New Zealand's terms of trade declined in the fourth quarter as weaker prices for dairy and meat saw export prices falling more than import prices.

The merchandise goods terms of trade fell 2 per cent in the fourth quarter as export prices slid 5.7 per cent and import prices dropped 3.7 per cent, Statistics NZ said.

Seasonally adjusted export volumes fell 2.4 per cent and import volumes rose 0.7 per cent, while the seasonally adjusted value of exports fell 6.1 per cent to $11.4 billion and the value of imports fell 1.9 per cent to $12.7 billion.

Terms of trade measure the buying power of NZ's exports abroad. In the fourth quarter dairy export prices fell 13 per cent, as volumes slid 0.9 per cent and the value of exports fell 6.7 per cent to $2.9 billion.


Milk powder and butter led the decline in dairy volumes, while the volume of cheese rose 4.8 per cent to a record.

The average price for whole milk powder has dropped 18 per cent at the four fortnightly GlobalDairyTrade auctions this year to US$1890 a tonne as global milk supply continues to outweigh demand.

NZX futures are predicting a gain in prices at today's sale.

Weaker dairying has hit the broader economy, with both KiwiRail and Port of Tauranga noting the drop in volumes in their latest results.

Seasonally adjusted meat values fell 2.4 per cent in the fourth quarter, having surged 16 per cent three months earlier. Export prices fell 5.1 per cent while volumes rose 3.8 per cent and the value of meat exports slid 2.4 per cent. Beef led the prices lower, falling 6.6 per cent, while lamb prices fell 4.2 per cent. Among imports, prices for petroleum and associated products tumbled 25 per cent in the fourth quarter.

Falling back

2 per cent fall in merchandise goods terms of trade in the fourth quarter.

5.7 per cent fall in export prices.

3.7 per cent fall in import prices.