NZ terms of trade falls to lowest since March 2010 as dairy prices sink
Sept. 3 (BusinessDesk) - New Zealand's terms of trade fell to the lowest level since the first quarter of 2010, with the biggest contribution coming from the fourth consecutive quarterly slide in dairy prices.
The terms of trade fell 2.6 percent in the three months ended June 30, according to Statistics New Zealand. That marked the fourth quarterly decline and exceeded the 2 percent drop forecast in a Reuters survey. Merchandise export volumes fell 0.4 percent against expectations of a 0.9 percent gain.
Fonterra Cooperative Group, the world’s largest dairy exporter, has lowered its forecast 2013 payment to farmers in the face of falling global commodity prices and a persistently high New Zealand dollar. Its latest GlobalDairyTrade auction is held this week.
Today’s government figures show export prices for goods fell 1 percent while import prices rose 1.7 percent. That means New Zealand could buy 2.6 percent less merchandise goods for a fixed amount of exports in the second quarter than it could in the first quarter.
The New Zealand dollar traded at 80.07 US cents, little changed from 80.11 cents immediately before the figures were released. The trade-weighted index was at 71.95, from 71.99.
Among dairy products, milk powder fell 2.7 percent in the latest quarter, butter was down 4.1 percent and cheese fell 1.1 percent.
Meat prices declined 2.3 percent, making the second-largest contribution to the decline, led by a 7.6 percent drop in lamb.
Petroleum import prices rose 8.4 percent, leading the gain in import prices. Excluding fuels, import prices rose just 0.3 percent last quarter.
Dairy products and fish made the biggest contribution to the decline in export volumes while non-fuel crude materials volumes rose. Merchandise import volumes fell 3.1 percent.