Export prices soar 10pc as dairy dominates

NZ export prices rose 10.3pc in the last quarter, said Statistics NZ. Photo / Kenny Rodger

Dairy product prices rose by nearly one-third, dominating a 10.3 percent rise in the price of exported goods during the March quarter.

This was the largest quarterly increase in export prices in nearly a decade, Statistics New Zealand (SNZ) said today.

"While dairy prices rose by one-third in the March 2010 quarter, prices are still 25 per cent lower than when they peaked in the December 2008 quarter," SNZ prices manager Chris Pike said.

Robin Clements, senior economist at UBS New Zealand said the increase in the terms of trade was broadly in line with expectations.

He said this latest surge in the terms of trade was "unequivocally positive" in respect of the outlook for incomes and growth over the coming year or so.

The data suggested downside risk, said Clements for his forecast of a 0.8 per cent rise in real GDP for the first quarter.

Forestry products (up 11 per cent) also contributed to the latest rise.

Prices for imported goods rose 4.2 percent in the March 2010 quarter - the first increase since the December 2008 quarter.

Petroleum and petroleum products (up 9.6 percent) contributed the most to the overall increase in import prices due to higher prices for crude oil and motor spirit.

The merchandise terms of trade rose 5.9 percent in the March 2010 quarter, following a similar increase of 5.8 percent in the December 2009 quarter.

The latest quarterly rise, the largest in 34 years, was due to export prices rising more than import prices.

A rise in the terms of trade means that for every dollar of exports sold, a larger volume of imports can be purchased.

Seasonally adjusted export volumes increased 3 per cent in the March 2010 quarter, and are nearly back to the level seen in the December 2007 quarter (which is the highest recorded).

Fruit, forestry products, petroleum and petroleum products, and meat were the main contributors to the increase in export volumes, while volumes for dairy and casein declined.

Seasonally adjusted import volumes rose 2.8 percent in the March 2010 quarter, which is the third consecutive quarterly rise.

Consumption goods, and intermediate goods (goods used as inputs in the production of other goods) were the main contributors to the rise.

Capital goods (assets used in industrial production), passenger motor cars, and motor spirit all recorded decreases in the current quarter.

The price and volume indexes for exports and imports of goods are compiled mainly from Customs data.