Economic week

February 23, 2018
by Nick Clark

Farm Sales Down
The Real Estate Institute’s monthly Rural Market Statistics recorded a steady start to the year but sales volumes are still down on the same time last year.  The statistics showed there were 396 farm sales in the three months ended January 2018, down 24.0% on the 521 farm sales for the three months ended January 2017.  Overall for the year ended January 2018, there were 1,527 farm sales, down 12.7% on the previous year.

The median price per hectare for farms sold in the three months to January 2018 was $28,257, up 4.4% on the three months to January 2017.  Over the same period the REINZ All Farm Price Index also rose 5.8%, although the Dairy Farm Price Index dropped 8.9%.  The All Farm Price Index (and the Dairy Farm Price Index) adjusts for differences in farm size, location and farming type, unlike the median price per hectare, which does not adjust for these.

GDT takes a breather
At this week’s event the Global Dairy Trade auction broke its recent run of gains, with prices slipping slightly by 0.5% compared to last fortnight’s auction.  

Three out of the six commodities on offer increased in price and three decreased.  For the two biggest by volume whole milk powder was up 0.3% but skim milk powder was down 3.0%.  The average selling price was US$3,623 and 20,256 tonnes were sold.

The GDT price index is 3.4% higher than the same time last year.  

Lamb and beef forecasts updated
Beef+Lamb NZ’s latest forecast for the 2017/18 predicts that remaining livestock available for processing for the rest of the season will be less than in any of the previous five seasons. 

Dry conditions and strong prices for lamb, mutton and beef in the December quarter drove high processing volumes.  The average value per tonne for lamb, mutton and beef exports were at record or near record levels in the quarter.

Beef+Lamb NZ forecasts the total number of lambs available for processing in 2017-18 will be up 1.3% on the previous season. However, the number processed in the December quarter was up 13%, leaving 2.1% fewer lambs for the remainder of the season compared to 2016-17.

Meanwhile, the total number of cattle available for the 2017-18 season is estimated to be even with the previous season.  However, 15% more cattle were processed in the December quarter, which means 4.7% fewer cattle are available for the rest of the season

Producer Prices
Higher fuel prices contributed to the rise in producer output and input prices in the December 2017 quarter, according to Statistics NZ’s Business Price Indexes.

For the whole economy producer output prices (the prices producers get for their goods and services) rose 1.0 percent in the December 2017 quarter. Input prices (the costs producers pay) rose 0.9 percent.

For sheep, beef cattle and grains farmers output prices were up 2.2% for the quarter and input prices were up 1.1%.  For dairy cattle farmers output prices were down 4.8% and input prices were up 1.1%.

For the year to December 2017, output prices for the whole economy were up 4.7% and input prices were up 4.4%.

For sheep, beef cattle and grains farmers output prices were up 15.9% for the year and input prices were up 3.9%.  For dairy cattle farmers output prices were up 6.9% and input prices were up 2.9%.

Productivity Up
New Zealand’s labour productivity rose 0.9% in the year ended March 2017, according to Statistics NZ’s Productivity Statistics. Growth in the workforce saw labour inputs for the increase 2.9%, while the economy expanded 3.8%.  Capital productivity (up 1.1%) and multifactor productivity (up 1.0%) also increased.

Growth in labour productivity in goods-producing industries was up 1.6% in the year ended March 2017, boosted largely by 3.9% growth for construction. Service industries recorded labour productivity growth of 0.8%, but primary industries (agriculture, forestry, fishing, and mining) declined 0.6%.

NIWA Soil Moisture Data
The latest soil moisture maps (as at 9am Thursday 22 February) show the impact of recent heavy rains.  Soils in many parts of the country are now significantly wetter than usual.
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Exchange Rates

Source: Reserve Bank of NZ

Wholesale Interest Rates