Soaring world dairy prices and booming sales to China have seen New Zealand exports leap in October, up 23 per cent on the same month last year.
Statistics New Zealand figures released yesterday show October exports at $4.2 billion, up $783 million on October 2012.
That reflected the rebound in farm production after last summer's drought. At the same time, dairy exports were able to cash in on high prices, BNZ economists said, and farm production was expected to remain strong for many months.
Dairy exports in October were up a massive 85 per cent on the same month last year to $1.5b, with most of the gain in China.
Exports to China alone topped $1b in October - a new record.
China's appetite for dairy products and logs has seen that market become New Zealand's biggest export destination in the past quarter, overtaking Australia.
"The burgeoning role of China cannot be overstated," BNZ senior economist Craig Ebert said. In the three months to the end of October, exports to China were up 76 per cent on a year ago.
At the same time, exports to Australia have fallen, mainly because of lower crude oil exports linked to the temporary shutdown of the Maari oil field. New Zealand also exports gold to Australia, so falling gold prices have taken the shine off trans-Tasman exports, too. Other exporters face a high exchange rate, at just under A90c yesterday. October exports to Australia were down 13 per cent on a year ago, at $794m.
On an annual basis, Australia is still New Zealand's biggest export market, but only just.
If present trends continue, China will take the annual top ranking soon.
The Fonterra whey contamination scare knocked dairy exports in August, but October trade figures show it was just a blip in China's insatiable demand.
High milk production in recent months, up about 3 per cent on last year to record levels, meant dairy export volumes were likely to keep rising in coming months, ASB Bank economists said. However, that may be offset by an easing in global dairy prices in New Zealand dollar terms, ASB said.
"We expect China's expanding middle class, and with a growing demand for protein, will underpin continued strong global demand for our dairy and meat exports," ASB economist Christina Leung said.
Log exports have been along for the ride, with October exports up 26 per cent on the same month last year, again fed by Chinese demand. Seafood volumes were also up 20 per cent on a year ago.
The export boom has led to New Zealand's lowest October trade deficit since the early 1990s.
There was a shortfall between exports and imports of just $168m in October, much better than the $350m deficit economists expected.
The annual trade deficit was $1b, equal to 2.1 per cent of exports, narrowing from $1.5b for the September year.