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Commodity price rises, led by skim milk powder, continued in January ANZ says

Rural News
Commodity price rises, led by skim milk powder, continued in January ANZ says
1st Feb 11, 3:46pm by Gareth Vaughan

Commodity prices climbed nearly 4% in January lifting the ANZ Commodity Price Index to another record high.

ANZ said January's index rose 3.8% to 313.3. It's the fifth consecutive strong monthly increase in the index, which has now recorded cumulative gains of 18% since last August.

Thirteen of the 17 commodity prices surveyed registered rises in January, three were unchanged and one declined.

ANZ economist Steve Edwards said the skim milk powder price produced January's biggest increase rising 14% from December. The price of whole milk powder increased by half of this, up 7%. Wool prices gained 11% and beef prices increased 7%.

Elsewhere aluminium prices rose 4%, venison prices added 3% and lumber prices were up 2%.  Wood pulp, sheepmeat and seafood prices all increased by up to 1%.

The one fall was recorded by skin prices which dropped 0.5% month-on-month after reaching a 14 year high in December. The prices of logs, kiwifruit and apples were unchanged.

Meanwhile, ANZ's New Zealand Dollar Commodity Price Index also hit a new high, rising 2.3% in January to 223.2.

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14 Comments

by  philthy  |  1st Feb 11, 4:23pm 1296530616

Great, just as we are wholesale selling all the farms off.



First the Chinese now the Germans.

You really have to ask, how dumb is this country?

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by  philthy  |  1st Feb 11, 4:36pm 1296531363

Or should that question be "how dumb is the government that's letting this happen?"

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by  Sheep Shagger  |  1st Feb 11, 10:03pm 1296551008

This lift is really starting to get significant. Talking to my father today and he reconed that apart from  the 2000/02 period he would have to go back to the 60s to recall prospects looking so good.

I know the doom and gloom brigade will counter with the rise in costs(with some validity) or dismiss it as the result of money printing or whatever but as things stand at the moment the turnaround is simply amazing. We have more feed than we know what to do with and product prices literally riseing by the week .Yes, off a low base but the speed and size of the lift is incredible. Its nice to be on the front foot for a change. Long may it last!

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by  Casual Observer  |  1st Feb 11, 10:41pm 1296553290

SS there does seem to be a little more optimism around.  Dairy herd sales have been quite static but apparently are now starting to move quite quickly.

 

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by  Sheep Shagger  |  1st Feb 11, 11:17pm 1296555422

CO, I was talking to a real estate agent at the weekend, who hadnt had a significant sale all of last year. He told me he had 4 sales on the verge of being signed off at the moment. All sheep a beef properties being brought by dairy farmers for run offs or  potential conversion. The money ,ballpark was about $700 per su to use the  measure that he quoted me.

I also talked to a mate of mine who has an irrigated sheep and beef place and he doing the the sums on conversion. He recons he cant justify not doing it with current prospects. Do you sense a shift in dairy farmer sentiment re expansion?

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by  dinky  |  2nd Feb 11, 7:39am 1296585549

These four farms SS, would they have been about $1000+ per su 2 years ago? It would be interesting to see the reason for sale, distressed S and B farmers, retiring, or just not feasible for the younger generation to take them on.

A mate of mine was talking to the local rural support guy the other day and he was staggered at the number of farmers in trouble, esp given the price of ewes, lambs, wool and beef.

 

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by  Sheep Shagger  |  2nd Feb 11, 10:35am 1296596155

Dinky

The point being it now seems the market is finding a level that whilst well below 2 to 3 years back is still historically pretty high.The above quoted places apparently had s and b farmers put offers in but at lower levels than the dairy interests.

Im not sure of the individual circumstances of the vendors to make any comment. However it must be positive for struggling s and b farmers( and their banks) to have a rise in income/capital stock values and some stability in their land asset price.

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by  dinky  |  3rd Feb 11, 8:00am 1296673255

Sorry SS, just asking a few questions to get a bigger picture. Given current S&B returns $700 per su would almost be a possibility. It's always a shame to see land go to the black and whites. I wonder where it will end. At what point will our low sheep number start to hurt us in the market place when we can't supply contracts etc. I hope the dairy machine doesn't continue to swallow up our finishing farms as these are vital to the industry.

With the margin in S&B being at or near an all time high, we still see some farmers in the crap, a hangover from 2001-2007 debt fuelled activity agreed. We will see more farms going to conversions and support. These will be for varied reasons but still a concern for the red meat industry.

We live in exciting farming times, but a face a number of challenges, but I have that feeling they were being talked about 20 years ago.

Debt, the increasing age of the farmer, declining stock numbers, reduction in finishing land, increased costs (esp rates, insurance, fuel, fert.), the ETS, all spring to mind.

 

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by  Casual Observer  |  2nd Feb 11, 8:30am 1296588623

SS, the banks have certainly loosened their grip on the $ to borrow if your numbers stack up. Some dairy farmers have/are converting their runoffs to dairy units so could be looking to replace them.

Some farmers have been holding off doing anything to see how things went this season.  This seasons payout is now in the bag so there will be some farmers with a fair bit of $ sloshing around in their accounts. By this time of the year, no matter where you live, half of your milk production will have been reached so you have a pretty good idea of how your season could go, though autumn is always quite key.

For some, even though production may have taken a hit due to drought or snow, financially this season is shaping up to be very, very good.I have heard 26 conversions going to Fonterra next season are all sheep farmers converting.

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by  marcf28  |  2nd Feb 11, 7:48am 1296586083

yeah cull ewes for 90 bucks and these not drys either.seems more good news every week, wonder what the banks are gonna do when there distressed farmers are in a better position, dont think gonna be much loyalty from the farmers anymore

t

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by  Casual Observer  |  2nd Feb 11, 8:31am 1296588710

Fonterra gDt up 7.2% this morning

  • WMP (Whole Milk Powder) up 5.7 % to $3,995/MT

  • SMP (Skim Milk Powder) up 8.5% to $3,913/MT

  • AMF (Anhydrous Milk Fat) up 9.2% to $6,486/MT

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by  Andrewj  |  2nd Feb 11, 11:01am 1296597708

Shags sheep, look at this and tell me its not a bubble. Jim Rodgers I think it was called another bubble in commodities in 2008 and he thought it was the blowing up of this bubble that was going to really hurt. Looks like he may have made a good call.

This is in one day!

http://finviz.com/futures.ashx

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by  Sheep Shagger  |  2nd Feb 11, 12:07pm 1296601669

I thought Jim Rodgers was the guy who has been the most bullish on ag commodities? I read a quote from him somewhere "that in the future it would be 29 year old farmers,not bankers driving Lambourgini's". Happen he's right?

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by  Andrewj  |  3rd Feb 11, 9:27am 1296678441

Shags sheep,

 Be careful. In the States the house has not approved raising the debt ceiling. This is resulting in huge amounts of extra liquidity flowing into the banks. I hear it could be as high as an extra 35 billion a week on top of the 17 billion Bernakes pushing. This money is going straight into equities and commodities. Its all bullshit.

Have another look and see what went on last night

 

http://finviz.com/futures.ashx

 and copper has hit 10k

 

http://www.telegraph.co.uk/finance/newsbysector/industry/mining/8298478…

its across the board

http://www.telegraph.co.uk/finance/newsbysector/industry/mining/8298210…

 

the truth is buried under a pile or crap. The guy has a Phd which stands for, 'piled high and deep'

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