Overall commodity prices have surged to record highs, underscoring the powerful role global markets play in rewarding strong export economies like New Zealand’s—even amid geopolitical instability such as the war in Iran.
The ANZ World Commodity Price Index rose 4.1% in March over February (month on month), marking an increase second only to the spike seen at the outbreak of the Russian-Ukraine conflict three years ago.
Nearly every component of the index climbed in March, with the exception of horticulture, which was between seasons and awaiting the arrival of new produce to market.
A 2.8% drop in the value of the New Zealand dollar last month further strengthened export competitiveness, helping drive the NZD Commodity Price Index up 6.4% month on month to a record high.
Global dairy prices rose 5.9% month on month as importers moved decisively to secure supply.
ANZ agriculture economist Matt Dilly noted that global dairy prices were already trending upward prior to the current Middle East conflict, with recent developments accelerating that momentum.
“Importers have increased purchases in response to concerns about supply chain disruption. However, global milk supply remains healthy, so higher prices might not be sustained once purchasing behaviours return to normal,” he said.
Aluminium prices climbed 9.8% month on month, supported by damage to a major aluminium smelter in the United Arab Emirates, with repairs expected to take several months.
Meat and fibre prices rose 2.4% month on month, driven by stronger overseas prices for beef and lamb. The meat and fibre index is now up 19% year on year, reflecting sustained international demand.
“Overseas demand remains strong for both beef and lamb, despite recent events, and supply is constrained,” Dilly said.
“This could change in the coming months as New Zealand supply increases on a seasonal basis.”
Wool prices dipped 2.8% month on month but remained up 49% year on year, showing longer-term strength in the sector despite short-term fluctuations.
The forestry index rose 3.1% month on month but was down 5.3% year on year, as concerns persist around China’s construction activity.
“Higher shipping costs, mostly due to fuel surcharges, will further erode margins on New Zealand log exports.”