High NZ$ wipes out most export price gains in October; Dairy price rise outstrips currency rise (Update 2)

It was another case of rue the high New Zealand dollar for NZ exporters in October, with overall gains in the international prices of NZ exports wiped out by the rising currency yet again. (Update 2 includes more detail.) However, a fall in the NZ dollar over the last week of October from just under 76 USc to just over 72 USc now may mean better news for exporters in November if commodity prices keep their strength and the NZ dollar does not regain its recent losses. New Zealand export commodity prices rose 4.6% in world price terms in October, but registered a small fall in NZ$ terms, the ANZ Commodity Price Index showed. Despite the rising Kiwi dollar, dairy prices rose 3.3% in New Zealand dollar terms over the month, its third consecutive rise since July, since when prices have risen 15.8%. In world price terms, dairy prices rose 8.3% over the month and are up 44% from their low in February and 32.9% since July. Forestry product prices also recorded a rise in NZ dollar terms. Prices rose 2.6% on the back of a 7% rise in world price terms during October. Here are ANZ economist Steve Edwards' comments on the figures:

Price gains measured over most commodities. The ANZ Commodity Price Index recorded another strong monthly gain, lifting 4.6 percent in October. Cumulatively, the index has risen 24 percent from the recent low measured in February this year. Eleven of the thirteen key commodities we track recorded a price rise in October, while two commodities recorded price falls. Another solid lift in global dairy prices underpinned the latest lift. International dairy prices rose a further 8.3 percent in October, with the indicative dairy price now 44 percent stronger than the low point measured in February. Increased prices were measured in ten other commodities. The largest increase across the commodity basket was a 15 percent rise in the price of logs. The other forestry prices also increased strongly The price of sawn timber was up 6.1 percent and wood pulp prices increased 4.2 percent. Wool prices improved 7.1 percent and skins lifted 3.5 percent. Aluminium prices lifted 2.1 percent. Smaller increases of less than 1 percent were recorded for seafood, venison, lamb and kiwifruit. Commodity price declines were measured in beef (down 3.9 percent) and apples (down 1.7 percent). A soaring kiwi dollar curdled the cream. The surge in New Zealand's key export commodity prices coincided with a lift in the value of the kiwi dollar over the month. In fact, the rise in the currency outstripped the lift in commodity prices, resulting in the ANZ NZ Dollar Commodity Price Index registering a small drop in October. The recent retracement in the value of the New Zealand dollar over the end of last month will boost the NZD index in November, assuming that the commodity prices remain at their elevated levels and the currency doesn't move higher.