New Zealand dairy markets and commodities have been hardest hit by the uncertainty facing the Chinese stock exchange, according to one of New Zealand’s main banks.
ABS says that overall dairy prices have fallen by 5.9% at a dairy auction on July 1, with prices for whole milk powder falling by more than 10%.
The downfall in Chinese markets are putting negative downward pressure on New Zealand commodity prices report ABS Commodities.
New Zealand market confidence has been hit hard and further price drops are expected at the upcoming dairy commodity auction on July 15.
ABS commodities also reports that future milk pricing suggests that a similar drop is expected at the next dairy auction.
The Shanghai Stock Exchange Composite Index (SSECI) has fallen by 30% since June 12. This drastic fall has occurred after a period of prolonged growth with the stock exchange rising 160% since early 2014.
However, ABS Commodities did suggest that the sudden drop in the Chinese market value will not have a negative impact on dairy products on the ground.
The sudden increase in stock market value did not result in increased food purchasing by the Chinese public therefore a fall in stock market will not result in a reduction in retail food spending.
Difficulties in both China and Greece have also added to New Zealand’s woes. The New Zealand dollar has hit a new five year low.
Investors have moved away from commodity dependent currencies to the safer Yen and US dollar.