Commodity price falls accelerate

<p>Kia ora,</p><p>Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/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 with another day focused on commodity prices, including this time, dairy prices.</p><p>The overnight <a href="https://www.globaldairytrade.info/en/product-results/" target="_blank"><strong>dairy auction</strong></a> has brought lower prices again, down -4.1% in US dollar terms. Butter was the big loser, down -9.1% at this auction. SMP fell -5.2% and WMP fell -3.3%. But somewhat saving the day has been a sharpish retreat in our currency, so in NZD terms prices fell only -1.0%. This is the seventh retreat in dairy prices in the past eight auction events, taking prices back to levels last seen at the start of 2022.</p><p>But dairy prices weren't the only commodity to take it on the chin. The gold price has fallen below US$1800/oz for the first time since October 2021. And oil prices have crashed, down about -10% and below US$100/bbl for the first time since mid-May. <a href="https://www.iea.org/reports/gas-market-report-q3-2022" target="_blank"><strong>Lower demand expectations</strong></a> and Russians selling at huge discounts has finally caught up with the main oil indexes. </p><p>All this is despite <a href="https://www.census.gov/manufacturing/m3/prel/pdf/s-i-o.pdf" target="_blank"><strong>US factory orders levels</strong></a> coming in surprisingly positive, up +1.7% from April when a good monthly +0.5% rise was expected. Overall these orders are up +15.5% from year-ago levels, far more than can be explained by inflation. And durable goods orders were up +12.2% so the gains are more than just temporary consumption. It is data that isn't getting much respect today.</p><p>The private <a href="https://www.pmi.spglobal.com/Public/Home/PressRelease/fe564b773e9846068e8fb87a7ce8f7a8" target="_blank"><strong>Caixin China services PMI</strong></a> also revealed a big recover