International commodity prices have firmed for a third successive month but those gains were being eroded by a stronger New Zealand dollar.
The ANZ Commodity Price Index index rose 2.7% in May, the third successive monthly increase, which took the index's combined increase since February to 6.5%.
But, the New Zealand Dollar Commodity Price Index - which quantified the impact on returns of changes to the value of the New Zealand dollar - fell 1.5%, following a 5.1% increase during May in the New Zealand/United States dollar exchange rate.
This supported concerns of dairy company Fonterra about the negative impact the exchange rate was having on its earnings, despite the May index recording a 5% rise in international export dairy prices.
That increase was being eroded by a strong exchange rate which was one reason why Fonterra last week reduced its forecast milk price to farmers next year to $4.55 per kg of milk solids from this year's expected $5.20.
ANZ economist Steve Edwards said seven commodity exports recorded rises in May, two were unchanged and four fell, but cumulatively it was the broadest range of price increases for New Zealand commodity exports in 18 months.
Wool led the rises, jumping 9.1% since April, but despite the rise, wool prices were still 38% down on a year ago.
Mr Edwards said lamb continued "a remarkable renaissance of late", with prices lifting another 0.7% in May, taking the cumulative increase in the past year to 25%.
After wool, beef recorded the next largest increase at 6.1%, sawn timber 4.1%, aluminium 2.5% and venison 0.3%.
The commodities to lose ground were seafood (5.1%), logs (4.6%), apples (3.2%) and skins (1.6%).
While the index had a buoyant run in the past three months, it was still 28.1% below May last year and the New Zealand dollar index was 11.2% lower than a year ago.
