{"id":16345,"date":"2015-11-23T00:00:00","date_gmt":"2015-11-22T11:00:00","guid":{"rendered":"https:\/\/www.farmersweekly.co.nz\/weaker-europe-weighing-on-nz-commodity-exports\/"},"modified":"2015-11-23T00:00:00","modified_gmt":"2015-11-22T11:00:00","slug":"weaker-europe-weighing-on-nz-commodity-exports","status":"publish","type":"post","link":"https:\/\/www.farmersweekly.co.nz\/news\/weaker-europe-weighing-on-nz-commodity-exports\/","title":{"rendered":"Weaker Europe weighing on NZ commodity exports"},"content":{"rendered":"Reading Time: <\/span> 2<\/span> minutes<\/span><\/span>

\u201cIf we decide that the current trajectory of our policy is not sufficient to achieve our objective, we will do what we must to raise inflation as quickly as possible,\u201d Draghi told a conference in Frankfurt.<\/p>\n

The kiwi hit a month high of 61.77 euro cents following the comments.<\/p>\n

\u201cA weak European economy and related weakness in the currency is not good news if you happen to be selling to the Europeans,\u201d Bank of NZ senior economist Doug Steel said.<\/p>\n

The ECB next meets on December 3 and Draghi\u2019s comments stoked speculation the bank will add to its stimulus programme to boost inflation and revive the regional economy.<\/p>\n

Despite the ECB\u2019s current asset buying programme, inflation rose just 0.1% in October.<\/p>\n

The weaker euro is helping make European milk more competitive in international markets, at the same time as the region has more milk available to sell because of the removal of production quotas and as Russian bans on the importation of European products sees supplies diverted elsewhere.<\/p>\n

\u201cEurope makes somewhere between six and seven times the amount of milk that NZ makes and it\u2019s the competitiveness of that potential on international markets that creates the wider impact for dairy,\u201d BNZ\u2019s Steel said.<\/p>\n

\u00a0\u201cThat\u2019s all come together really in a negative way for international pricing and for NZ.\u201d<\/p>\n

Dairy products are NZ\u2019s largest commodity export, followed by meat and Steel said sheep meat exports to European countries were also affected by a weaker regional economy.<\/p>\n

\u201cWe sell a lot of sheep meat up to continental Europe as well as into the UK,\u201d Steel said.<\/p>\n

\u201cTo the extent that the UK and European currencies move similarly, so we are seeing softer in-market pricing for lamb in the UK particularly but also in Europe and a weaker Europe just compounds that problem so that\u2019s putting downward pressure on NZ lamb prices.\u201d<\/p>\n

The price for a leg of lamb in the United Kingdom, considered a European benchmark, had fallen by about a quarter over the past year to about \u00a31.54 per pound, he said.<\/p>\n

Still, tighter supply because of a smaller NZ sheep flock should help support future pricing, he said.<\/p>\n

Meanwhile, venison wasn\u2019t hit to the same extent because much of NZ\u2019s production was destined for Germany, which was in a stronger economic position than other European countries, he said.<\/p>\n

\u201cIf you have a niche product and you are selling to a particular group of consumers that are going okay, then you can still do well in that environment for sure,\u201d Steel said.<\/p>\n

Still, BNZ currency strategist Raiko Shareef said much of the ECB easing story may already be built into the euro.<\/p>\n

He expects the kiwi could fall to 56 euro cents by the end of the year as the NZ dollar weakens owing to traders eschewing risk in response to the Federal Reserve hiking United States interest rates.<\/p>\n","protected":false},"excerpt":{"rendered":"A weak European economy, which is pushing down the region\u2019s common currency, is weighing on New Zealand\u2019s largest export commodities.\nThe euro tumbled after European Central Bank (ECB) president Mario Draghi on Friday gave his strongest hint yet that the ECB will unveil fresh stimulus measures at its meeting next month to boost the regional economy.\n","protected":false},"author":16,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_FSMCFIC_featured_image_caption":"","_FSMCFIC_featured_image_nocaption":"","_FSMCFIC_featured_image_hide":"","footnotes":""},"categories":[3],"tags":[],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t