Photo Source: Matthias Zomer
New Zealand’s commodity export performance in 2024 exceeded expectations, with the ANZ World Commodity Price Index jumping 15% year-on-year. The climb, driven by strong dairy and meat prices, reinforced the country’s significance on the global stage. The outlook for 2025 remains positive, supported by expanding production capacities and market trends shifting despite sector-specific challenges.
Dairy and Meat Perform Strongly
The dairy and meat industries stood out as the top performers in 2024. Dairy prices saw a remarkable 18.9% increase for the year, contributing significantly to overall index gains, although December saw only a modest 0.1% uptick.
ANZ agricultural economist Susan Kilsby remarked, “Prices for whole milk powder firmed, but prices for other dairy commodities softened in December.” Meanwhile, the meat and fibre sector enjoyed a 23% year-on-year rise, despite a slight 0.3% dip in December, highlighting the sector’s overall strength amid seasonal adjustments.
Kiwifruit Industry Shines
The horticulture sector, particularly the kiwifruit industry, played a significant role in New Zealand’s commodity success. The horticulture index rose 3.9% in December and 6.7% over the year, reflecting a strong production season. ANZ agricultural economist Susan Kilsby noted, “The kiwifruit industry had a strong season in terms of production and prices,”
Forestry Faces Challenges
The forestry sector had a challenging year in 2024, diverging from the strong performances seen in dairy and kiwifruit. The forestry index showed no movement in December or over the year, with weak demand from China contributing to the stagnation. “It has been a tough year for forestry as it is highly reliant on demand from China, and this demand has been relatively weak,” commented by Susan Kilsby.
Aluminium Benefits from Electric Vehicle Demand
Aluminium prices contributed significantly to the index, climbing 16% year-on-year, supported by robust demand from the electric vehicle (EV) sector. Though the sector saw a 1.5% dip in December, the annual rise reflected its resilience. Kilsby noted, “China’s decision to end its export tax rebate could push global aluminium prices higher,” indicating possible future price increases.
Economic Factors Boost Export Returns
The New Zealand Dollar (NZD) Trade Weighted Index recorded a 24.7% year-on-year increase in 2024, further enhancing returns for exporters. December alone saw a 3.6% rise in the index, amplifying gains in NZD terms. Currency fluctuations provided additional support to the already strong commodity price trends.
Challenges in Early 2025, but Optimism Remains
The close of 2024 saw positive performance, but the early months of 2025 have presented hurdles, especially for dairy and meat exporters. Weak holiday demand has put pressure on dairy prices, and lamb prices fell 3.3% in December after strong growth throughout the year.
However, there is optimism ahead, with alumina shortages expected to ease in 2025, potentially boosting aluminium production. Furthermore, both the kiwifruit and dairy sectors are expected to grow as production capacities increase.
“Looking ahead, alumina shortages are expected to ease in 2025,” Kilsby said, pointing to the potential for a more stable and growth-oriented year ahead.