Rising dairy prices continue to underpin gains in the ANZ Commodity Price Index, which has recorded its seventh straight monthly gain last month.

The index gained 4.6 percent in October, led by an 8.3 percent increase in dairy prices, as 11 of the 13 commodities tracked rose.

Dairy prices have recovered strongly as buyers restock depleted inventories, as witnessed by the 65 percent surge in the price of milk powder on Fonterra's online auction website, globalDairyTrade.

"You'd expect dairy prices to fall after they risen over 65 percent since July, but anecdotally, what we're hearing suggests prices are still pretty firm," said Philip Borkin, economist at ANZ National Bank.

Commodities have bounced back from their lows in February, with the ANZ index rising 24 percent over this period, but are still well down from the highs achieved in 2007.

The gains in international prices have somewhat offset a soaring kiwi dollar, which is up more than 45 percent from its sub-50 US cents low in March.

The currency's continued strength in October largely wiped out the increase, expressed in New Zealand dollars, with kiwi-denominated commodity index easing 0.4 percent last month.

Source: Auckland New Zealand Herald

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