Here's my summary of the key news overnight in 90 seconds at 9 am, including news that our currency rebounded overnight, hitting a five year high against the Aussie dollar.
The latest Fonterra auction results are impressive. Prices are up +3.9% on the last auction in US dollars, and up 5.1% in Kiwi dollars. These aren't records but they are high levels. In fact they are 50% higher than prices at the same time last year. Weighted average prices over the whole range auctioned came in at US$4,973/tonne, merely US$7 less than the record set in the early October auction. The index has been higher though.
The 'good news' keeps coming for the New Zealand economy. Offshore markets noted the latest data and bid our currency higher by a full cent against most others. That news yesterday included the strong and holding commodity prices, the record terms of trade, the booming market for commercial vehicles, and now today's dairy prices.
Embellishing our credentials further, Transparency International rated New Zealand as the world's least corrupt - in first place with Denmark. For us, that represents an improvement on last years ranking.
Elsewhere, Brazil's economy contracted in the third quarter, with output shrinking by more than analysts had forecast, according to official state figures.
Gold was down again overnight, briefly touching just US$1,215/oz although it is up a few dollars from that low now. Both US benchmark and Brent oil prices are higher though, probably on news Iraq is looking to scale back its production levels.
New York equity markets are down, reportedly because markets are seeing early tapering by the Fed as now likely.
Across the ditch, the RBA left its official rates unchanged late yesterday at 2.5% - and worried about the 'high' level of the Aussie dollar.
The NZ dollar starts today sharply higher at 82.5 USc, 90.5 AUc which is its highest level in five years, and the TWI is at 77.5.
The easiest place to stay up with today's event risk is by following our Economic Calendar here »
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18 Comments
Agreed , our interest rates are higher than our competitors and our currency is too strong BUT it gives Wheeler some wriggle room if things turn to custard .
If we really want to catch up with Australia we should set up a National Oil Company with the proceeds of asset sales and expand our exploitation of our natural resources for the benefit of all Kiwi's .
Mortgage Belt - the Reserve Bank will need to LOWER interest rates or at least leave the OCR where it is for at least two years. Most mainstream banks now offer 5.99% mortgage rate for 3 years fixed - but they look like going lower over the next 6 months as banks compete hard for customers.
Paradoxically viewed as the least corrupt while well down the list on education.
Truly we can now be the example for the global community that, bulls..t does indeed ,baffle brains.
The education standards slide in New Zealand should be a major concern if aspiration is a genuine driver of future growth.
The numbers for asian cities should not be matched to OECD countries. However, the issue for New Zealand is that compared to the same OECD countries we have always been compared to in the past (places like Ireland, Denmark, Germany), student preformance has absolutely plummeted in the past 3 years. In fact, looking out over the past decade, we are the third most deteriorated country, and almost all of that has come in the last three years.
Hugh... Do you ever wonder that the changes might finally happen at the wrong time..???
ie. At the top of a real Estate cycle
And that the right thing to do... but done at the wrong time actually wreaks havoc..???
I kinda think there should be a sense of urgency...
All good news , but we dont want parity with the AUS$, because at under 90cents we are able to maintain our competitiive pricing advantage .
Remember the pricing advantage is really what I would describe as our DISTANCE PREMIUM , in other words a compensation for the distance to and from our markets .
The reality is that our products are really expensive overseas .
I saw Anchor and Anlene products on the shelves in Dubai earlier this year , and they were more expensive than Dutch, French , Polish and in a few cases Swiss products.
My layperson's assessment is that we are able to compete in this due to quality , but price will always be a factor in the long run
Disagree Boatman ... anyone can fiddle with price , its maintaining and keeping the quality that is a lot lot harder.
Brand NZ needs to stand for high quality , we will never be able to compete with the lowest cost producer of anything and neither should we try to !
You mentioned the jump in dairy prices (WMP? the one which pays our farmers?...)
Because there are a bunch of new regulations on the way from MPI.
(start quote)
Must provide a minimum of 30 days cooling profile data for delivery line and vat that is USB downloadable in CSV file format"
What! THE! FU!!!
hese regulations are currently set for implementation by MPI in the 2015-2016 season.
The official Comm’s plan is due to start in the new year (once everything is signed off by MPI).
The inside scoop from Fontera is that for all supplies of milk going to full processing and arriving at above 10c: each farmer will be supplied with a warning notice that the milk temperature is non-compliant and in 2015 the milk will not be accepted at all.
There are also rumblings within the Ministry that they may look to get a mandatory 30 day electronic reading of milk temperatures for compliance reasons. Albeit, this is unconfirmed as yet, it is always good to have a heads up on any serious regulatory changes that the Ministry is proposing."
(end quote)
We're only just getting some of the detergent residue issues sorted, and that cost thousands. And now we're supposed to get a bunch of other NON-VALUE ADDING equipment???? Most of which DOESN'T EXIST yet!!
Where is the money for all this crap supposed to come from??
The residue issue improved the product...but no-one will pay a premium, or even lift the base price for it.
The harder cooling temperatures won't change anything, let alone change base price or allow premium pricing. It looks like either a oneupmanship (if the UK say 12degrees, NZ will make 10C law, hah!, MPI say we must be betterer).
As for the data-logging...no. it's "proof" for compliance to the law. adds nothing but cost anywhere. most will sit unused. We used to have the facility built into microcontrollers, but they all got removed over the last 20yrs, along with the loadcells. They turned out to be too fiddly and not robust enough to operate on site. We paid thousands to get ours serviced before I relaced it with a switch and timer, and it was afterwards the company admitted to them not working. The customer wants quality product, and doesn't want to pay for it, let alone paying for that kind of cost-stuffing crud.
But then why would downstream customers pay a premium for the tougher cooling? It doesn't improve or change the product they receive. The end-consumer product doesn't get changed in any way by data-logging, so why -would- they want to pay extra.
The most important step in operating a business is to keep overheads and excess costs down to a minimum. That's why change for changes sake is the cynanide of economic behaviour
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