Make it 1000%!
OPINION: The appendage swinging contest between the US and China continues, with China hitting back with a new rate of 125% on the US, up from the 84% announced earlier.
New Zealand commodity prices are likely to feel downward pressure over the year, says ASB senior rural economist Nathan Penny.
In his Commodities Weekly report, Penny says 2019’s more modest outlook follows relatively positive prices over 2018.
The average level over 2018 was comfortably above the 10-year average in both USD (+4.7%) and NZD (+12.3%) terms.
However, economic growth in NZ’s major export market, China, is slowing, and Penny expects this slowing to lead to more modest demand for NZ’s commodities.
“Recall that China accounts for around a fifth of NZ’s overall goods exports and larger amounts for the log, dairy and sheepmeat sectors,” he says.
Moreover, NZ agricultural production is booming, with the extra supply also weighing on commodity prices.
Penny notes that in particular, spring 2018 weather was surprisingly good and the weather has continued in this vein so far this summer. As a result, agricultural production is likely to remain firm over coming months.
“For example, we expect record-high dairy production this season. Indeed with the bumper dairy production in mind, we revised down our 2018/19 milk price forecast twice late last year.”
Meanwhile, the global economy is also slowing, hinting at a broader slowing in demand for NZ export commodities. In the US, the trade tensions with China combined with rising interest rates are causing financial market volatility. While over the Atlantic, ongoing Brexit concerns are weighing on the UK and European economies.
Despite these headwinds, there are positive offsets in play, says Penny.
“First up, the NZ dollar is at a supportive level and likely to mostly stay that way over 2019. As a result, commodity prices in NZD terms, if not USD terms, are still likely to remain above long-term averages.
“Also, while overall Chinese economic growth is slowing, we expect the household sector to hold up better than the industrial and export sectors.”
Recent rain has offered respite for some from the ongoing drought.
New Zealand's TBfree programme has made great progress in reducing the impact of the disease on livestock herds, but there’s still a long way to go, according to Beef+Lamb NZ.
With much of the North Island experiencing drought this summer and climate change projected to bring drier and hotter conditions, securing New Zealand’s freshwater resilience is vital, according to state-owned GNS Science.
OPINION: Otago farmer and NZ First MP Mark Patterson is humble about the role that he’s played in mandating government agencies to use wool wherever possible in new and refurbished buildings.
For Wonky Box co-founder Angus Simms, the decision to open the service to those in rural areas is a personal one.
The golden age of orcharding in West Auckland was recently celebrated at the launch of a book which tells the story of its rise, then retreat in the face of industry change and urban expansion.
OPINION: The appendage swinging contest between the US and China continues, with China hitting back with a new rate of…
OPINION: The irony of President Trump’s tariff obsession is that the worst damage may be done to his own people.