Dairy prices fall again

<p>Kia ora,</p><p>Welcome to Wednesday's Economy Watch where we follow the economic events and trends that affect New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news Wall Street thinks yesterday's drop was overdone, but there has been little positive data released overnight to support that view.</p><p>First up today however is the overnight <a href="https://www.globaldairytrade.info/en/product-results/" target="_blank"><strong>dairy auction</strong></a> which saw <a href="https://www.interest.co.nz/charts/commodities/dairy-prices" target="_blank"><strong>prices fall again</strong></a>, this time down -2.9% in US dollar terms led by SMP which fell -5.2% from the prior even two weeks ago, and WMP which fell -3.8%. The only saving grace has been the devaluation of the NZ dollar, and in local currency todays declines are 'only' -1.5%. Since the big +15% jump in early March, overall prices have fallen -9.3% although they are still +20% above year-ago levels. Analysts will be re-running their payout forecast assessments as today's results represent the seventh consecutive auction where prices have fallen.</p><p>US housing starts and building permits issued are remaining quite elevated, but oddly, <a href="https://www.census.gov/construction/nrc/pdf/newresconst.pdf" target="_blank"><strong>completions haven't caught up</strong></a> yet and are just +1.5% higher in June than May, and only marginally above the June 2019 levels. The March jump hasn't been extended and it is unclear why given the continuing surge in starts. The low completion rate is adding to the perceptions of a 'housing shortage' in the US.</p><p>In Canada, <a href="https://housepriceindex.ca/#maps=c11" target="_blank"><strong>house prices are rising</strong></a> at their fastest pace on record. They were up +16% year on year in June, faster than the +14.2% rise which was the previous record in June 2017 - and after which the Bank of Canada brought in new cooling measures. None see