Dairy prices squash trade deficit
Booming dairy exports, especially to China, have led to New Zealand's lowest October trade deficit since the early 1990s.
There was a shortfall between exports and imports of just $168 million in October, according to Statistics New Zealand. That was much better than the $350m shortfall economists had expected.
New Zealand typically runs a trade deficit in October.
High export returns for the month were led by surging dairy product prices and volumes compared with a year ago, with a good start to the new season.
Production had rebounded from last summer's drought and world dairy prices were high, so exports were expected to remain strong in coming months, economists said.
However, the high New Zealand dollar, especially against the Australian currency, remains a strong headwind for exporters outside the key commodities such as dairy.
The annual trade deficit was $1 billion, equal to 2.1 per cent of exports, narrowing from $1.5b for the September year.
In October, the value of exported goods rose $783m (23 per cent) to $4.2b compared with October last year.
This rise was due to milk powder, butter, and cheese, up $690m, while quantities increased 22 per cent in October 2013, compared with the same month last year.
The value of imported goods rose $237m (5.7 per cent) to $4.4b, compared with the same month last year.
Logs and timber were also up strongly in October, rising $77m or 26 per cent on the same month last year, mainly due to exports of logs.
Aluminium exports jumped $76m, 180 per cent higher than October last year, mainly going to Japan.
But exports of crude oil were down heavily, dropping $82m, or by 62 per cent.
Exports to China alone topped $1b in October, led by whole milk powder and line logs. That made it New Zealand's top export market in the month and the quarter, ahead of Australia.
On an annual basis, Australia is still the main export market, worth $9.18b, but only just in front of China and looks set to lose that ranking soon.
Exports to Australia in October were worth $794m, down $118m because of the slump in crude oil exports.
After removing seasonal effects, the value of exported goods in October 2013 fell 8.2 per cent compared with September 2013.
A fall in crude oil export quantities from September 2013, which were at their highest level since July 2012, had a large effect on seasonally adjusted exports.
Seasonally adjusted imports for October 2013 rose 0.1 per cent compared with September 2013.