Dairy and meat export prices lift terms of trade

Higher dairy and meat export prices lifted the terms of trade to a 37-year high in the March 2011 quarter, Statistics New Zealand said today. The merchandise terms of trade rose 0.9 percent, which means that 0.9 percent more imported goods could be funded by a fixed quantity of exported goods than in the December 2010 quarter.

Merchandise export prices rose 6.3 percent in the March 2011 quarter, reflecting higher prices for dairy (up 5.5 percent) and meat (up 10.0 percent). The increase in export prices was broad-based, and also included price rises for forestry products (up 4.2 percent) and wool (up 12.0 percent).

In the March 2011 quarter, prices for imported goods rose 5.4 percent. Petroleum and petroleum products contributed half of the overall increase. Excluding petroleum and petroleum products, import prices rose 2.7 percent in the March 2011 quarter. A rise in food and beverage prices (up 4.7 percent) also contributed to the latest rise in import prices.

Dairy export prices and volumes both rose in the latest quarter. “Seasonally adjusted dairy export volumes rose 7.6 percent in the March quarter, reaching their highest level since the series began in the June 1990 quarter,” Statistics NZ’s prices manager Chris Pike said.

Seasonally adjusted export volumes fell 0.3 percent in the March 2011 quarter but remain at an historically high level, following a 4.0 percent rise in the December 2010 quarter. Meat, non-fuel crude materials, and fruit and vegetables were all major contributors to the overall fall in export volumes. Dairy, petroleum and petroleum products, and forestry provided notable offsetting increases.

Seasonally adjusted import volumes rose 5.1 percent in the March 2011 quarter – the seventh consecutive quarterly rise. Total import volumes are 21.5 percent higher than the most recent low reached in the June 2009 quarter, but are still 1.8 percent lower than their June 2008 quarter peak. Intermediate goods (used as inputs in producing other goods) and consumption goods were the main contributors to the rise in import volumes in the March 2011 quarter.

The price and volume indexes for exports and imports are compiled mainly from overseas merchandise trade data.

Geoff Bascand 1 June 2011

Government Statistician