What happened Thursday

A review of things you need to know before you go home on Thursday; NZD weakens with OCR cuts predicted after dairy price drop, commodity prices fall, Fletcher wins contract for Chch housing development

2nd Jul 15, 4:03pm by Jenée Tibshraeny

Here are the key things you need to know before you leave work today.

TODAY'S MORTGAGE RATE CHANGES
No changes.

TODAY'S DEPOSIT RATE CHANGES
No changes.

MORE INTEREST RATE CUTS PREDICTED AFTER DAIRY PRICE DROP
Another dire night for New Zealand's dairy industry saw prices in the latest GlobalDairyTrade auction fall by 5.9%. Wholemilk power prices plunged 10.8%. ANZ economists are now picking a Fonterra milk price of just $4.50 this season. ASB economists are picking the Reserve Bank will completely unwind last year's interest rate hikes by October; forecasting a further three consecutive cuts to the OCR between now and then. ANZ's economists predict the same number of cuts, but they pick the final reduction to 2.5% will take place in March.

COMMODITY PRICE INDEX DROP
The ANZ Commodity Price Index for June has declined by 3.1%. This is the third consecutive fall in the index, although the decline was more moderate than those seen previously. The index is 20% lower than 12 months earlier and at its lowest level in three years. Aluminium prices led the declines this month, down 6.4% m/m, followed by dairy prices, down 4.4% m/m. Prices in the meat sub-group fell 3.4% (down 8.6% year-on-year), while prices for the other major sectors were unchanged.

AUCKLAND HOUSING FIREWORKS DISPLAY CONTINUES
The average home within the former Auckland City Council boundaries is now valued at more than $1 million. The latest Quotable Value figures show the average residential property value in this area was $1,003,144, based on sales over the three months to the end of June. That was up 5.1% compared to the three months to March, and up 18.3% compared with 12 months earlier. A QV spokesperson says large number of Aucklanders are flocking to buy homes in Tauranga, Hamilton and the western Bay of Plenty, pushing up property values in those places too.

FLETCHER GETS ANOTHER CANTERBURY CONTRACT
Fletcher Building's Fletcher Residential has won the tender to work with the Government on an $800 million housing development in central Christchurch. If the development agreement is confirmed later this year, Fletcher Residential will progressively buy seven hectares of land between Manchester and Madras Streets, from just north of the Avon River down to Lichfield Street. It'll build 940 townhouses and apartments within the next eight to nine years. While Fletcher Residential will set the prices when the homes go to market, the Government says most are likely to be between $400,000 and $900,000.

CERA TO BE REPLACED BY NEW AUTHORITY
The Government is set to hand over the management and governance of the Canterbury rebuild to local authorities. It's today announced a new Greater Christchurch Regeneration Bill will replace the Canterbury Earthquake Recovery Act 2011, which expires next April. A new organisation, Regeneration Christchurch, will be set up to implement the Christchurch Central Recovery Plan, while some of Canterbury Earthquake Recovery Authority’s functions will transfer into a business unit within the Department of Prime Minster and Cabinet.

SUPREME COURT ALLOWS MOTOR TRADE FINANCES' APPEAL
The Supreme Court has granted Motor Trade Finances (MTF) leave to appeal a Court of Appeal fee judgment that went in favour of the Commerce Commission. The question to be debated will be; did the Court of Appeal err in finding that the fees charged by the applicants (MTF and Sportzone Motorcycles Ltd) were unreasonable for the purposes of s41 of the Credit Contracts and Consumer Finance Act 2003?

WHOLESALE RATES FALL
NZ swap rates have dropped sharply across the shorter maturities with 1, 2 & 3 year swap rates down 7 - 8 basis points. The weaker dairy auction overnight is a contributing factor behind the falls. The 90 day bank bill rate has dropped 2bps to 3.22%.

NZ DOLLAR WEAKENS
The NZ dollar has weakened from this time yesterday, following the grim GlobalDairyTrade auction. It's at 67.1 USc, at 87.8 AUc, and 60.7 euro cents. The TWI is at 71.2. Check our real-time charts here.

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8 Comments

by profile | 2nd Jul 15, 5:43pm 1435815793

10 billion tonnes of fish discovered. Now that will take a while to work through the deep fryer.

"That figure is not only 10 times the earlier estimate but 100 times the globe’s annual catch of seafood and 200 times the estimated biomass of the world’s 24 billion chickens, considered the most numerous vertebrate on land."

http://www.nature.com/ncomms/2014/140207/ncomms4271/full/ncomms4271.html

by steven | 2nd Jul 15, 8:08pm 1435824497

I wonder how cost effective / economic it is tto get the fish at "200 to 1000 metres" Well offshore as well...

by profile | 2nd Jul 15, 6:06pm 1435817173

So that's where all the productivity went. Not even a robot can fix this problem.

"But not everyone is as enthusiastic about the success of enterprises such as Ms. Reid’s Lune Croissanterie. Number-crunchers in the government believe that the rapid growth of artisan food-and-drink makers from craft-beer brewers to rustic ice-creameries are skewing the nation’s productivity figures."

http://www.wsj.com/articles/australias-artisan-conundrum-are-thriving-c…

by steven | 2nd Jul 15, 6:47pm 1435819656

So the fact "we" dont want to stuff ourselves with cheap, dodgy Cadbury's or GMO filled McDonalds, served to us by min wage workers but choose to go and buy quality food made by local New Zealanders with knowledge and skill has damaged productivity of the massive corporations? Meanwhile homegrown NZ SMEs and making a decent living? Well, all I can say is goodie.

by KH | 2nd Jul 15, 7:39pm 1435822787

Then there is damage caused by having only two big supermarket chains. Who severely limit access to their shelves.
What how much does it cost us when small producers can't get access, can trial products, can't get their products in front of the public.
But commercial innovation is not what is really the aim is it. Our government is only interested in the maintaining the status quo.
Think what would happen if we had twelve supermarket chains who actually needed to compete.

by steven | 2nd Jul 15, 8:04pm 1435824258

The supermarket chains are just the tip of the iceberg. The wholesalers are blocking small businesses importing on everything from ammo to tools and beyond to hold their margins up. Meanwhile places like the US where there is actual competition ppl generally earn more than us but pay a lot less.

by cowboy | 2nd Jul 15, 10:39pm 1435833592

Don't worry under TPPA, the US will insist that NZ follow it's example of banning unsafe personal food production and insist we used only certified and approved seeds and production facilities. Then you'll have to buy what the supermarkets tell you that you can afford.

by redcows1 | 3rd Jul 15, 8:39am 1435869566

Pretty much encapsulates why so much currently used economic theory is a dog. Same sort of thinking says Farmers can not own and run their own large coop companies and therefore they and their company must be corporatised. But runaway house prices are highly productive.