New Zealand’s commodity prices fell by 1.8% in July, driven by a decline in dairy prices
by VT Markets
/
Aug 5, 2025
In July, New Zealand’s ANZ Commodity Price Index fell by 1.8% compared to the previous month, following a drop of 2.4% in June. This decline was mainly due to lower dairy product prices.
On an annual basis, the index rose by 10.7%, thanks to higher prices for dairy and red meat. The stronger New Zealand dollar contributed to a 1.2% monthly decrease in the NZD Commodity Price Index.
Rising Global Shipping Prices
In addition, ANZ reported that global shipping prices went up in July. Exporters expect these costs to decline in the coming months due to lower global demand.
Commodity prices fell again in July, but not as much as before. This ongoing decline is primarily linked to falling dairy prices. The combination of this trend and anticipated lower shipping costs suggests tough times ahead for New Zealand’s exporters.
The latest Global Dairy Trade auction results from August 5, 2025, show prices dropped by another 3.1%. This aligns with recent manufacturing data from China, New Zealand’s largest trading partner, which showed an unexpected slowdown. China’s official PMI also fell to 49.2 last week, raising concerns about the demand for raw materials.
Given this situation, traders might want to prepare for a weaker New Zealand dollar in the upcoming weeks. Shorting the NZD/USD through futures or buying put options could be good strategies, especially since the RBNZ may need to take a softer approach. This situation is similar to late 2022 when a global growth scare significantly weakened the Kiwi dollar.
Expectations for the Reserve Bank of New Zealand
We believe the Reserve Bank of New Zealand will have little choice but to adjust its tone at the upcoming meeting later this month. Markets reflect this expectation, with overnight index swaps suggesting a 40% chance of an RBNZ rate cut by the end of the year, up from just 15% a month ago. Therefore, considering derivatives that benefit from falling short-term interest rates could also be a smart move.
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by VT Markets
Aug 5, 2025
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