ANZ Commodity Price Index Stalls in April Amid Sectoral Crosscurrents

The ANZ World Commodity Price Index remained flat in April 2025, marking a month of balanced gains and losses across key sectors. This stagnation, which followed a modest 0.4% decline in March, reflects the fragile state of global commodity markets as sector-specific dynamics collide with currency pressures. Dairy and meat prices rose, buoyed by strong demand, while forestry and aluminum prices fell, underscoring oversupply or weakening industrial demand. The New Zealand Dollar (NZD) further complicated the picture, with its depreciation amplifying the drag on local export returns.

The Sectoral Divide

The April stagnation was driven by opposing trends in commodity sub-indexes:
- Dairy and Meat: Prices rose, likely fueled by robust global demand. Dairy gains were particularly notable, with butter and cheese prices climbing on tight supplies and strong exports to Asia. Beef prices also surged, benefiting from increased demand in key markets like the Middle East and North America.
- Forestry and Aluminum: These sectors offset the gains. Forestry prices fell amid a lingering oversupply of logs, exacerbated by reduced construction activity in China and Australia. Aluminum prices declined as slowing industrial production—particularly in manufacturing—curbed demand.

The NZD Commodity Price Index fell 1.0% month-over-month (m/m) in April, reflecting both sectoral divergences and the NZD’s 1.0% depreciation against major currencies. This currency effect dampened returns for exporters, even as global commodity prices held steady.

Historical Context and Projections

While April’s flat result may seem minor, it follows a year of volatility. The index averaged 4.2% growth annually since 1987, but it has been elevated in recent years. March 2025’s YoY growth stood at 14.9%, down slightly from February’s 14% but still far above the long-term average. Historically, the index hit a peak of 49.08% in April 2010 and a low of -31.09% in March 2009, underscoring its sensitivity to economic cycles.

Projections suggest further moderation. Trading Economics forecasts the index to trend toward 3.7% by mid-2025, dropping to 1.9% by 2026 and stabilizing near 2.0% by 2027. This outlook aligns with broader expectations of slowing global growth, reduced inflationary pressures, and a normalization of supply chains post-pandemic.

The Role of Currency and Global Markets

The NZD’s depreciation in April amplified the drag on local commodity returns. While the World index was flat, the NZD-denominated index fell due to the currency’s weakening—a reminder of how exchange rates can magnify or mitigate commodity price movements. Meanwhile, the Reserve Bank of Australia’s (RBA) commodity index fell 1.2% m/m in April, driven by declines in non-rural and base metals, suggesting broader challenges in sectors like iron ore and coal.

Risks and Opportunities

Investors should monitor two critical factors:
1. Dairy and Meat Sectors: Continued demand from Asia and export market dynamics could sustain these gains. However, price volatility remains high, with geopolitical tensions and trade policies posing risks.
2. Forestry and Aluminum: A recovery hinges on improved demand. For forestry, a rebound in China’s construction sector or new export markets could be pivotal. Aluminum’s prospects depend on global industrial output and energy prices.

Conclusion

The ANZ World Commodity Price Index’s April flatness underscores the precarious balance between sectors in a slowing global economy. While dairy and meat sectors showed resilience, forestry and aluminum’s struggles—and the NZD’s depreciation—highlight vulnerabilities. With projections pointing to further declines in the index over the next three years, investors should brace for a normalization phase. The 3.7% Q2 2025 forecast and the long-term stabilization at 2.0% by 2027 suggest that commodity prices will increasingly reflect a world of moderate growth rather than the boom-bust cycles of the past. For now, the index’s stagnation serves as a cautionary signal: in a world of sectoral crosscurrents, diversification and a focus on demand fundamentals are critical to navigating the commodity landscape.