Powder price slump hits hard
Dairy exports to China are plunging, knocking a hole in total exports for October and leaving a worse than expected monthly trade deficit of more than $900 million.
The trade deficit of $908m was the worst for that month in six years, after the big slump in milk powder prices since the start of the year.
It was worse than the $640m monthly trade shortfall that economists expected on average.
The annual trade balance had been blown back from a surplus of $1.8 billion in the August year to an annual shortfall of $107m for the year to the end of October. It was the first time New Zealand ran an annual deficit since the end of last year.
Both imports and exports were higher than expected in the month, Westpac economists said.
In seasonally adjusted terms, there was a strong lift in wood exports in the past month, but that may reflect the timing of shipments, rather than a rebound from the big drop in log volumes and prices after a glut in the Chinese market earlier this year, Westpac said.
Dairy exports were weaker as expected, with prices and volumes down by more than 4 per cent between September and October, seasonally adjusted, Westpac said.
Latest trade figures show Australia is once again New Zealand’s top export market, knocking China off its previous perch.
Statistics NZ figures show exports were down $215m in October, 5.1 per cent down on the same month last year.
Milk powder led the fall in exports to China, slumping 77 per cent to $459m. Volumes were down 67 per cent.
Milk powder, butter, and cheese exports to all countries fell by $361m, as other countries such as Algeria received a greater value than in October 2013.
‘‘Milk powder exports to China fell after the record prices and quantities of late 2013, contributing to a 40 per cent fall in exports to China,’’ Statistics NZ international statistics manager Jason Attewell said.
Exports to Australia rose $32m (4.0 per cent), due to crude oil. This month, exports to Australia were $185m higher than those to China, compared with last October when they were $280m lower.
‘‘Since June we’ve sent a higher value of goods to Australia than to China, but China is still ahead for the 12 months ending October,’’ Attewell said.
The value of import rose $525m (12 per cent) to $4.9b compared with October 2013.
The rise was across all three main broad economic categories, led by capital goods including aircraft, helicopters and goods vehicles.