In August 2025, the ANZ World Commodity Price Index for New Zealand rose by 0.7% after a decline of 1.8% the previous month. Over the year, the index increased by 9.3%. When looking at New Zealand Dollars, the index went up by 2.1% in August, partly due to a weaker currency. All commodities saw price rises, except for aluminium. Dairy prices, which had been decreasing since May, began to recover in August, helping the index rise. Global shipping prices were mixed during this month, but exporters predict those costs will drop soon because of lower global demand. The rise in commodity prices, especially from the surprising recovery in dairy, is good news for New Zealand’s trade situation. After several months of decline, this turnaround could boost exporter confidence. The 9.3% annual increase hints at underlying strength even with recent softness. The recovery in dairy prices is crucial, confirmed by the last two Global Dairy Trade auctions in August 2025, where whole milk powder prices climbed by 4.1%. Since dairy makes up about one-third of New Zealand’s goods exports, this is a strong sign for the economy. It marks the end of the downward trend we saw from May to July. However, the New Zealand dollar’s weakness in August, which made these gains more significant locally, reflects broader market trends. The US dollar has been strong due to signals from the Federal Reserve about keeping interest rates high to tackle a steady 3.2% inflation in the US. This might limit any rallies in the NZD, creating challenges for currency traders. For those trading interest rate derivatives, this data makes it less likely that the Reserve Bank of New Zealand will cut rates soon. With inflation in New Zealand hitting 3.8% in Q2 2025, rising export prices could push inflation higher. This suggests that the RBNZ will maintain a strict policy stance through the rest of the year. There’s an opportunity in the options market since the conflicting signals from strong local data and weak global growth might lead to more NZD volatility. Looking back to the spikes in 2022 and 2023, we saw similar circumstances when domestic policies differed from global trends. Traders might consider buying NZD call options to prepare for a potential rebound while managing their downside risk. Watching for expected declines in shipping costs due to lower global demand is important. Recent data from China’s Purchasing Managers’ Index (PMI) shows a contraction at 49.2 for August 2025, reinforcing the idea of a global slowdown. This could create challenges for New Zealand’s export sector and the NZD in the medium term, despite currently strong prices.

here to set up a live account on VT Markets now