NZ Herald
  • Home
  • Latest news
  • Herald NOW
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
  • Herald NOW
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Politics
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Herald NOW
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / Business / Companies / Agribusiness

Buying power of exports rides surge in global dairy prices

Brian Fallow
By Brian Fallow
Columnist·
11 Jun, 2007 05:00 PM4 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

Dairy product prices rose 2.8 per cent in the March quarter, led by prices for milk powder. Photo / Paul Estcourt

Dairy product prices rose 2.8 per cent in the March quarter, led by prices for milk powder. Photo / Paul Estcourt

KEY POINTS:

Soaring dairy prices have pushed the international buying power of a basket of New Zealand's exports to the highest it has been since 1974.

The terms of trade improved 2 per cent in the March quarter, Statistics NZ said yesterday, which means that 2 per cent more imports
could be funded by a fixed quantity of exports than in the December quarter.

The exchange rate rose against the currencies of all our major trading partners during the March quarter, including a 4.1 per cent appreciation against the United States dollar.

"The high terms of trade are driving the New Zealand dollar higher, meaning that it is consumers rather than exporters who are benefiting most," said Westpac chief economist Brendan O'Donovan.

But the Reserve Bank singled out the high terms of trade as a major reason behind last week's official cash rate increase.

The March quarter's 2 per cent increase puts us well on the way towards the 5.4 per cent increase the bank is now forecasting for the year to March 2008.

"It will give the bank no comfort and does nothing to change our expectation of another rate hike to come," O'Donovan said.

The higher dollar tends to push import and export prices lower. But world prices for dairy products almost completely offset the currency effect on export prices overall.

Export prices fell 0.2 per cent while import prices fell 2.1 per cent.

Dairy product prices rose 2.8 per cent in the quarter, led by milk powder.

Forest products were also higher, by 2.9 per cent, the fifth consecutive quarter in which they have risen.

But if dairy farmers are doing well, their sheep farmer neighbours face falling prices, down 6.9 per cent for the quarter.

The other main driver of the fall in export prices was manufactured exports.

On the imports side, oil was cheaper by 3.6 per cent (compared with a 20.7 per cent fall in the December quarter) and machinery recorded a similar decline.

ANZ National Bank calculates effective exchange rates for different export sectors which adjust for the impact of commodity prices and inflation. The results give an indication of how much world prices have or have not insulated different sectors against the higher dollar.

For the dairy sector the effective exchange rate is approaching the levels last seen in 2000/01 when the kiwi dollar was below US45c.

But for meat producers the commodity-price-adjusted exchange rate is more adverse than ever.

The effective exchange rate is also deteriorating for manufacturers, services like tourism, horticulture and seafood. For forestry it is still restrictive, but less so than it has been.

Overall export receipts, adjusted for seasonal effects, rose 2.7 per cent or $222 million to $8.38 billion in the March quarter. A $208 million increase in dairy exports to $1.7 billion accounted for almost all of the increase.

It reflected not only higher prices but a 10.2 per cent increase in dairy export volumes.

Exports of non-food manufactures also increased, despite the exchange rate, by 5.5 per cent in the quarter, more than reversing a 4.5 per cent decline in December. But meat exports fell 5.3 per cent in volume terms.

Overall, export volumes were 2.4 per cent higher than in the December quarter, while imports increased 2.2 per cent

Imports of consumer goods rose, especially durables, but car imports fell. Imports of plant and machinery rose, apart from transport equipment.

ANZ National bank chief economist Cameron Bagrie said dairy prices in April and May would see the terms of trade post another strong increase in the June quarter.

Higher terms of trade would support a higher currency on average and ANZ's latest fair value estimate put the kiwi around the US65c mark. The historic average is around US60c.

Advertisement
Advertise with NZME.
Advertisement
Advertise with NZME.
Save

    Share this article

Latest from Agribusiness

Premium
KiwiSaver

'Opening a can of worms': Govt considers allowing KiwiSaver withdrawals for farms

10 Jun 05:00 PM
Agribusiness

ASB offers $150,000 interest-free loans for farm solar systems

09 Jun 11:51 PM
Premium
Agribusiness

$15b boost to NZ economy: Fonterra sets milk price forecast and earnings

28 May 09:15 PM

Why Cambridge is the new home of future-focused design

sponsored
Advertisement
Advertise with NZME.

Latest from Agribusiness

Premium
'Opening a can of worms': Govt considers allowing KiwiSaver withdrawals for farms

'Opening a can of worms': Govt considers allowing KiwiSaver withdrawals for farms

10 Jun 05:00 PM

Finance Minister Nicola Willis is seeking advice from Inland Revenue.

ASB offers $150,000 interest-free loans for farm solar systems

ASB offers $150,000 interest-free loans for farm solar systems

09 Jun 11:51 PM
Premium
$15b boost to NZ economy: Fonterra sets milk price forecast and earnings

$15b boost to NZ economy: Fonterra sets milk price forecast and earnings

28 May 09:15 PM
Premium
A2 Milk silent on A$350m acquisition talk

A2 Milk silent on A$350m acquisition talk

27 May 12:37 AM
Clean water fuelling Pacific futures
sponsored

Clean water fuelling Pacific futures

NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • What the Actual
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven CarGuide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP