ANZ Commodity Index Rises on Oil Surge and Weak Kiwi Dollar
The ANZ World Commodity Price Index climbed 0.6% in September, marking a 1.0% year-over-year increase. This rise was primarily fueled by surging oil and gas prices, driven by the ongoing Middle East conflict. Skim milk powder saw a significant jump of 9.2% for the month and is up 41.1% compared to last year. Butter, however, fell 5.1%, influenced by stronger milk production in the Northern Hemisphere.
Aluminium prices increased by 1.1%, supported by supply disruptions in the Middle East, pushing its annual gain to around 23%. The conflict also led to higher freight costs, which offset modest gains in overseas log prices for New Zealand's harvesters and exporters. The NZD Commodity Price Index surged 2.8% due to a weaker New Zealand dollar, partly attributed to higher US interest rates.
The dual impact of the Middle East conflict is evident: while it boosts prices for energy-linked exports like milk powder and aluminium, it also raises freight and import costs. A weaker kiwi dollar amplifies local-currency returns for exporters, supporting farm incomes and terms of trade, but complicates the Reserve Bank of New Zealand's inflation management task.
ANZ's next update is scheduled for November 4, which will provide further insights into these trends. The current dynamics suggest that any easing in oil prices could quickly reverse the gains seen in milk powder prices.