Stronger dairy and meat prices lift terms of trade

Both total meat and lamb are at record prices, Stats NZ says. Photo / File

New Zealand's merchandise trade rose in the June quarter, bolstered by stronger dairy and record meat prices, but fell short of expectations.

The terms of trade, which measures the purchasing power of New Zealand's exports relative to imports, rose 0.6 per cent in the June quarter after falling a revised 2 per cent in the March quarter, Statistics New Zealand said.

Economists had expected a 1 per cent rise, according to the median Bloomberg poll, although forecasts ranged from a 0.5 per cent drop to a 1.7 per cent lift.

Terms of trade measures the purchasing power of New Zealand's exports abroad and is an indicator of the state of the overall economy.

The 0.6 per cent lift means New Zealand can buy more imports for the same amount of exports.

Export values rose 3 per cent to $13.4 billion in the second quarter, with a 1.1 per cent lift in volumes and a 2.4 per cent lift in prices.

The value of imports rose 1.7 per cent to $15.1 billion as prices increased 1.7 perc ent and volumes advanced 0.9 per cent.

The figures are seasonally adjusted.

On the export side, dairy prices rose 3.2 per cent, with milk powder up 7.1 per cent, cheese increasing 1.2 per cent, and butter up 1 per cent.

Dairy volumes rose 5.2 per cent, while values increased 7.6 per cent.

Meat export prices rose 3.6 per cent, with lamb up 5.4 per cent and beef up 1.7 per cent. Both total meat and lamb are at record prices, Stats NZ said.

Wool export prices rose 4.8 per cent as volumes fell 2.1 per cent and values rose 1.2 per cent.

On the import side, petroleum and petroleum product prices rose 10 per cent, following a 7.9 per cent increase in the March 2018 quarter.

Crude oil prices rose 14 per cent, volumes fell 35 per cent, and values slipped 26 per cent.

Crude oil volumes and values are not seasonally adjusted. "The Marsden Point refinery maintenance shutdown during the June quarter led to the fall in volume of crude oil imported," business prices manager Sarah Johnson said.

Stats NZ also noted that New Zealand's dollar fell 1.5 per cent in the June quarter on a trade-weighted index basis and "a falling New Zealand dollar has an upward effect on export and import prices and their New Zealand-dollar values," Johnson said.