Log prices have risen in the past month. Photo by Gerard
Log prices, which remained flat most of last year, have
risen markedly during the past month, the latest ASB New
Zealand Commodities Weekly shows.
Chinese inventories were run down over 2012, keeping prices
in check during that time and limiting the volume of imports,
Inventories had now reached a low level, suggesting prices
would be supported by additional Chinese demand.
The expected reacceleration of the Chinese economy and the
Christchurch rebuilding work would also be positive factors.
The ASB New Zealand commodity price index edged 0.4% higher
in the weekend ended January 18, with price gains led by
forestry and dairy commodities.
Lamb prices weakened again during the week, continuing a
slide that started at the end of October. Since then, prices
have fallen by more than 18% in New Zealand dollar terms.
There were upward movements in wool and log prices.
The latest US Department of Agriculture's bi-weekly price
report showed prices for most dairy ingredients increased
from their previous levels, although cheese and whey powder
prices were unchanged.
While the increases were modest, they did reflect continuing
production concerns for New Zealand and Australia, Prof
William Bailey, of the Department of Agriculture at Western
Illinois University, said.
Limited moisture was expected for New Zealand for the next
several weeks, keeping pasture conditions less than ideal for
a long tail to the production season.
The use of agricultural commodities as loss leaders to lure
customers into grocery stores to purchase more expensive
branded products, such as cereal, water or coffee, had
started to have an impact on the Australian dairy industry,
Prof Bailey said.
Several Australian supermarket chains were attempting to keep
fluid milk prices low, almost to less than the cost of
production in some cases, in an attempt to get customers into
their stores. As a consequence, the Australia dairy industry,
particularly in Queenstown, was shrinking, he said.
It had been reported the number of dairy farms in Queensland
had ''declined precipitously'' in the past few years.