Slowdown in China hits exports

THE slump in dairy prices is flowing through to export figures with a vengeance, as last year’s boom in sales to China rapidly fades and Australia again takes up the crown of New Zealand’s top export market.

Total exports in November were down almost 10 per cent on the same month last year, to $4 billion.

Exports have been hit hard by falling dairy returns, but also lower prices for other export commodities such as crude oil, though meat exports have been improving with strong demand, and beef prices are at their highest levels in more than 12 years.

But, overall, exports are expected to worsen in the coming year as lower dairy prices keep knocking overseas sales, with the trough likely to arrive in March quarter trade figures.

If the Chinese economy continues to slow down, economists say, it will pose a key risk for New Zealand exports next year.

Exports to China peaked at the end of last year, led by rocketing sales of milk powder, but the totals have since dropped more than 40 per cent, to levels seen two years ago.

Milk powder exports to China have collapsed by almost $500m since November last year, a fall of 70 per cent.

Exports to China have been falling for almost a year. In contrast, exports to the United States have jumped up almost $160m compared with November last year, a gain of more than 50 per cent, led by frozen beef and sheep meat.

Some commodity export prices have been hit hard this year.

Exports of milk powder, butter and cheese have fallen for 11 months in a row and are now down 26 per cent from the peak at the end of last year.

Logs and timber-product exports have fallen for a year by 22 per cent.

And fruit is down 29 per cent from a high point at the start of the year.

Statistics NZ figures out yesterday showed imports dipped just 1.3 per cent to $4.2b in November.

That left a trade deficit of $213m, which was the smallest November deficit since 2010.