New Zealand commodity export prices rose for a third month as a softer local currency and recovering global demand for dairy products combined to boost returns.
Prices in New Zealand dollars gained 3.1% in October from September, when they improved 2%, ANZ Bank New Zealand said Monday in Wellington. From a year earlier, prices fell 8.6%, which is the smallest annual decline since December.
Signs that prices for milk, meat and lumber are finding a floor may deliver a boost for New Zealand’s cooling economy, with farmers in particular facing a squeeze on profits as incomes drop while costs and interest rates rise. Sentiment in the rural sector fell to the lowest in 20 years in the third quarter, according to a Rabobank survey.
There are encouraging signs for dairy prices amid a tentative recovery in demand from China. Auckland-based Fonterra Cooperative Group, the world’s biggest dairy exporter, last month raised the price it expects to pay its New Zealand suppliers citing a lift in global auction prices, which have gained 20% since hitting a seven-year low in August.
Dairy prices rose 5.9% from September, according to the ANZ gauge. Still, they are 17% lower than a year earlier.
ANZ said higher prices for kiwifruit, aluminum and beef also underpinned the commodity price index recovery in October.
The local currency’s 4.8% decline against the US dollar in the past six months has also added to returns for local producers.
