Australia back to top NZ export destination

The TPP agreement seeks a trade agreement spanning the Pacific Rim and currently involves 12 countries: New Zealand, Australia, the United States, Canada, Japan, Singapore, Malaysia, Brunei, Vietnam, Chile, Peru, and Mexico.

Australia has overtaken China as New Zealand's number one export destination, in part reflecting a slump in milk powder exports to the People's Republic, according to data from Statistics NZ.

Statistics NZ said Australia had supplanted China in the New Zealand export stakes for the first time since 2013 but ASB said it expected China to soon regain its "top dog" status when dairy prices recover.

In the year to March 2015, exports to Australia were valued at $8.65 billion compared with $8.60 billion for exports to China.

"We expect China to regain its top dog status, probably some time later in the year, particularly as dairy export prices come off their current lows and the Chinese economy regains strength," ASB Bank said.

For the past five months, exports to China and Australia had fallen, compared with the same month in the previous year, Statistics NZ said. Falls in exports to China were larger than the falls to Australia.

"This is the first time Australia has been our top export destination since the year ended November 2013," said SNZ's international statistics manager, Jason Attewell.

Total goods exports fell $103 million (2 per cent), down to $4.9 billion in March compared with the same month last year.

Exports to China fell $324 million (29 per cent) because of lower whole milk powder exports while exports to Australia fell by $26 million.

Goods imports rose $169 million (4.1 per cent), to reach $4.3 billion in March 2015. Consumption goods, including clothing, led the rise and were up 19 per cent.

In March, the trade surplus of $631 million was down from the $904 million surplus in March 2014, the department said. Excluding the re-export of a drilling platform to Singapore in March 2015, the trade surplus was $432 million.

Statistics NZ said there was an annual trade deficit of $2.4 billion - 4.9 per cent of exports - in the March year, the largest annual trade deficit since the year ended July 2009.

Last month, Fonterra announced a 6 per cent drop in its first-half net profit to $183 million and lowered its dividend forecast to a range of 20c-30c a share from 25c-35c. Revenue from China - Fonterra's biggest market - dropped to $1.2 billion in the six months ended January 31 from $3.15 billion a year earlier.

As it stands, there is downward pressure on Fonterra's $4.70 per kg of milksolids forecast for the current season, which ends on May 31.

Oversupply issues continue to weigh heavily on the dairy market thanks to the lifting of the European Union's quota system on April 1, increased supply resulting from import bans by Russia, and higher production coming from the US.

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