Meat export rise shrinks trade deficit

Falling dairy prices were offset by a rise in meat exports. Photo / Nicola Topping

New Zealand posted its smallest November trade deficit in four years, beating economist forecasts, as falling dairy prices were offset by a rise in meat exports.

The country's trade deficit narrowed to $213 million last month, the smallest November deficit since 2010 and down from October's deficit of $908 million. A deficit of $500 million was expected last month, based on a Reuters poll of economists.

The trade balance was a surplus of $153 million in November last year - the first surplus for that month since 1991 - when exports were at record highs, according to Statistics New Zealand.

Exports fell 9.5 per cent to $4.02 billion from the same month a year earlier, beating the Reuters poll of $3.95 billion. Imports slipped 1.3 per cent to $4.24 billion.

New Zealand benefited from strong terms of trade in the first half of the year as demand for dairy products and logs in China bolstered exports, while a historically high kiwi dollar has kept down the cost of imported goods. Dairy prices have nearly halved since the start of the year, as an oversupply in China weakened demand and pushed down prices, coinciding with a fall in log prices, easing the country's trade outlook, and weighing on the currency.

Yesterday's figures show milk powder, butter and cheese dropped 27 per cent to $1.2 billion, led by a 34 per cent tumble in milk powder.

Offsetting the decline in New Zealand's biggest export commodity was a rise in meat and edible offal, which rose 20 per cent, led by a 65 per cent jump in frozen beef.

Capital goods led the decline in imports, falling 7.9 per cent last month from November 2013. Intermediate goods increased 7.9 per cent, led by processed industrial supplies and diesel, while consumption goods rose 4.2 per cent.

Exports to China slid 44 per cent to $686 million in November from a year earlier, led by a drop in milk powder. Meanwhile, imports from China rose 1.3 per cent to $829 million last month.

On an annual basis New Zealand's trade balance was a deficit of $453 million, smaller than Reuters' forecast deficit of $750 million. Exports rose 6.3 per cent to $50.4 billion in the year ended November, while imports climbed 6.6 per cent to $50.8 billion.

The country posted a trade deficit of $2.5 billion in the three months ended November 30, as exports dropped 7 per cent to $11.6 billion, while imports climbed 11 per cent to $14.1 billion.

Deficit drops
• Trade deficit narrowed to $213m last month.
• Down from October's deficit of $908m.
• Exports fell 9.5% to $4.02b versus same month last year.
• Imports fell 1.3% to $4.24b versus same month last year.