New Zealand's terms of trade fell in the first three months of the year as a decline in commodity prices weighed on exports, with dairy prices falling for the third straight quarter even as volumes rose.
The terms of trade, which measures how much imports can be bought with a fixed quantity of exports, fell 2.3 per cent in the three months ended March 31, according to Statistics New Zealand.
That's a smaller decline than the 3 per cent forecast in a Reuters survey. Export volumes fell 0.6 per cent against an expectation of a 0.7 per cent increase, while export prices dropped 3.8 per cent
Prices of dairy products fell 5.6 per cent in the first quarter, making the biggest downward contribution to the terms of trade.
The fall follows a slide in prices in Fonterra Cooperative Group's GlobalDairyTrade sales this year which prompted the world's largest exporter of dairy products to cut its forecast 2012 milk price payout and flag lower payments in 2013.
Fruit export prices fell 7.3 per cent, mainly reflecting weaker prices for apples. Forestry products fell 4.2 per cent and meat declined 3.6 per cent.
Import prices fell 1.5 per cent in the first quarter, less than the 2.1 per cent drop forecast by economists and helping offset the slide in export prices.
Prices of transport equipment imports fell 2.3 per cent in the March quarter, leading the decline. Mechanical machinery import prices fell 1.8 per cent and electrical machinery dropped 2.6 per cent.
Terms of trade for services rose 1.8 per cent.