The ANZ attributes the wool jump to higher prices for cotton (a competing fibre) and renewed demand from Middle East and European markets, which has coincided with run down in wool inventories globally. While the wool industry still has long way to go to provide farmers with satisfactory returns, the price lift is an encouraging signal for those that still have some faith in its future.
The resilience of the Kiwi continues to impact on returns for unhedged exporters. When converted to NZ dollars, the ANZ Commodity Price Index lifted by more modest 0.8 percent in October. This reflects strengthening in the value of the kiwi dollar, particularly against the United States dollar. ANZ chief economist Cameron Bagrie says the booming commodity prices are critical support pillar for the economy as attention turns to the prospects for 2011. Firstly, they are helping the rural sector deleverage and fix balance sheets that had become extended. And they are providing huge revenue and income boost to the economy.
For further information on the ANZ Commodity Price Index, which includes an overview of the wool industry visit http://www.anz.co.nz/
Meanwhile the World Bank’s latest report on the state of global food supply predicts high prices for meat, sugar, dairy and grain will continue for the next five years. This is expected to cause instability in number of countries, with food riots already claiming number of lives in Mozambique.
Food prices have risen by more than 15% in the past 12 months in Egypt, India, Uganda, Indonesia, Kenya and Brazil, and record high grain and sugar prices have been joined by soy, which reached the highest for almost 18 months last week.
Speaking following an emergency meeting of the UN Food and Agriculture organisation last week in Rome, UN special rapporteur on the right to food Olivier de Schutter attributed the impact of increased pressure on land as being the principal cause.
“Worldwide, five million to 10 million hectares of agricultural land are being lost annually due to severe degradation and another 19.5 million are lost for industrial uses and urbanisation.”
