NZ's monster May trade surplus confirmed

1.00pm

Statistics New Zealand today trimmed just $2 million off a surprise monster May trade surplus that was foreshadowed in preliminary figures released last month.

Following the receipt of export data, the department said the surplus was $654m compared with the early estimate of $656m.

Economists had predicted a surplus of just $91m.

A whopping increase in the value of goods exported during May was the principal reason for the month's trade balance soaring to the biggest one month surplus since May 2001.

Exports jumped in May to $3.37 billion from $2.69b in April and $2.76b in May 2003.

Imports fell to $2.71b from $2.88b in April and $2.64b in May 2003.

The annual deficit fell to $3.37b from $3.92b in the April year, but it still well ahead of the 2.32b in the year to May 2003.

New Zealand is experiencing a sharp lift in terms of trade as prices for its main commodities surge.

Record prices for beef and lamb and an eight-year high for dairy products have pushed commodity prices up 26 per cent in the year.

ANZ Bank today reported commodity prices rose another 3.3 per cent in June, which augurs well for the June trade figures.

ANZ economist John Bolsover said a strong recovery in commodity prices during the past two years was due to a combination of tight supplies and improving demand.

"The recovery in world commodity prices has been characterised by a sharp turnaround in dairy prices from 16-year lows in July 2002, aided by prices for lamb and beef pushing to record levels."

The dairy price index was at an eight-year high, up 5 per cent in June, while prices for lamb and beef were at record levels in the index's 18-year history, with beef up almost 6 per cent in the month.

Returns in New Zealand-dollar terms were dampened by gains in the New Zealand dollar since mid-May, but the New Zealand Dollar Commodity Price Index still managed to book a 1.5 per cent increase in June -- its fourth consecutive monthly rise.

SNZ said the May surplus was the highest monthly exports value, in nominal terms, ever recorded -- 4.2 per cent higher than the second highest value posted in May 2001. The surplus equated to 19.4 per cent of exports.

Although the exports value is a record high, the trade balance in percentage of exports terms is within the normal range, the department said.

Over the past 10 years, trade balances for May have ranged from a deficit of 1.4 to a surplus of 21.0 per cent of exports, with anaverage of 12.1 per cent of exports.

SNZ said the majority of commodities exported during May recorded higher export values compared with May 2003. The main increases came from wholemilk powder, bulk salted butter and cheese; frozen boneless beef and bone-in lamb cuts; kiwifruit and apples; and re-exports of large aircraft.

"Higher values and quantities of exported whole milk powder contributed significantly to the higher value recorded for milk powder, butter and cheese compared with May 2003.

"The value ofexported bulk salted butter is 173 per cent higher this month compared with May 2003," SNZ said.

The quantity of bulk salted butter exported was up 161 per cent and the value of exported cheese was also higher during the current month.

- NZPA