Still mixed signals on the export price front, with a worrying cloud on the edge of the horizon

As New Zealand’s  export season gains momentum, there  are some encouraging  signs for the farming  industries  on the price  front.  For good measure, the NZ  dollar  has  eased in value against the  US  dollar.

The ANZ Bank’s world commodity price index increased 1.3% m/m in February, a welcome lift, the bank says, after 10 consecutive monthly falls. Stronger returns for meat and forestry products were the main drivers. In local currency terms the index gained 2.0%.

Dairy prices lifted 0.2% month-on-month in February, with the dairy auctions delivering mixed results. ANZ economist Susan Kilsby says there is a strong expectation that improved economic activity in China will drive increased demand for dairy products, but this is yet to really materialise.

Prices hold steady at latest GDT auction, but are there warning signs for farmers in Scope 3 pressures?

Prices held steady at the latest Fonterra  GDT auction. In USD terms, they were up 0.6% to an average $US3610, a smaller rise than the 2.4% at the previous auction.

WMP prices  held  steady at $US3400   but SMP and cheddar both rose.  Cheddar was  up 1.8% to $US4826, SMP  about +1.7% to $US3102. Butter meanwhile  was down 1.9% $US4725.

However things were undermined in NZ dollar terms. Overall prices dropped 2% in local currency as the NZD continues its puzzling rise. That means in local currency prices are down 15% over the past two months, compared with the equivalent 9% drop in the USD.

None of this shows NZ is getting on top of its of deteriorating current account deficit.