New Zealand posted its third straight trade surplus in January, as sales of dairy products drove record exports to China, cementing its status as the nation's biggest market.
The trade surplus was $306 million last month, a record for the month of January, from a revised $493 million in December, according to Statistics New Zealand. In the year, the trade balance turned to a deficit of $312 million, or 0.6 per cent of exports. The monthly surplus of $216 million and an annual gap of $250 million was expected, based on a Reuters survey.
China has cemented its new position as our leading export market.
Exports to China jumped by $590 million, or 92 per cent, to $1.2 billion in January, led by shipments of whole milk powder. China bought 46 per cent of all milk powder, butter and cheese New Zealand sent overseas last month and it accounted for 30 per cent of total exports, up from 19 per cent in January last year.
At the same time, shipments to Australia fell by $80 million, or 13 per cent, to $556 million and New Zealand's closest market took 14 per cent of total exports, down from 19 per cent a year ago.
The changing status of China versus Australia was also reflected in imports. New Zealand imports from China rose by $41 million, or 6.5 per cent, to $671 million last month, while imports from Australia fell by $111 million, or 22 per cent, to $393 million.
"The strength of Chinese demand for New Zealand exports continues to be a feature of trade data," said Anne Boniface, senior economist at Westpac Banking Corp.
"Strong demand is leading to high international prices for New Zealand's key commodity exports, and providing a significant income boost for exporters," she said in a note. "We expect this to flow through the broader New Zealand economy in a myriad of ways over the coming year, including via a boost to consumption and investment spending."
Exports of dairy products jumped about 56 per cent to $1.69 billion, compared to January 2013, and rose about 25 per cent to $14 billion in the 12 months ended Jan 31. Meat exports gained 12 per cent to$497 million in the year and 2.4 per cent to $5.3 billion in the year. Exports of logs and wood products rose 33 per cent to $497 million in January and gained 24 per cent to $3.9 billion in the year.
Total exports rose 22 per cent to $4.08 billion in January and climbed 6.8 per cent to $48.8 billion in the year.
The trade figures come the same day that Fonterra Cooperative Group, the world's biggest dairy exporter, raised its forecast pay-out to farmers to a record, citing global demand for milk powders.
The Auckland-based company expects to pay $8.65 per kilogram of milk solids to farmers in the 2013/14 season, up from a previous forecast of $8.30 per kgMS, it said in a statement. The dairy company held its forecast dividend of 10 cents per share.
The kiwi dollar didn't move much after the trade figures, having gained after the Fonterra announcement earlier, paring an overnight decline. It was last at 83.11 US cents, from 83.10 cents immediately before the trade figures were released.
New Zealand's imports rose a more modest 3.5 per cent to $3.77 billion in January from the same month of 2013 and climbed 3.2 per cent to $48.5 billion in the year. Imports of vehicles and parts led the increase in the month, rising by $110 million, or 31 per cent. Mechanical machinery imports rose by $38 million, or 7.6 per cent, food residues and fodder jumped $36 million, or 85 per cent led by soya beans and palm oil cake and petroleum products rose by $15 million, or 2.4 per cent.
Fertiliser imports fell by $32 million, or 44 per cent, mainly reflecting a drop in urea.