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ANZ Commodity Price Index: Up, up and away? - ANZ

Fuseworks Media
Fuseworks Media

The ANZ World Commodity Price Index farewelled 2020 with a 1.8% gain in the month of December, to finish the challenging year down just 0.4% y/y.

Dairy, forestry and aluminium were the sectors that pushed the index higher in December.

ANZ Agri Economist Susan Kilsby said "Demand for dairy products has not been notably impacted by the changing consumption habits associated with the social distancing measures that remain in place in many countries."

In local currency terms the index fell 0.9%, as the Trade Weighted Index (TWI) gained 1.8%.

Global shipping costs lifted sharply during December as shipping companies lifted rates to offset the cost of delays at ports. Port congestion remains an issue - it is taking longer for ships to unload goods and in some cases goods are being diverted to alternative ports. Locally we continue to have delays at the Port of Auckland and several ports in China are also highly congested. Access to shipping containers remains an issue due to the slow turnaround times and some vessels not back-loading empty containers.

Dairy prices lifted 4.3% in December to finish the year just 1.2% down. Strong gains were recorded for milk powders with whole milk powder up 5% and skim milk powder lifting 3.8%. Butter prices lifted 6.4% while cheese gained 2.8%.

The meat and fibre index fell 1.7% in December. Prices for this sector have fallen 14.1% in the past year. Wool prices eased in December, after crawling upward for the previous six months. Wool prices are currently 20% weaker than a year ago and are expected to remain very weak for some time. Beef prices eased 2.4% in December and lamb prices fell another 1%. Lamb prices have been impacted to a greater degree due to being more reliant on the restaurant trade.

The horticulture index eased slightly in December but limited volumes of product are exported at this time of the season.

The forestry index gained 2.7% in December to finish the year up 2.3%. Demand for export logs remains strong, led by the recovery of China’s economy. Domestic demand for logs to construct houses also remains strong.

Aluminium prices lifted 4.1% in December, having lifted nearly 14% in 2020. Prices are now at their highest level in over two years fuelled by strong global demand, particularly from China. China’s investment in technology infrastructure such as 5G networks, ultra-high-voltage power transmission and big-data centres bodes well for aluminium demand.

See the attached report for full analysis.

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