New Zealand's trade balance improved further in February
New Zealand’s trade balance improved further in February, rising from a surplus of NZ$269 million to a surplus of NZ$321
million (J.P. Morgan: NZ$400 million; consensus: NZ$433 million). Both exports and imports rose over the month, by 5.3%
and 3.8%, respectively, and have appeared to trend higher in recent months.
In the year to February 2010, exports were down 3.6%oya, marking the ninth straight monthly decline. The fall owed
mainly to a drop in exports of meat and edible offal (-11%). Preventing a larger drop in exports, however, were
significant increases in exports of logs and wood (+31%), aluminium (+40%), and live animals (+125%), which were mainly
thoroughbred colts and fillies for racing, and dairy product exports.
With respect to the latter, exports of milk powder, butter, and cheese were up 2.5%oya in February. We suspect that
these exports will increase significantly in 2010, thanks to strengthening demand from China, now New Zealand’s second
largest trading partner. New Zealand’s dairy cooperative Fonterra has sold significantly more New Zealand milk powder
for consumption in China since the melamine debacle in 2008. In fact, Fonterra recently said that it expects China to be
the world’s largest dairy market in 25 years, which will bode favourably for New Zealand’s all important export sector.
Merchandise imports were up 1.3%oya in February, marking the first rise after ten consecutive monthly falls. Crude oil,
which notably is imported in large and irregular shipments, was the main contributor to this rise, surging 205%oya. In
volume terms, crude imports were up a hefty 150%, partly due to a low base, with February 2009 marking the lowest
reading in volume terms on record. Excluding crude oil, imports tumbled 6.1%oya in February.
ENDS