New Zealand trade deficit widens as dairy prices hit 7-year low in August

New Zealand’s trade deficit widened during the month of August, as dairy prices, especially those of milk powder rose to a seven-month high during the period, dragging down exports on an annual basis.

New Zealand’s merchandise trade deficit widened to NZD1.3 billion in August, data released by Statistics New Zealand showed Monday. A median estimate of economists had forecasted a USD730 million shortfall.

The value of exports fell USD323 million to USD3.4 billion in August, with dairy and meat products leading the decline. Exports of milk powder plunged to their lowest level since August 2009. The milk powder, butter, and cheese category fell to USD135 million, compared to that in August 2015, with milk powder being the torchbearer.

However, wood products were a positive contributor to exports, rising USD102 million. Goods imports fell USD148 billion to USD4.7 billion, with capital goods declining USD195 million. Crude oil imports also fell by more than USD100 million. Excluding petroleum products and aircraft parts, goods imports increased 4.4 percent, official data showed.

Further, eat and edible oils had a large fall, down USD111 million, with falls in both beef and lamb. The United States had the largest fall in beef, and the United Kingdom had the largest fall in lamb. The fall in meat exports is partly due to a record high meat season this time last year.

Meanwhile, fall in other commodities such as fruit, wool, casein and mechanical machinery contributed to the fall in exports, which were down USD323 million (8.7 percent) from August 2015.