was started in 1986.

The main driver was the strength of global dairy prices, which gained 12.7 percent in March, the highest in seven years, with whole milk powder, a key driver of farmer returns, 43 percent higher than last year.

ANZ’s agricultural economist Susan Kilsby said: “Dairy prices are currently being supported by strong global demand, combined with a steady milk supply in the main dairy-exporting nations”.

Meat was close to a one-year high, while logs and aluminium were sitting near two-year highs.

The common feature of the strong prices and demand was China, which was growing more strongly than most economies after the pandemic, Kilsby said.

“It was already a major buyer of our commodities before Covid hit and it’s going to continue to be for the foreseeable future.”

The seafood and horticulture sectors remained under pressure, with the former not be able to sell to normal high end food outlets overseas, and the latter was struggling to harvest crops.

Shipping costs remained a high cost and the shortage of containers was more pronounced with exporters finding it harder to get containers and then space on ships, Kilsby said.

The Baltic Dry shipping index – a lead indicator of economic activity – rose 25 percent in March.

“Global shipping costs continue to trend higher, meaning a smaller portion of the overseas returns is making it back to our local producers,” she said.

New Zealand dollar returns for producers rose 7.4 percent for the month, reflecting a fall in the value of the dollar.