January 11, 2008

New Zealand dairy prices lost rising momentum

New Zealand dairy prices have weakened for the first time in 18 months, down by 1.8 percent since August 2006.

The ANZ world commodity price index remained the same in December, although it was up 30 percent for the year.

Steve Edwards, ANZ economist, said that New Zealand's price surge last year was caused by a drought in Australia and the phasing out of export subsidies in European countries.

An analysis of price trends over 40 years showed that on average boom in food prices was followed by a 50 percent drop from the peak.

A 50-percent drop in August-September dairy commodity peaks still left dairy prices at historically high level, Edwards noted.