Terms of trade boosted by dairy and meat

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New Zealand's terms of trade hit a 37-year high in the March quarter, boosted by higher dairy and meat export prices.

The merchandise terms of trade rose 0.9 per cent, meaning 0.9 per cent more imported goods could be funded by a fixed quantity of exported goods than in the December quarter, Statistics New Zealand (SNZ) said.

Merchandise export prices rose 6.3 per cent in the March quarter, with dairy prices up 5.5 percent and meat up 10 per cent, forestry products up 4.2 percent and wool up 12 per cent.

Prices for imported goods rose 5.4 per cent in the March quarter with petroleum and petroleum products contributing half of the overall increase. Excluding petroleum and petroleum products, import prices rose 2.7 per cent in the quarter.

The rise in the terms of trade was smaller than expected, with the median forecast in a Reuters poll having been for a rise of 2.2 per cent, with the rise in import prices much higher than the 2 percent predicted, while export prices also beat expectations but by a smaller amount.

SNZ prices manager Chris Pike said seasonally adjusted dairy export volumes rose 7.6 per cent in the March quarter, reaching their highest level since the series began in 1990.

Seasonally adjusted export volumes fell 0.3 per cent but remained at historically high levels, following a 4 percent rise in the December 2010 quarter.

Meat, non-fuel crude materials, and fruit and vegetables were all major contributors to the overall fall in export volumes. Dairy, petroleum and petroleum products, and forestry provided notable offsetting increases.

Seasonally adjusted import volumes rose 5.1 per cent in the March quarter, the seventh consecutive quarterly rise.

Total import volumes were 21.5 per cent higher than the most recent low reached in the June 2009 quarter, but were still 1.8 percent lower than their June 2008 quarter peak, SNZ said.

Intermediate goods - used as inputs in producing other goods - and consumption goods were the main contributors to the rise in import volumes in the March quarter.

- NZPA