Plummeting dairy prices have contributed to the largest monthly decline ever seen in the ANZ commodity price index series.
The index dropped 11.2% in July, its fourth consecutive fall, and it is at its lowest level since October 2009.
The fall was broad-based, led by dairy prices, with 13 of the 17 main commodities recording declines, ANZ agri-economist Con Williams said.
Dairy prices fell 23.1% in the month, reaching their lowest level in more than 11 years.
Whole milk powder prices fell 35.2%, while skim milk powder and casein prices were down 10.7% and 9.8% respectively and cheese and butter prices declined.
International supply and demand imbalances remained a ''significant headwind'' for dairy exporters, Mr Williams said.
Prices also fell across most of other major sectors, with aluminium prices down 2.6% and forestry down 2.2%. Forestry exports were under pressure from softer Asian demand, particularly from China, he said.
A 5.4% increase in beef prices, due to continued strong United States demand, helped offset declines in lamb, wool and skin prices.
Prices from the NZD index fell 6.7%, the third largest monthly fall since the series started in 1986.
A weaker NZD was helpful but its sizeable fall indicated it was not moving fast enough in response to shifts across commodities, Mr Williams said.
• Fonterra is expected to lower its milk price forecast on Friday.
