A 1% increase in the ANZ commodity price index last month has
seen the index lift to its second-highest level on record.
The index was now only 0.9% below the peak in prices recorded
in April last year, economist Steve Edwards said.
International prices for 10 of New Zealand's main commodities
increased in December, led by dairy products, and three fell
and four were unchanged.
Cheese and butter recorded the largest rise, both increasing
7%, leaving cheese at a five-year high and butter at a
two-year high. Skim and whole milk powder lifted 3% and 2%
After hitting a two-year high last month, the price of wool
fell 12% in December, accompanied by a 4% drop in the price
of pelts and a 1% easing in aluminium prices.
The forestry and seafood subgroups lifted to record highs.
The dairy subgroup moved to a seven-month high but remained
6.3% shy of its highest level. In contrast, the level of
aluminium prices eased to a four-year low, Mr Edwards said.
Westpac senior economist Anne Boniface said robust demand for
New Zealand's key commodity exports, combined with tight
supplies in some sectors, had been supporting prices at high
While the bank expected increasing supply to put downward
pressure on prices this year, the strength of demand from
emerging economies should limit the down side, she said.